Raute - Orders about to improve
Raute reports Q4 results on Feb 12. Wood Processing has already demonstrated very high margins so that for now focus remains on order intake, which should be improving.
We expect Q4 adj. EBITDA to have gained slightly to EUR 5.5m
Wood Processing margins beat estimates throughout last year; we estimate its Q4’25 EBITDA margin at 12%, compared to the 14.5% seen over the first nine months of the year. We expect the margin to have already softened as the segment’s Q4 revenue might have been lower than during the previous quarters even though still relatively high. Services lacked demand for customer upgrade investments in Q3, which reflects the general environment Raute has seen recently where smaller equipment orders have been low. Q3 however already showed some encouraging signs of higher order intake; in our view both Services and Analyzers should see some earnings gains in FY’26, while the amount of new Wood Processing orders is still the biggest question mark for now. We expect Q4 order intake to have been EUR 40m, in other words slightly better q/q but down EUR 10m y/y from the relatively high comparison figure.
We estimate Raute FY’26 revenue to decline by some 13%
We estimate Raute to have reached EUR 25.9m comparable EBITDA in FY’25 and expect the figure to decline by more than EUR 6m in FY’26; we estimate Services and Analyzers to remain roughly flat so that the decline is attributable to Wood Processing, for which we estimate EBITDA margin to decrease by some 300bps to 11%. This headwind is mainly due to the fact that Wood Processing FY’26 revenue is set to decline by a significant amount, perhaps about 20% y/y unless order intake soon starts to show bigger improvement. We believe Europe could contribute more equipment orders, smaller as well as larger projects, soon as many orders have already been postponed for a while and outlook is now gradually improving.
Higher order intake could be a strong upside driver
Order intake remains the most important metric probably at least over the next couple of quarters because even if Q4 shows more encouraging signs the figure needs to continue to improve as Raute’s order book is currently only around EUR 100m. European construction activity should have already seen its nadir; this may not be enough to help Raute sustain earnings growth in FY’26, but the corresponding multiple is only about 4.5x EV/EBIT. We retain our EUR 17.0 TP and BUY rating.