Translation: Original published in Finnish on 12/17/2025 at 9:24 am EET.

Sitowise announced on Tuesday that it would recognize an impairment of approximately 40 MEUR relating to its business in Sweden. While this impairment will not affect cash flow, it does reflect the prolonged challenges facing the Swedish business. The risk of a write-down was obvious, so the news came as no surprise and does not pressure us to change our operational estimates immediately. We understand that the covenant in the company's current financing package is tied to the leverage ratio (the ratio of net debt to rolling 12 months EBITDA), and a decrease in the equity ratio does not affect the covenant.

Impairment relates to Swedish business

Sitowise announced on Tuesday that it will recognize approximately 40 MEUR in goodwill related to its business in Sweden in the last quarter of 2025. This impairment is a one-time event and has no impact on the group's adjusted EBITA or cash flow, but it does weigh on the reported operating result. The impairment stems from weakened future cash flow assumptions for the Swedish operations. Revenue and profitability in Sweden have been weak, and the benefits from the 2024–2025 adjustment measures have been delayed compared to earlier expectations. At the same time, the parent company is impairing the value of Sitowise Sverige AB shares on its balance sheet by approximately 40 MEUR. This corresponds to about two-thirds of the shares' acquisition cost and reduces the parent company's distributable funds. However, according to the company, the funds remain at a good level.

Following the impairment, the remaining goodwill on the group balance sheet will be approximately 120 MEUR, allocated to the Infra, Buildings, and Digital Solutions businesses, primarily in Finland, which have clearly outperformed Sweden.

No immediate pressure for estimates change

The news of the impairment did not come as a major surprise, as we have previously highlighted the risk of goodwill impairment in Sweden in our reports and videos. The company's Swedish business has struggled for a long time; for instance, Swedish revenue decreased by 19.5% in the Q3'25 earnings report, and the segment was clearly unprofitable (EBITA margin of around -30%, according to our calculations). The write-down reinforces the view that the turnaround in Sweden has proven to be slower and more challenging than anticipated, as the company also mentioned in its release.

Since the impairment does not affect adjusted EBITA or cash flow, it has no direct impact on the key valuation multiples we use or our operational estimates for the coming years. Additionally, we have not relied on a low P/B ratio in our valuation due to the risk of goodwill impairment. The write-down now corresponds to just over a third of Sitowise's equity. We will revise our estimates for the decreased equity in our next update.