SRV - Profitability remained modest
SRV's net sales in Q4 amounted to EUR 181.8m, below our estimate of EUR 195.6m. Driven by lower volumes, the operative EBIT was also lower than our estimate.
- Revenue in Q4 was EUR 181.8m (EUR 181.2m in Q4/22), below our estimate of EUR 195.6m. Revenue grew 0.3% y/y.
- The operative operating profit in Q4 amounted to EUR 2.4m, also below our estimate of EUR 5.6m.
- SRV’s signed new agreements worth EUR 253.1m (EUR 287.2m in Q4/22).
- The order backlog in Q4 was EUR 1048.6m (EUR 838.8m in Q4/22), up by 25% y/y.
- Business construction revenue in Q4 was EUR 153.1m, (EUR 180.2m Evli estimate) up 36.3% y/y. The large projects such as Laakso Joint Hospital and Metsä Wood’s Kerto timber mill supported volumes yet not as strongly as we expected.
- Housing construction revenue in Q4 was EUR 28.7m (EUR 15.0m. Evli estimate). SRV recognized only 4 residential units as income which was expected. Revenue from development projects exceeded our estimates.
- Despite the weaker than expected revenue and profitability, the company’s improving backlog was a clear positive and will serve as a catalyst for growth in the forthcoming quarters and years.
- SRV outlook 2024: Full-year consolidated revenue for 2024 is expected to grow compared to 2023 (revenue in 2023: EUR 610.0 million). Operative operating profit is expected to improve on 2023 (operative operating profit in 2023: EUR 1.1 million).
- Revenue is expected to consist of low-margin yet low-risk cooperative contracting and, to a lesser extent, of development projects sold to investors and housing construction contracting.