Kreate Q3'25: Projects are progressing, sizes are growing

Translation: Original published in Finnish on 10/23/2025 at 7:50 am EET.

Kreate's revenue growth clearly exceeded our estimates in Q3. Due to strong volume development, profitability was also higher than our estimates in absolute terms, although relative profitability was slightly below our estimates. After a strong quarter, the current year's revenue guidance appears cautious, which may be explained by the relatively slower revenue recognition of larger projects than before. Earnings growth and dividend yield in the coming years support the expected return, but the valuation is tight based on our current year estimates. We raise Kreate's target price to EUR 10.5 (was EUR 9.4) but reiterate our Reduce recommendation.

Volume development drove the earnings beat

Kreate's Q3 revenue grew by 22% year-on-year to 94.7 MEUR, exceeding our 84.7 MEUR estimate by 12%. By business line, revenue in Structural engineering grew particularly strongly by 29% to 63.7 MEUR. In Transport infrastructure, revenue also grew by 10% to 29.9 MEUR. By country, growth in Sweden was clearly stronger than our forecasts, with revenue increasing by 54%.

Due to the strong growth, profitability was also at a higher level than we expected, with the absolute adjusted EBITA rising to 4.0 MEUR, topping our forecast of 3.6 MEUR. The EBITA margin was 4.2%, which was almost in line with our forecast of 4.3%. Despite stronger revenue development than our forecasts, profitability was still hampered during the quarter by the company's front-loaded growth investments in personnel. In the lower lines, financing expenses were lower than our estimates, and thus EPS also grew to EUR 0.30, exceeding our estimate of EUR 0.24.

The company's order book decreased slightly from the previous quarter, ending at 242 MEUR at the end of the quarter. Compared to the prior-year period, the order book at the end of the quarter grew by as much as 58%. In addition, the company has several major projects won and/or in the development phase that have not yet been recorded in the quarter's order book.

Our revenue forecast is in line with the upper end of the guidance range

Kreate reiterated its guidance in connection with the Q3 report, in which the company estimates its revenue for the current year to be 290-310 MEUR (2024: 275.5 MEUR) and EBITA to be 9-11 MEUR (2024: 8.8 MEUR). After January-September, revenue stands at 220.7 MEUR and EBITA is 6.3 MEUR. Kreate estimates that 87 MEUR of the order book at the end of Q3 will be recognized during the 2025 financial year. Thus, with only the project portfolio recognized from the order book, the company would end up near the upper end of the revenue guidance range. We now forecast the company's revenue to grow by 12% this year to 310 MEUR and EBITA to rise to 10 MEUR (EBITA%: 3.3%). Our updated revenue forecast is in line with the upper end of the company's guidance range. Profitability will be supported by continued growth in volumes in the remainder of the year and an increase in the relative share of the more profitable Swedish business. On the other hand, the company's front-loaded investments in personnel are still reflected in our forecasts in personnel costs.

Overall valuation picture neutral

Kreate's share is valued at 12x EV/EBIT and 15x P/E multiples based on our current year estimates. Relative to our acceptable valuation (EV/EBIT & P/E: 10-12x), the pricing appears challenging. On the other hand, for the coming years, the multiples fall to a more attractive level (2026-27e EV/EBIT: 9x, P/E: 11x). However, in our view, this does not offer sufficient upside to make the expected return attractive, as some of the potential has evaporated with the share price increase. In addition, there is uncertainty regarding the realization of earnings growth, especially as the average project size increases. The DCF model value is also well in line