Source: Inderes 

NYAB will publish its Q2 report on Thursday, August 13. Following a muted start to the year, we expect revenue growth to accelerate as early-phase projects transition into execution. We also expect this volume pick-up, along with an increased share of projects in niche segments, to support a year-on-year improvement in profitability and continued solid cash flow generation. In the report, our focus will be on the development of the order book and the book-to-bill ratio, as well as qualitative comments on recent landmark contract wins, particularly the Phase 2 award for the Uppsala tramway, which provides significant long-term visibility. We will also listen for management's assessment of the overall market outlook and the impact of geopolitical tensions on the business.

Top-line acceleration expected as projects transition into execution

We forecast NYAB's Q2 revenue to grow by 9.5% year-on-year to 149 MEUR (Q2'25: 136 MEUR). In Q1, revenue declined as several large-scale projects were in early engineering and design phases, where revenue recognition is typically low. However, management expects significant acceleration as these projects move into execution, with approximately 60% of the Civil Engineering backlog slated for recognition in 2026. Consequently, we anticipate that the Civil Engineering segment, particularly in Sweden, will drive the top-line recovery in Q2. Meanwhile, we expect the Consulting segment's revenue to remain more subdued, reflecting continued headwinds from a soft offshore market. We believe the Q1 book-to-bill ratio of 1.8x (LTM: 1.1x), the record Civil Engineering order book, and continued favorable market conditions in Sweden provide a very strong foundation for the quarter's volume ramp-up. That said, we acknowledge that the key swing factor in our estimate is the timing and pace of this acceleration. Since the ramp-up hinges on how quickly the early-phase projects move into execution, our Q2 revenue forecast could prove somewhat high if the pick-up is more back-end loaded. This risk is underscored by the low revenue recognition in Q1, which points to a potentially more pronounced H2 weighting in 2026. It is also worth noting that NYAB is simultaneously up against a demanding comparison period, with 29% organic growth in Q2'25, which raises the bar for the year-on-year growth we are forecasting.

Margins and cash flows to strengthen on higher production volumes

We estimate Q2 EBIT to amount to 6.9 MEUR (Q2'25: 5.7 MEUR), translating to an EBIT margin of 4.6% (Q2'25: 4.2%). The anticipated margin expansion is primarily driven by improved operating leverage as production volumes increase. In Q1, Swedish Civil Engineering demonstrated margin resilience by expanding profitability despite a lower revenue base; we expect this dynamic to be amplified by the Q2 volume recovery. We will also monitor the Finnish operations, where project variations weighed on early-year profitability, and the Consulting segment, which has faced offshore market weakness. Additionally, we expect NYAB to report continued solid cash flow generation. The company delivered strong cash conversion in Q1 despite the revenue decline, aided by robust invoicing carried over from a high-activity Q4 and a more favorable backlog composition. Structurally, a growing share of year-round contracts has also dampened the seasonal swings that have historically weighed on the company's cash flow profile.

Landmark Uppsala tramway contract and order book development in focus

NYAB does not provide financial guidance, making the order book and qualitative management commentary the primary indicators for future performance. A key highlight of the quarter will be the recent order intake, most notably the Phase 2 contract for the Uppsala tramway project secured in July. With NYAB's 50% share translating to approximately 294 MEUR, this marks the largest contract in the company's history. While execution is split into two stages extending to 2034, which tempers the immediate annual revenue contribution, the sheer size of the contract significantly de-risks NYAB's long-term growth trajectory and will put upward pressure on our estimates. We will also look for further details on the Early Works Agreement with SSAB in Luleå, which positions NYAB favorably for subsequent, more valuable construction phases.

Furthermore, we will monitor updates on the contract pipeline, specifically the potential Phase 2 award for the Svenska Kraftnät transmission line (~136 MEUR), which management previously indicated could be signed around Q2 or Q3. We believe the development of the overall order book and the book-to-bill ratio will be central to our assessment of how well the company is replenishing its backlog as the current large projects transition into their execution phases.

Finally, given the turbulent geopolitical landscape and commodity price volatility, we will listen for remarks on cost inflation. In particular, we will look for qualitative commentary on any potential implications or knock-on effects from the prolonged Iran/US conflict, both on input costs and supply chains, and within management's broader market outlook.