Solwers Q1'25 flash comment: Signs of recovery in the market

Translation: Original published in Finnish on 5/28/2025 at 9:19 am EEST.

Solwers published its mixed Q1 business review this morning. Revenue was slightly better than expected, and the organic decline at the end of the year was overcome. However, profitability was poor, as in the end of the year, and clearly below our forecasts. As expected, the market situation was challenging at the beginning of the year, but there are signs of improvement in the outlook.

The organic decline in revenue was stopped

Solwers' revenue slightly exceeded our forecast of 20.0 MEUR, growing by 6% to 20.4 MEUR. Revenue continued to be supported by acquisitions made in 2024, but organically revenue was stable in our calculations. The clear decline in organic revenue seen in H2'24 was stopped, which is of course positive and important. The market situation remained challenging during the review period, and the recovery is slow. In addition, weak demand has kept price competition tight. The company did note, however, that its order book and invoicing rate improved towards the end of the review period.

Profitability remained low

Although revenue was slightly better than expected, profitability clearly fell short of our expectations. EBITA was 0.9 MEUR, while our forecast was 1.7 MEUR. The company reported that Q1 profitability was still suffering from non-recurring costs related to the transition to the main list. In addition, the weak market situation makes resourcing difficult and keeps price competition tight. However, due to the reduced Q1 reporting, the report does not provide the opportunity for a more detailed assessment of cost levels. Overall, however, profitability was weak, and it is of vital importance for the company to raise its profitability level closer to its historical levels. The company implemented cost savings during the first part of the year, and their effects should start to be visible in the coming months. In addition, the company has already launched significant savings measures in group overheads, as previously announced.

Nascent signs of recovery in the outlook

Solwers has not provided numerical guidance but reiterated its previous outlook. In its outlook, Solwers expects to benefit from the general market upturn, which is expected to strengthen towards the end of the year. In addition, the company reported that there are early signs of recovery in the market, as the number of requests for quotations has started to increase and previously postponed projects have started to be launched. This view is in line with the general economic consensus, which expects the economy to gradually recover in both Finland and Sweden during the second half of the year. Given the company's position early in the value chain, it should benefit relatively quickly from the market recovery.

The company did not make any acquisitions during the review period but said that the reviews of potential acquisition targets have continued actively in all three countries of operation.