Solwers H1'25 flash comment: Market recovery still some way off

Translation: Original published in Finnish on 8/26/2025 at 9:15 am EEST.

Source: Inderes

Solwers reported a weaker-than-expected result this morning. Although revenue grew in line with our expectations, intense price competition weighed on margins and consequently on the result. A broader market recovery is still some way off, although the company expects the market to pick up towards the end of the year. You can watch the earnings call, starting at 10:00 am EEST, here.

Revenue in line with expectations, market situation remains challenging

Solwers’ revenue increased by 6% to 42.3 MEUR in H1 and was fully in line with our 42.1 MEUR estimate. Revenue grew driven by acquisitions, with organic growth slightly positive according to our calculations.

The market situation has remained sluggish, and the initial positive signs seen at the beginning of the year have not materialized into growth. The situation in the Swedish market in particular appears to be more challenging than before. The revenue trend did not change in Q2, with acquisitions accounting for the majority of growth.

Price competition weighed on profitability

Profitability was clearly disappointing, with EBITA coming in at 1.8 MEUR, whereas we had expected an EBITA result of 3.3 MEUR. The margin was a modest 4.3%, weighed down by fierce price competition and margin overruns in individual projects. In Q2, profitability remained at the same level as in the first quarter, and the impact of cost-cutting measures was offset by margin pressures. Ultimately, EBIT remained close to zero, and earnings per share fell into negative territory. The company stated that it had continued its moderate adjustment measures and was aiming for savings of 1 MEUR in group operations during 2025.

Market pick-up still some way off

As regards market outlook, the early signs of recovery seen at the beginning of the year have not yet translated into growth. In Finland, the company sees a cautious light at the end of the tunnel, but the market environment in Sweden has become slightly more challenging than before. The company reported that its order book was at a good level and that billing rates had risen moderately.

The company also stated in its report that it did not meet its net debt/EBITDA covenant at the end of H1. The company's principal lender, Nordea, has granted a waiver in this regard, under which the net debt/EBITDA covenant did not apply as of the June 30, 2025 review date. While we are not overly concerned about the covenant breach, it highlights the company's weak earnings level and the need for improvement.