Sitowise Q1’25 preview: Market environment remains challenging

Sitowise will report its Q1 results on Tuesday, May 13th, 2025. We expect revenue to have declined due to the weak market conditions and one fewer working day. Furthermore, while we anticipate that earnings will decrease with declining revenue, operational adjustments made in response to the current challenging environment should help support profitability somewhat. In the upcoming Q1 report, we will be closely looking for any comments regarding the market outlook, the development of cash flow, and the financial situation, which will be key this year.

Revenue expected to remain weak

We expect Sitowise’s revenue to decline by around 7% in Q1 to 48.1 MEUR (Q1’24: 51.5 MEUR). The decrease in revenue is mainly attributable to the continued weakness in Sweden and the Buildings business, as well as one fewer working day. In Sweden, the commercial buildings and residential sectors remain at low levels, while in Finnish Buildings, there are signs of increased activity in the market, but with intense price competition. Furthermore, we expect that insufficient workload and organizational challenges weigh on the utilization rate in Sweden. We expect the Infra business to have outperformed the rest of the group, thanks to a stable market. In the Digital Solutions business, fierce competition, especially in the public sector, is hindering growth.

We anticipate earnings to flex down with revenue

We expect Sitowise’s adjusted EBITA to decrease somewhat year-on-year to 3.1 MEUR, and the margin to decrease to 6.4% (Q1’24: 6.6%). Besides one fewer working day in the quarter, we believe that profitability will be negatively impacted by tight price competition and weak utilization rates. On the other hand, operations have been adjusted to the current situation, and we believe this will support profitability despite a decrease in revenue. In the lower lines of the income statement, we expect a slight decrease in EPS due to slightly higher financial expenses.

Focus remains on market outlook and financial situation

In conjunction with its FY24 report, Sitowise chose not to provide guidance for 2025. According to the company, the timing of the construction market recovery remains uncertain, making it impossible to reliably estimate future revenue. In our view, given the current market conditions, the outlook is unlikely to have improved, so we do not expect Sitowise to issue guidance alongside its Q1 report either. However, in the upcoming report, we will pay close attention to any comments regarding the expected timeline for market recovery and the turnaround of the Swedish business. According to our estimates, the market for residential construction in both Finland and Sweden remained weak in Q1, and there are currently no signs of a steep recovery. As a result, we expect the majority of 2025 to remain challenging, and a meaningful recovery will likely not be visible until 2026.

In addition to the market outlook, our attention is focused on Sitowise’s cash flow and financial situation. On a positive note, the company managed to extend its financing agreement in Q1, with more or less the same terms, thereby avoiding significant changes in financing costs. However, Sitowise carries a very high debt leverage (net debt/adjusted EBITDA), which stood at 5x in Q4’24 (target below 2.5x), being clearly above the target level. Therefore, we will closely follow the cash flow development and look for any comments regarding the financial situation.