ETTEPLAN Q2 2023: Growth slowed down in a difficult market

ETTEPLAN Q2 2023: Growth slowed down in a difficult market

Key points April-June 2023

Key points January-June 2023

Etteplan also monitors non-IFRS performance measures because they provide additional information on Etteplan’s development. More information on performance measures is provided at the end of the release.

President and CEO Juha Näkki:

The second quarter of the year was short and market uncertainty was reflected in customers’ willingness to invest, weakening the demand situation. In particular, very few new product development projects were launched. April was exceptionally difficult, but more projects got underway towards the end of the quarter. Engineering-to-Order projects remained at a good level during the review period. In Europe, the demand situation was similar in all of our operating countries, while the market situation in China was weak as Western companies were transferring operations to other countries due to geopolitical tensions.

In the difficult market situation, our growth slowed down and profitability was modest for us. However, operating cash flow was at a good level. Operational efficiency weakened and we took measures to rectify the situation. The review period was shorter than the comparison period, and more holidays relative to the comparison period also had a slight impact on our development.

The market situation was particularly difficult in our product development-focused Software and Embedded Solutions service area, where revenue and profitability decreased. The profitability of the service area was also burdened by credit losses. During the review period, we took measures to improve our operational efficiency and also secured several major contracts late in the review period, which is an encouraging sign of the recovery of investment activity.

The Engineering Solutions service area continued to grow, and its profitability was at a good level. We also won several outsourcing contracts during the review period, which proves the functionality of our service offering in an uncertain market situation as well.

The growth of the Technical Communication Solutions service area stopped, especially as the situation of our customers manufacturing consumer products weakened. The weaker profit level of Cognitas continued to burden our profitability, but measures to improve profitability are progressing.

The first half of the year fell short of our expectations, as the market situation especially in the second quarter was weaker than expected, and we are specifying our guidance. However, inflation is expected to ease slightly, which should increase investments and improve the demand situation during the second half of the year. We also returned to the acquisition path at the beginning of the third quarter by acquiring LAE Engineering GmbH in Germany, so we expect growth to continue and profitability to develop in a better direction during the second half of the year.

Market outlook 2023

The most important factor affecting Etteplan’s business is the global development of the machinery and metal industry. Russian aggression against Ukraine and the subsequent elevation in geopolitical tensions have increased uncertainty globally. Inflation remains high, but it is expected to decrease gradually. Slowing inflation should increase consumer demand and increase companies’ willingness to invest. Investments related to the defense industry, energy efficiency and accelerating the green transition are continuing to grow. There is variation in demand, but we expect the general demand situation to be moderate throughout 2023.

Financial guidance 2023 (published on August 10, 2023)

Etteplan specifies its financial guidance for revenue and operating profit (EBIT) within the previously communicated range and estimates:  

Revenue in 2023 is estimated to be EUR 360-380 (2022: 350.2) million, and
operating profit (EBIT) in 2023 is estimated to be EUR 28-31 (2022: 28.6) million.

Previous financial guidance 2023 (May 11, 2023)

Etteplan keeps its guidance for revenue and operating profit (EBIT) intact and issues the following estimate:  

Revenue in 2023 is estimated to be EUR 360-390 (2022: 350.2) million, and
operating profit (EBIT) in 2023 is estimated to be EUR 28-33 (2022: 28.6) million.

Disclosure procedure

This stock exchange release is a summary of Etteplan's January-June 2023 Half Year Financial Report. The complete Half Year Financial Report is attached to this stock exchange release in pdf format and is also available on Etteplan's website at www.etteplan.com.

Conference call and live webcast today, August 10, 2023

Etteplan’s President and CEO Juha Näkki will present the Company’s results for January-June 2023 in a conference call and a live webcast, held in English language, on August 10, 2023 starting at 10.00 a.m. Finnish time (EEST).

Questions can be asked in Finnish and in English after the President and CEO’s presentation only through conference call connection. Participants must register through this link http://palvelu.flik.fi/teleconference/?id=10010624 to ask questions through the conference call lines. After registering the participants will receive a teleconference number and a code to join the call. The participants are asked to press *5 to join the queue for questions.

Juha Näkki’s presentation can be followed as a live webcast on https://etteplan.videosync.fi/q2-2023. The webcast starts at 10.00 a.m. Finnish time (EEST). A recording of the webcast will be later available at www.etteplan.com.

Espoo, August 10, 2023

Etteplan Oyj

Board of Directors

Additional information:
Juha Näkki, President and CEO, tel. +358 10 307 2077
Outi Torniainen, SVP, Marketing and Communications, tel. +358 10 307 3302

The information presented herein has not been audited.
Releases and other corporate information are available on Etteplan's website at www.etteplan.com.

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