Source: Inderes

Translation: Original published in Finnish on 10/30/2026 at 8:54 am EET.

Raute released its Q3 report this morning. The company beat our earnings forecast, driven particularly by the strong profitability of the Wood Processing equipment unit relative to market conditions. New orders driven by the line deal in Estonia reached our expected level in an overall difficult market environment, driven by the struggling global construction sector. The company narrowed its wide guidance ranges for the current year, but our pre-report forecasts are in the middle of the new ranges. In addition, the company is launching a profitability program targeting savings of 4 MEUR. Overall, based on our preliminary assessment, we find the report to be fairly neutral.

Expected direction, but the defense played a bit better than we anticipated

Raute's revenue decreased by 34% in Q3 to 29 MEUR from the high comparison level, slightly missing our forecast. Revenue declined in line with our expectations, particularly in Wood Processing and Analyzers, due to the recent decrease in the order book and otherwise lowered customer activity levels. Services, on the other hand, achieved marginal growth from a low comparison period. The root cause behind the sluggish investment and, in part, production activity (i.e., service demand) among Raute's customers is the continued weakness in global construction.

Raute's comparable EBITDA more than halved from the very high comparison period to 3.2 MEUR, which moderately exceeded our estimate despite the revenue miss. Earnings and the beat against our estimates were supported by strong operational performance and cost management. In addition, contrary to our expectations, Raute was able to continue the reversal of previous cost provisions. This likely pushed Wood Processing's profitability to an atypically high level relative to its revenue in Q3. In Services and Analyzers, margins were roughly in line with our expectations, but neither unit can reach the level corresponding to its potential with the achieved volumes. On the lower lines, the company recorded small one-off expenses, typical zero-level financing expenses, and a normal tax rate for Q3. Thanks to the operating result, reported EPS thus came in at EUR 0.25, slightly exceeding our forecast.

New orders were well in line with our forecast

During the review period, Raute's new orders rose to a solid level of 53 MEUR given the circumstances (incl. the previously announced 31 MEUR plywood mill expansion in Estonia). The outcome was almost exactly in line with our forecast, as small projects and service business accumulated slightly better in Q3 than in recent quarters. According to the company, uncertainty related to the global economy and geopolitics continued to lead to delays in customers' investment decisions, although management noted that activity in smaller productivity- and efficiency-enhancing projects has picked up cautiously in recent times. Consequently, the order outlook does not seem hopeless, and we believe the company is in a competitive position when investments eventually resume. However, uncertainties remain uncomfortably high due to macroeconomic factors (i.e., inflation and rising market interest rates). Thanks to a positive order-to-billing ratio in Q3, Raute's order book at the end of Q3 was at a reasonable level of 85 MEUR (-21% y/y, +29% q/q). As a result, the company should get a tolerable starting point for next year despite the uncertainties, which is naturally also supported in part by the profitability program announced this morning.

A small and unsurprising guidance update

Alongside the report, Raute narrowed its guidance and now expects 2026 revenue of 125–135 MEUR (was 125–145 MEUR) and comparable EBITDA of 13–16 MEUR (was 11–18 MEUR). According to the company, the changes reflect H1 actuals, the order book at the end of Q3, and current demand prospects. Before the report, we forecast revenue of 130 MEUR and adjusted EBITDA of 14.6 MEUR for the current year, both close to the midpoints of the new ranges, so the update holds no material surprises, and we expect the company to meet its guidance without issue. For the share, however, the focus is more on Q4 demand and new orders, as well as progress in the profitability program, which are key to next year’s outlook and earnings potential.