ETTEPLAN Q3 2023: Forward in an uncertain market situation

ETTEPLAN OYJ Interim Report October 31, 2023, at 1.00 p.m.

ETTEPLAN Q3 2023: Forward in an uncertain market situation

Key points July-September 2023        

• The Group’s revenue decreased by 0.4 percent and was EUR 80.0 million (7-9/2022: EUR 80.3 million). At comparable exchange rates, revenue increased by 2.1 percent.
• Operating profit (EBITA) decreased by 10.6 percent and was EUR 6.3 (7.1) million, or 7.9 (8.8) percent of revenue.
• Operating profit (EBIT) decreased by 13.9 percent and was EUR 5.0 (5.8) million, or 6.2 (7.2) percent of revenue.
• Operating cash flow improved and was EUR 7.1 (4.1) million.
• Basic earnings per share improved and were EUR 0.10 (-0.03).
• Etteplan released a profit warning on September 18, 2023, updating and specifying its previous estimate of 2023 revenue and operating profit (EBIT) due to the weaker-than-expected business development in the third quarter. According to the new estimate, the revenue is estimated to be EUR 355-370 (previously 360-380) million and operating profit (EBIT) to be EUR 26-28.5 (previously 28-31) million.

Key points January-September 2023  

• The Group’s revenue grew by 2.2 percent and was EUR 264.8 million (1-9/2022: EUR 259.1 million). At comparable exchange rates, revenue increased by 4.4 percent.
• Operating profit (EBITA) decreased by 11.8 percent and was EUR 21.3 (24.2) million, or 8.1 (9.3) percent of revenue.
• Operating profit (EBIT) decreased by 14.2 percent and was EUR 17.3 (20.2) million, or 6.5 (7.8) percent of revenue.
• Operating cash flow improved and was EUR 23.0 (17.1) million.
• Basic earnings per share were EUR 0.43 (0.43).

Etteplan also monitors non-IFRS performance measures because they provide additional information on Etteplan’s development. More information on performance measures is provided at the end of the release.

Key figures

EUR 1,000	7-9/2023	7-9/2022	1-9/2023	1-9/2022	1-12/2022
Revenue	79,961	80,308	264,763	259,146	350,170
Operating profit (EBITA)	6,332	7,085	21,322	24,184	33,915
EBITA, %	7.9	8.8	8.1	9.3	9.7
Operating profit (EBIT)	4,967	5,766	17,340	20,204	28,622
EBIT, %	6.2	7.2	6.5	7.8	8.2
Basic earnings per share, EUR	0.10	-0.03	0.43	0.43	0.73
Equity ratio, %	39.3	36.7	39.3	36.7	38.2
Operating cash flow	7,087	4,085	22,985	17,075	28,095
ROCE, %	10.0	13.2	12.2	15.4	15.9
Personnel at end of the period	4,010	3,979	4,010	4,001	3,951

President and CEO Juha Näkki:

The third quarter of the year was challenging, and the development of demand was twofold. On one hand, the slowing of consumption and customers’ declining delivery volumes weakened demand in Europe during the review period. On the other hand, we saw a slight recovery in product development towards the end of the review period, and some production investments were started. Nevertheless, uncertainty remains high, customers are slow to make decisions on starting new projects, and there are significant differences in demand between different customer industries. In China, the market situation remains challenging due to geopolitical tensions. In the prevailing circumstances, our revenue growth halted and our operating profit decreased, and we had to update our guidance during the review period. We implemented new adaptation and efficiency improvement measures to safeguard our profitability and our capacity to make investments in business development even in the prevailing market situation. Due to the adaptation and efficiency improvement measures and the halting of growth, less capital was employed in our business operations and our operating cash flow improved substantially.

Software and Embedded Solutions was our most successful service area. After a difficult period earlier in the year, we saw small signs of a recovery in product development towards the end of the review period, but the number of software project starts was still low. The significant orders we received in the summer improved the situation in the service area, and the adaptation measures we implemented improved the operational efficiency of the service area, which helped profitability return to a good level. We also invested in the service area’s growth by acquiring High Vision Engineering Sweden AB, a Swedish company serving the automotive industry, near the end of the review period.

