Raute - Project delays burden EBIT margin
Raute’s EUR 37m Q2 revenue topped our estimate slightly, helped by strong services sales. Nevertheless, operating margin remained on the weak side due to the cost burden caused by a few delayed projects. Order book stands some 40% lower than a year ago, however it now spans an exceptionally long period.
- Q2 revenue amounted to EUR 37.0m vs our EUR 35.6m estimate (EUR 38.2m consensus).
- Order intake was EUR 26m compared to EUR 28m a year ago. Order book stood at EUR 72m at the end of Q2 (compared to EUR 127m a year ago). Raute says a significant proportion of the order book is scheduled for 2020 (and a small amount for 2021) i.e. the order book is stretched exceptionally long.
- Q2 operating profit was EUR 2.3m vs our EUR 2.9m estimate (EUR 2.7m consensus). Operating margin therefore amounted to 6.3% vs our 8.1% expectation (7.1% consensus). A few delayed projects lead to extra costs.
- Raute says current demand is focused on major new capacity projects as well as services and small-scale improvements, whereas the share of mid-sized projects is exceptionally low and causes fluctuations in order intake. All in all, market uncertainty has increased, causing delays in project negotiations.
- Raute changed its FY 2019 guidance on Jun 25, expecting revenue and operating profit to decrease compared to previous record-high year.