Translation: Original published in Finnish on 2/5/2025 at 5:00 am EET.

Sitowise will report its Q4 result on Wednesday, February 12 2025. We expect revenue to have declined in the last quarter of the year due to the weak market situation in house building and the timing of the Christmas holidays. However, we expect profitability to have improved due to the savings measures in the Swedish business and significant IT system expenses in the comparison period. But after a weak 2024, the focus will be on guidance and the outlook for the future. The development of cash flow and the improvement of the financial situation will also be key this year and we will be monitoring this closely already in the Q4 results. 

Revenue on a downward trend

We expect Sitowise's revenue to continue to decline by around 6% in Q4 to 49.5 MEUR (Q4'23: 52.8 MEUR). The decrease in revenue is due to the weaker market development in Sweden and the Buildings business, as well as the fact that the Christmas break largely fell on working days. In Finland, the housing market did not yet show any significant signs of recovery in Q4, and we expect the challenging period to continue into H1. In Sweden, insufficient workload and organizational challenges are weighing on the utilization rate, although we expect a better development than in the previous quarter due to the actions taken. We expect the Infra business to have outperformed the rest of the group, thanks to a stable market. In the Digital Solutions business, fierce competition and a weaker private market are hampering growth.

Expectation of earnings improvement versus weak comparison period

We expect Sitowise's adjusted EBITA to have increased to 3.5 MEUR from the comparison period (Q4’23: 2.4 MEUR) and the margin to have increased to 7.0% (Q4’23: 4.5%). Profitability is supported in particular by the negative cost and workload impact of IT systems in the comparison period. However, the weakness of the housing market and the insufficient workload in Sweden will continue to weigh on utilization rates and profitability, and overall profitability will remain weak. Reported items are negatively impacted by restructuring costs, but we forecast a slightly positive net result (EPS: EUR 0.01). We do not expect Sitowise to pay a dividend on last year's results.

Focus on outlook and economic situation

After a weak year for Sitowise in 2024, the focus will be on the timeframe for market recovery and the turnaround of the Swedish business for the better. According to our estimates, the market for residential construction in both Finland and Sweden has remained weak in Q4. This makes a significant earnings improvement in H1 challenging and we expect the second half of the year to carry more weight in the guidance and outlook. The earnings improvement we expect in H2 and for the full year will be supported by Infra's good performance and order intake (e.g. the Vantaa tramway and Helsinki light rail projects) as well as the efficiency measures taken, but it will also depend on market developments.

In addition to guidance and outlook, our attention is focused on Sitowise’s cash flow and financial situation. We believe that cash flow should improve in Q4, which could also help reduce the company's debt leverage. Regarding the financial situation, the debt leverage (net debt/adjusted EBITDA) was already at 5x in Q3 (target below 2.5x), which is clearly above the tolerance level. Sitowise's current financing package matures next year and from a negotiation point of view it would be desirable to achieve a turnaround this year. Besides the comments on the result and the outlook, we also look for the company's comments on the development of the financial situation.