Etteplan - Not out of the woods just yet
Etteplan’s H1 was disappointing, with the escalation of the trade war causing demand to weaken further in Q2 following an already soft Q1. The revised guidance requires a marked improvement over last year in H2.
NRI’s continued to weigh on reported figures
Etteplan’s net sales declined 1.3% y/y in Q2 while organic net sales at comparable FX declined 6.8%. Most of the sales decline came from the Software and Embedded Solutions where sales declined 13.9%. Increased uncertainty from the escalating trade war impacted demand across all service areas. In Software and Embedded, some projects that had already been agreed upon were postponed or canceled. Despite the lackluster topline development, profitability was at relatively good level. The reported figures were negatively affected by non-recurring items worth of EUR 0.9m that were related to restructuring expenses. Excluding the NRI’s, EBITA-margin would have been at 7.6% in the quarter.
Short-term outlook remains weak
We revised our estimates for 2025E and onwards in connection with the profit warning prior to the Q2 print. We continue to expect relatively weak performance during the second half of the year while there are also some positive drivers. The Novacon acquisition should continue to drive inorganic growth (size of Novacon is roughly 10% of Engineering Solutions annual net sales). In addition, the H2/2024 comparison period is significantly weaker. For the forementioned reasons, we model continued growth for Engineering Solutions in H2. Conversely, for Software and Embedded, we expect sales decline. The segments’ number of employees was down 8.9% at the end of quarter. For Technical Communication and Data, we expect flat sales for H2. In terms of profitability, we model some improvement compared to last year especially for Engineering Solutions which suffered from very weak profitability in Q3/24. For the full year, we now forecast net sales of EUR 368m and EBIT of EUR 19.5m.
Valuation neutral in the short-term
Etteplan is priced at adj. EV/EBITA of 12-11x on our estimates for 2025-2026E. We find the current valuation neutral on both relative and absolute basis in the short-term. With only slight estimate adjustments, we retain TP at EUR 11.0 and rating at ACCUMULATE.