Finland drove a clear top-line beat

Revenue grew 27% year-on-year to 190 MEUR, clearly beating our 176 MEUR estimate. As in Q2, the Civil Engineering segment drove the growth, with revenue up 39% to 169 MEUR, as the record backlog continued to move through execution during the seasonally strong second half. Swedish revenue rose 12% to 124 MEUR (Inderes estimate: 118 MEUR), supported by, among others, the continuation of new railway infrastructure projects with high production concentrated in a short period. Finland, however, was the main source of the beat, as revenue increased 126% to 47 MEUR (Inderes: 33 MEUR), driven by the ramp-up of construction at the Mikkeli data center project. On the earnings call, management indicated that around 15-20% of the Mikkeli contract value is currently in the order backlog, up from roughly 10% at the end of Q2, which in our view implies a materially longer call-off runway than we had assumed. In contrast, Consulting revenue declined 25% to 21 MEUR (Inderes: 25 MEUR), as the average number of FTEs fell to 570 (Q3'25: 719) amid continued weak demand for project personnel services in the Norwegian offshore market and more selective order intake. Management noted that the entire decline came from the lower-margin project personnel business.

Group order intake reached a record 555 MEUR (Q3'25: 118 MEUR), of which Civil Engineering accounted for 542 MEUR. Intake included NYAB's ~294 MEUR share of Phase 2 of the Uppsala tramway (total value 6.5 BSEK, 50/50 joint venture with AZVI) as well as the ~1.6 BSEK (~140 MEUR) Phase 2 contract for Svenska kraftnät's Letsi-Svartbyn power line. Excluding Uppsala, group order intake was ~261 MEUR, above our 241 MEUR estimate. Beneath that, Swedish intake excluding Uppsala of ~160 MEUR fell short of our ~192 MEUR estimate and was itself dominated by Letsi-Svartbyn, while Finnish intake of 89 MEUR came in well above our 33 MEUR estimate. Excluding Uppsala, the Civil Engineering order backlog reached a new record of ~580 MEUR, up ~16% from the previous quarter, while the reported figure including the joint venture more than doubled year-on-year to 874 MEUR (Q3'25: 404 MEUR). As the joint venture is equity-accounted and contributes only through the share of results of associates and joint ventures, we would caution against reading the headline backlog figure at face value. Nevertheless, we view the underlying backlog as providing strong visibility into 2027.

Management reiterated that long-term investment programs in energy, infrastructure and industry continue to support demand, highlighting heavy investment needs from defense, data centers and infrastructure. Management also noted that competition remains clearly lower in the early-phase and collaborative work that now represents a growing share of volume, while competitive intensity in traditional general contracting is broadly unchanged, and that it has not seen any margin pressure from material or labor costs. The Norwegian offshore market remained soft, and the appetite for new renewable energy investments stayed weak.

With Uppsala and Letsi-Svartbyn now in execution, the estimated value of potential execution contracts from ongoing early-phase assignments fell to ~200 MEUR, from ~600 MEUR at the end of Q2. The change reflects these projects moving into the order book, as well as new assignments and revised estimates. According to management, the remaining pipeline relates to a high extent to industrial clients, including the early works agreement with SSAB for a steel coil logistics facility linked to its planned mini-mill in Luleå, where negotiations on subsequent phases are ongoing. Management did not disclose any indication of the potential execution value of the Utajärvi data center project. These potential contracts are not included in order intake or the backlog.

In our view, the quarter once again demonstrated the value of NYAB's early-phase positioning, as the two largest contracts in the company's history were both converted from Phase 1 positions. We continue to see the main uncertainty in the remaining pipeline as one of timing rather than outcome. Importantly, unlike Uppsala’s joint venture structure, the remaining contracts would be NYAB’s own and would therefore flow through revenue in full.

Headline EBIT beat, but the underlying quality was weaker

Operating profit (EBIT) increased 33% to 15.0 MEUR (Q3'25: 11.3 MEUR), translating to a 7.9% margin (7.5%) and beating our 14.0 MEUR (7.9%) estimate. With the margin in line with our expectations, the beat was driven by volume. The Civil Engineering segment's EBIT rose 33% to 13.7 MEUR, but its margin declined slightly to 8.1% (8.4%). In Sweden, the margin improved to 8.4% (7.8%) on efficient project execution, but this was clearly below our 9.7% estimate, and EBIT of 10.4 MEUR fell short of our 11.4 MEUR estimate. Management described itself as satisfied with the level, while noting there is still room for improvement and that ramp-up costs persist as long as the current growth rate continues. Finland was the positive surprise, with EBIT of 3.3 MEUR (Inderes estimate: 1.9 MEUR) and a margin of 7.0% (8.3%) against our 5.7% estimate. Management attributed the year-on-year decline to ramp-up costs associated with the growth rate and a small number of legacy renewable energy projects with tighter margins, which will be essentially completed after Q4. Consulting profitability weakened further, with the margin falling to 0.6% (4.5%) against our 2.8% estimate, as the cost-efficiency measures in Norway have yet to take full effect.

While the combined segment EBIT of 13.8 MEUR was slightly below our 14.0 MEUR estimate, the headline beat was explained by unallocated group items of +1.2 MEUR (Q3'25: -0.3 MEUR), supported by a revaluation gain of ~1.7 MEUR on the total return swap used to secure share deliveries under the long-term incentive plans. As we consider this non-operational, adjusted EBIT was 13.3 MEUR, corresponding to a 7.0% margin, against 7.5% a year earlier and our 7.9% estimate. On the path toward the long-term EBIT margin target of >7.5% (LTM: 6.2%), management reiterated that the target is not expected to be reached in 2025-2026 due to the dilution from the project personnel business, and that it aims to be more transparent about the 2027 outlook at the turn of the year. More encouragingly, management highlighted that Finland's historically weak first halves, caused by too low volumes relative to its fixed cost base, should look clearly better in 2027 given the much stronger backlog, which in our view supports a structural improvement in the Finnish full-year margin.

Further down the income statement, positive net financial items (0.3 MEUR vs. -0.6 MEUR) and a lower-than-expected tax rate lifted net income by 49% to 12.6 MEUR (Q3'25: 8.5 MEUR), above our 11.4 MEUR estimate, and EPS increased to EUR 0.018 (EUR 0.012).

Free cash flow dipped on the timing of a large customer payment

Free cash flow was -7 MEUR (Q3'25: 9 MEUR), as ~20 MEUR was tied up in working capital, mainly in contract assets. According to management, a customer payment of 31 MEUR was received a few days after the end of the quarter, and had it arrived within the quarter, free cash flow would have been around 24 MEUR. In addition, working capital has been tied up during Q2 and Q3 in a single strategic project with extended payment terms, for which the company receives compensating revenue adjustments, and management expects a significant reduction in working capital in Q4 in line with the agreed invoicing and payment plan. As such, the normalization of cash conversion we expected after Q2 has been pushed into Q4, but we continue to view it as timing-related rather than a deterioration of the underlying model, which management confirmed, noting that underlying cash conversion has historically been around 90%. Net cash declined to 5.2 MEUR (Q2'26: 12.0 MEUR), corresponding to a net debt/EBITDA of -0.12x, and the equity ratio stood at 64.8%. While the balance sheet remains strong, contract assets will be the item we follow most closely in the Q4 report.