Translation: Original published in Finnish on 8/19/2025 at 8:21 am EEST.

We raise Koskisen's target price to EUR 9.00 (was EUR 8.25), reflecting a slight decrease in the required return. In our opinion, however, the share price increase (+30% this year) has already eroded the best part of the short-term expected return, so we decrease the company's recommendation to Reduce (was Accumulate). In our opinion, Koskisen's Q2 report was fairly neutral overall. Although we did not make any significant changes to our near-future forecasts, we believe that the strong performance in H1 has slightly reduced the share's risk level. 

Operational figures fell between our estimates and the consensus

In Q2, Koskisen's revenue increased by 15% to 90 MEUR and adjusted EBITDA by 10% to 10.3 MEUR. Operational figures exceeded consensus estimates, but our forecasts for the seasonal Q2 quarter were slightly more optimistic than the actual results. The shortfall in relation to our forecasts was mainly due to expenses in both units (incl. wood) and figures for Iisveden Metsä, which was included for one month and performed slightly below our estimates (revenue 4 MEUR, EBIT 0.0 MEUR). Considering the market situation, we believe Koskisen's figures were reasonable overall, as the struggling construction sector provided no boost to the market in Q2 either, and the summer season in the Sawn Timber industry was weaker than expected. The mood in the Panel Industry sounded more positive, but construction is slowing it down as well. High log prices continue to challenge profitability, although the worst of the raw material situation seems to have fallen in the summer, at least for now.

We made no major estimate revisions

Koskisen reiterated its guidance for 2025 according to which revenue will grow from last year (2024: 282 MEUR revenue) and the adjusted EBITDA margin will be 7-11%. This comes as no surprise, as the company does not typically elaborate on its guidance with adjectives. Koskisen is also well on track to achieve its targets, even though H2 will be more fragmented for the company in terms of production than H1, due to production shutdowns in the summer and at Christmas.

We did not make any material changes to our forecasts for Koskisen in H2 or in the coming years. Overall, we believe that the company's development was promising throughout H1 in relation to the market situation, which has reduced the risks associated with the earnings improvements already included in our forecasts. The next shift should also be positive for the construction sector, even though the recovery has been delayed due to factors such as the trade war. We expect Koskisen's revenue and EBITDA to continue to grow, driven by the gradual recovery of the construction cycle, investment efficiency gains and the acquisition of Iisveden Metsä (Q2’25 LTM-2027e adj. EBITDA CAGR 20%). Still, persistently high raw material prices will limit the profitability improvement in our estimates, even though revenue is increasing.

Expected return has become neutral

Koskisen’s 2025 and 2026 EV/EBITDA ratios that consider the strong balance sheet are around 8x and 6x and the P/B ratio (Q2’25 ACT) is around 1.3x. The multiples are weighted toward the upper end of the ranges we accept for this year and are about halfway through for next year, taking into account the company's estimated return on capital and risk profile. We consider this to be a fairly neutral overall picture, given the somewhat balanced positive and negative risks associated with the forecasts. Following minor changes in estimates and a slight decline in the required return, the DCF value of the share is approximately at the level of our target price and the current share price. Thus, Koskisen's expected return based on earnings growth, falling multiples (Q2'25 LTM P/E 20x) and a dividend yield of around 2% is, in our view, lower than the required return. As the economy and construction sector in Europe recover, the company could see earnings growth continue even further. This would also be a strong medium-term driver for the stock, but for now, we believe the overall picture remains neutral following this year's price increase of over 30%.