Source: Inderes

NYAB will release its Q3 report on Wednesday, November 5. We expect revenue growth to remain strong, driven by both inorganic contributions and continued high organic growth, supported by a robust order backlog and favorable market conditions, particularly in Sweden. Further, we expect operating margins to be broadly in line with last year’s pro forma level, as the rapid growth is anticipated to slightly weigh on profitability in the short term as staff capacity builds up. In light of the recent larger orders in the Finnish energy sector (read our comment here), we will look for any commentary that reaffirms potentially improving market conditions in Finland, but also that activity levels in Sweden remain high, as well as updates on the progress of the Dovre integration. We will also pay close attention to margin development across the group.

We expect sustained high market activity in Sweden coupled with a strong order book to enable continued high organic growth

We forecast NYAB's Q3 revenue to increase by 60% year-on-year to 149 MEUR (Q3’24: 94 MEUR), with the Dovre acquisition contributing by 28 MEUR. Civil Engineering is estimated to grow by 30%, mainly driven by Sweden (36% y/y), where we believe market conditions have remained favorable during the quarter, primarily within the Power and Infrastructure segments. In Finland, we believe the market conditions have continued to slightly improve after a couple of quarters of subdued activity. As such, we expect a 15% growth in the Finnish Civil Engineering segment, where we also expect NYAB to continue to diligently leverage its cross-border collaborations, and thus, contribute to growth.

In the Consulting segment, where the short-term focus is on profitability and market dynamics are quite mixed, we expect flat growth (-1%), similar to the previous two quarters. On a pro forma basis, we estimate organic revenue growth of 23% in Q3. Year-to-date, NYAB has announced orders totaling ~2 BNSEK (~186 MEUR), which we believe supports our positive revenue outlook for 2025-2026. We also view the most recent signed agreements in Finland, worth 50-55 MEUR (Energy segment), to be supportive of our revenue estimates for the Finnish Civil Engineering segment over the coming years and a potential sign of improving market conditions.

Operating margin is expected to remain stable due to front-loaded investments in personnel in the first half of the year

We estimate EBIT to amount to 12.6 MEUR (Q3’24: 8.9 MEUR, Q3’24 pro forma: 10.2 MEUR), translating to an EBIT margin of 8.4% (9.5%, pro forma: 8.4%). The year-on-year margin contraction reflects the consolidation of the lower-margin Consulting segment (Dovre). In addition, we expect that the current rapid top-line growth will limit any meaningful margin expansion in the Civil Engineering segment due to front-loaded investments in personnel during the first half of 2025. Hence, in Civil Engineering, we forecast operating margin to be relatively stable (9.6% vs Q3’24: 9.5%) but expect these effects to ease over time as growth becomes more balanced, enabling stronger margin optimization. That said, we consider the estimated margin healthy. On the bottom line, we expect losses from associates and net financial expenses to remain stable relative to the previous quarter as well as the comparison period. Given this overall picture and after taxes, we estimate net profit to reach 9.5 MEUR (Q3’24: 6.7 MEUR).

Margin development and outlook in core geographies in focus ahead of the Q3 report

For FY2025, we forecast revenue of 548 MEUR (+58% y/y) with an adjusted EBIT margin of 6.4%* (FY2024: 7.6%, pro forma 2024: 6.1%). On a pro forma basis, we estimate 20% revenue growth (Civil Engineering +26%, Consulting +1%), with margin pressure driven by the lower-margin Project Personnel business in Consulting.

The company continues to experience strong momentum in its Civil Engineering business, particularly in Sweden, where market conditions remain favorable, and, more recently in Finland, supported by effective cross-border resource allocation. While rapid growth is nothing new for NYAB, the main challenge lies in ensuring sufficient execution capacity, including skilled labor, subcontractors, and supply chain resources, to efficiently deliver on its expanding order book and secure new contracts while maintaining healthy margins. We acknowledge that some timing-related effects are inevitable from time to time, as investments in additional capacity may temporarily weigh on margins, as seen in the previous quarter to some extent. However, with management emphasizing cost control during the high-activity second half, we will closely monitor margin performance across the group. This also includes Dovre, where we hope to see that ongoing integration efforts deliver tangible margin improvements, especially as profitability remains the current strategic priority over growth. Additionally, we will pay close attention to management’s commentary on the market outlook for 2025 and potentially 2026, particularly across the company’s core geographies and key business segments.

* Excluding the impact of one-offs costs in Q1’25