Translation: Original published in Finnish on 5/18/2026 at 9:03 am EEST.

We lower our target price for Koskisen to EUR 8.50 (from EUR 9.00) and reiterate our Reduce recommendation for the company. We significantly cut our estimates, especially for the current year, in the wake of the company's rather strong profit warning issued before the Q1 results. We believe Koskisen still has clear earnings growth potential in the coming years, as the construction cycle eventually recovers and the company's substantial investments of recent years reach fruition. However, the cyclical recovery has continuously receded, and the stock is expensive relative to its weak short-term earnings performance. Thus, we believe the share's expected return remains modest over our target price horizon.  

Q1 saw growth, but profitability stumbled heavily

In Q1, Koskisen's revenue increased by 22% to 105 MEUR and adjusted EBITDA decreased by ~30% to 6.6 MEUR. Revenue growth, driven by the acquisition of Iisveden Metsä and volume growth in the Sawn Timber Industry, was stronger than we expected. However, the adjusted EBITDA margin remained at a weak 6.6% as costs rose sharply due to both inflation and production challenges. The results of both businesses were clearly below our Q1 estimates. 

We cut our short-term earnings forecasts

On Wednesday, Koskisen lowered its guidance for the current year. The company now expects its 2026 revenue to grow (unchanged) and its EBITDA margin to remain below last year's 8.1% (was adjusted EBITDA margin 8-12%). According to the company, the rather significant decrease in profitability guidance was due to the prolonged weak trend in construction caused by economic and geopolitical uncertainties, inflationary pressures in several items, and production problems that hampered Q1. Although the risks of macro implications of the war in Iran on the recovery of the construction sector and the level of production costs were known, the reduction in guidance was a clear disappointment to us and the consensus. Naturally, in the aftermath of the profit warning, there were few glimmers of light in the company's market outlook for the foreseeable short-term horizon.

We slashed our current year estimates for Koskinen, especially regarding costs and margins. The company's earnings will decline this year, especially on the lower lines of the income statement, but we expect Koskisen's profitability to recover starting next year, driven by the gradual recovery of the construction cycle, efficiency benefits from investments, synergies from the acquisition of Iisveden Metsä, and the easing of the worst inflationary pressures. In our estimates, persistently high raw material prices will limit profitability in the coming years despite revenue growth. Thus, we estimate the company will fall quite clearly short of its margin target (cf. over 15% EBITDA-% over the cycle vs. 2026e-2028e adj. EBITDA-% 6-11%).

Expected return is not sufficient

Koskisen’s EV/EBITDA ratios for 2026 and 2027, which consider the balance sheet structure, are around 10x and 6x, and the corresponding P/E ratios are 41x and 12x. The multiples are clearly above our accepted ranges for this year, considering the company's estimated return on capital and risk profile, and within the ranges for next year. We consider this a challenging overall picture in the short term, given that, due to the uncertain outlook, we believe the forecast risks do not clearly turn positive despite increased safety margins. Thus, we believe that Koskisen's expected return, consisting of declining earnings and multiples (Q1'26 LTM P/E of approximately 40x) and a 1% dividend yield, will be below the required return over a 12-month horizon. The share's DCF value, which considers a longer-term perspective, is slightly above our target price. As the European economy and construction sector recover, Koskisen could have good earnings leverage, but we remain cautious on the stock as the market and earnings turnaround has once again been pushed further out