In the Engineering Solutions service area, the demand situation was moderate. Engineering work related to customers’ deliveries was reduced as customers’ delivery volumes decreased, but some investment projects were started. Project challenges in Central Europe had a slight negative effect on profitability, but operational efficiency remained fairly good. At the beginning of the review period, we invested in the service area’s growth by acquiring LAE Engineering GmbH, a German company specializing in industrial automation projects.   

The Technical Communication Solutions service area did not develop as we had expected. Demand slowed as our customers’ delivery volumes decreased, particularly in Central Europe, where we have more customers manufacturing consumer products. The service area’s profitability was modest especially in Central Europe, where operational efficiency was weak and the large number of sickness-related absences also affected the result. We have taken measures to address the situation and expect profitability to improve during the remainder of the year.

Russian aggression against Ukraine and the rising tensions in the Middle East maintain uncertainty in the markets and make it even more difficult to predict future development. Nevertheless, our diverse service offering has proven its strength even in an uncertain market situation, and we have won several outsourcing contracts, for example. We are now increasingly focusing our operations on the customer industries in which we expect the demand situation to remain good. By doing so, we seek to keep our overall demand situation at a moderate level. We are also continuing to invest in growth so that we can continue on the path of profitable growth even in the prevailing market conditions.  

Market outlook 2023

The most important factor affecting Etteplan’s business is the global development of the machinery and metal industry. Continued Russian aggression against Ukraine and the further elevation of geopolitical tensions due to the conflict in the Middle East have increased uncertainty globally. Uncertainty, continued high inflation and rising interest rates have reduced our customers’ willingness to invest and weakened the demand situation in certain customer industries. However, investments related to the defense industry, energy efficiency and accelerating the green transition are continuing to grow. There is variation in demand, but we expect the general demand situation to remain moderate through the remainder of 2023.

Financial guidance 2023 (published on September 18, 2023)

Etteplan updated and specified its financial guidance for revenue and operating profit (EBIT) and issued the following estimates:

Revenue in 2023 is estimated to be EUR 355-370 (2022: 350.2) million, and operating profit (EBIT) in 2023 is estimated to be EUR 26-28.5 (2022: 28.6) million.

Previous financial guidance 2023 (published on August 10, 2023)

Etteplan specified its financial guidance for revenue and operating profit (EBIT) within the previously communicated range and estimates:

Revenue in 2023 was estimated to be EUR 360-380 (2022: 350.2) million, and operating profit (EBIT) in 2023 was estimated to be EUR 28-31 (2022: 28.6) million.

Disclosure procedure

This stock exchange release is a summary of Etteplan's January-September 2023 Interim Report. The complete Interim Report is attached to this stock exchange release in pdf format and is also available on Etteplan's website at www.etteplan.com.

Conference call and live webcast today, October 31, 2023

Etteplan’s President and CEO Juha Näkki will present the Company’s results for January-September 2023 in a conference call and a live webcast, held in English language, on October 31, 2023 starting at 2.30 p.m. Finnish time (EET).

Questions can be asked in Finnish and in English after the President and CEO’s presentation only through conference call connection. Participants must register through this link http://palvelu.flik.fi/teleconference/?id=10010625 to ask questions through the conference call lines. After registering the participants will receive a teleconference number and a code to join the call. The participants are asked to press *5 to join the queue for questions.

Juha Näkki’s presentation can be followed as a live webcast on https://etteplan.videosync.fi/q3-2023. The webcast starts at 2.30 p.m. Finnish time (EET). A recording of the webcast will be later available at www.etteplan.com.

Espoo, October 31, 2023

Etteplan Oyj

Board of Directors


Additional information:
Juha Näkki, President and CEO, tel. +358 10 307 2077
Outi Torniainen, SVP, Marketing and Communications, tel. +358 10 307 3302


The information presented herein has not been audited.
Releases and other corporate information are available on Etteplan's website at www.etteplan.com.


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