Translation: Original published in Finnish on 8/26/2026 at 8:00 am EEST.

Solwers' Q2 was a clear disappointment for us, as revenue declined and profitability weakened, even compared to our revised forecasts following the profit warning. The turnaround in earnings remains at the heart of the investment story, but its timing is difficult to predict, and the new covenant terms leave no room for delay. As our longer-term estimates remain largely unchanged, we are maintaining our target price of EUR 1.8. We maintain our Reduce recommendation.

Figures below our forecasts across the board

We expected Q2 revenue to reach 22.4 MEUR, driven by acquisitions, but revenue remained at 20.8 MEUR, decreasing by 5% year-on-year. Taking inorganic growth into account, we believe organic revenue declined quite clearly during the quarter. Although infrastructure design in Finland developed positively, and major projects like the East Railway supported the order book, the architectural design market, particularly on the industrial side in Sweden, remained more challenging than we expected. Thus, developments continued to be mixed, and the momentum from the more steadily performing specialist design and financial administration companies was insufficient to compensate for the weakness elsewhere.

The combined effect of disappointing revenue and wage inflation hit the company’s bottom line hard, and adjusted EBITA for Q2 was a mere 0.1 MEUR. This performance fell well short of both the comparison period level (0.7 MEUR) and our estimate of 0.5 MEUR. According to management, the main reason for the disappointing results was the decline in the billing rate to 79.8% (H1’25: 82.6%), attributed to lower utilization rates, especially at the loss-making industrial service companies in Sweden. Due to the weak earnings level, ROCE also dropped clearly year-on-year to 2.4% (7.7%).

Solwers agreed to amend the terms of its financing agreement

Solwers announced on Monday that it had agreed with its main bank to amend the terms of its financing agreement, temporarily easing the maximum threshold for the covenant concerning the ratio of net debt to EBITDA until the end of June 2027. Under the new agreement, the maximum threshold for the net debt-to-EBITDA ratio will ease as of September 30, 2026. The threshold will gradually tighten until June 30, 2027, when the original 3.5x covenant level will be reinstated. We commented on the terms in more detail here.

Our forecasts indicate a gradual turnaround in earnings

Solwers withdrew its guidance earlier in June and did not provide any in connection with its earnings report. The company has stated that it will adjust its capacity to match market demand, which we expect will positively impact relative profitability in the second half of the year. In line with the company's comments, we estimate that the impact will be particularly visible in the fourth quarter. We lowered our current-year adj. EBITA estimate to 1.8 MEUR (previously 2.3 MEUR), mainly due to the weaker-than-expected Q2 result. According to our estimates, the net debt/EBITDA ratio will settle at approximately the covenant limit at the end of the year, meaning there will be no buffer relative to our estimates.

No changes in the valuation picture

At the center of Solwers' investment story is still succeeding in the earnings turnaround. Due to the current weak earnings level, valuation multiples are very high in the short term and clearly above our comfort zone for next year as well. In the longer term, as the earnings level normalizes, we consider the current pricing to be quite affordable already. However, at this stage, we will continue to monitor the progress of the story as visibility into the timing and magnitude of the earnings turnaround remains limited. The company's lack of new guidance in connection with the earnings report, replacing the guidance canceled in June, also indicates this. In addition, elevated indebtedness and relatively tight covenant terms keep the risk level high.