Translation: Original published in Finnish on 4/24/2025 at 9:31 am EEST.

Kreate published its Q1 report this morning, which was slightly weaker than our expectations in terms of figures. Revenue decreased almost exactly as we expected, but the earnings level in Q1 was slightly softer than our forecasts. On a positive note, Kreate's order book grew more strongly than we had expected. In our view, the first half of the year will be weaker, and growth will be concentrated in the second half of the year, reflecting typical seasonality, which is also indicated in the company's guidance.

Revenue decreased in line with expectations

In Q1, Kreate's revenue decreased by 3.7% to around 52.4 MEUR, which was more or less in line with our forecasts (forecast: 52.7 MEUR). The top-line decline slowed in the first quarter of the year as projects got underway and the comparison figures eased. By business area, revenue of Structural engineering decreased by 14% to 34.5 MEUR, while the Transport infrastructure revenue increased by 27% to 16.9 MEUR, based on projects received. Large bridge projects have decreased, while railway construction projects have increased, which is reflected in the development of the business areas. By country, revenue developed strongly in Sweden, rising by 15% to 7.5 MEUR, but still falling short of our forecast (forecast: 9.1 MEUR). In Finland, on the other hand, business developed slightly better than we expected, with revenue decreasing by 6% to 44.9 MEUR in the quarter (forecast: 43.6 MEUR).

On the positive side, Kreate’s order book grew in Q1 by about 23% to 226 MEUR. New projects totaling 87 MEUR were added to the order book during the quarter, including the first phase of the Tampere passenger rail yard project (~40 MEUR), Swedish projects (~16 MEUR), and bridge projects (~15 MEUR). The development of the order book supports this year's developments well, and we also estimate it will strengthen in the coming quarters as the railway projects in the development phase enter the work phase.

Profitability developed slightly softer than we expected

Kreate's earnings decreased from the comparison period to 0.1 MEUR and were slightly below our forecast (forecast 0.3 MEUR). The EBITA margin was thus 0.1%, while we had expected a margin of 0.6%. In our view, profitability was hurt during the quarter by the low volume level and the still tight competitive situation, which in our view is reflected in price competition. At the bottom of the P&L, financing costs were slightly lower than we had expected, so earnings per share increased to EUR 0.01 (Q1'24: EUR -0.06), also exceeding our forecast (forecast: EUR -0.04).

The guidance remained unchanged, expecting growth to be weighted towards H2

In its guidance, Kreate expects its revenue to grow in 2025 to 290-310 MEUR (2024: 275.5 MEUR). EBITA is expected to grow to 9-11 MEUR (2024: 8.8 MEUR). The market situation in construction remains difficult and competition in infrastructure is still tight, in addition to which the deteriorating global economic situation brings uncertainty to the company's outlook. The near-term outlook for infrastructure is expectant, with better performance expected towards the end of the year. For Kreate, the Swedish market looks strong at the moment, but the situation in Finland is more neutral. In Kreate's case, projects in the development phase are expected to increase the order book during the early part of the year, so there should be good candidates for growth despite market movements.