Etteplan - AIming to improve
Etteplan's Q4 results aligned with our estimates, with NRIs weighing on the figures. The market remains challenging which is reflected in the conservative lower range of the 2025 guidance. Going forward, Etteplan aims to continue profitable growth with the help of increased share of AI service offering.
Q4 reported figures in line as NRI’s weigh on numbers
Net sales in Q4 were EUR 91.3m (Evli est. EUR 93.2m, EUR 95.2m in Q4/23), revenue decreased by 4.1% as organic net sales decreased by 7.2%. EBIT in Q4 amounted to EUR 5.0m (Evli est. EUR 4.9m, EUR 8.2m in Q4/23), at a margin of 5.4% (Evli est. 5.3%). The combined effect of NRI’s on EBITA and EBIT was EUR -0.9m for the quarter, excluding NRI’s EBIT was at EUR 5.9m. There were no large surprises on the business area level as Software and Embedded continued to grow supported by acquisitions while Technical Communication and Data Solutions saw flat sales and Engineering Solutions sales declined by over 10%. The market environment stayed challenging during the quarter and at the end of Q4, the company had 178 employees in Finland temporarily laid off (approximately 10% of the total workforce in Finland).
Organic growth remains hard to come by
Etteplan estimates net sales of EUR 365–400m and EBIT of EUR 23-30m for 2025E. We find the current guidance quite conservative in terms of organic growth as Etteplan acquired Novacon Powertrains in January (Novacon net sales in 2023 approx. EUR 18m). We have adjusted our estimates still slightly downwards as we now model net sales of EUR 386m (prev. EUR 392m) and reported EBIT of EUR 25.7m (prev. EUR 27.7m). Engineering Solutions growth will be supported by the acquisition while we model organic sales decline for H1/25. For Software and Embedded and Technical Communication and Data we model low single digit growth for 2025E. We expect some further restructuring NRIs for H1 in line with the comments made by the management. While NRIs continue to affect reported profitability, we expect that the restructuring actions will continue to bear fruit in 2025E. The new AI-driven revenue target is ambitious; however, success in developing AI-based services and enhancing the current offering, particularly in Technical Communication and Data Solutions, could further support the profitable growth story.
BUY with a TP of EUR 12.0 (prev. EUR 12.5)
After the negative estimate changes, we revise our TP back to EUR 12.0 yet retain rating at BUY. The company is priced at adj. EV/EBITA 11-9x based on our estimates for 2025-2026E. While pricing is in our view conservative, the market remains uncertain.