Hello and welcome to Enersense's Q3 webcast. I'm Liisi Tamminen from Investor Relations, and today our CEO, Kari Sundbäck, and CFO, Jyrki Paappa, will present our January-September result. In the end, we will have time for questions, so please write your questions already during the presentations in the chat box on your screen. Now, please welcome Kari Sundbäck and our result review.
Thank you, Liisi. Welcome everybody to our Q3 results review. It's a Q3 which was strong for Enersense. Our adjusted EBITDA margin for core business is improved, and at the same time, our order backlog has increased. I will start with highlights of the period, July-September. Jyrki will then join for a deeper financial review, and I will continue with the way forward. Starting with some highlights, indeed the adjusted EBITDA margin for core business is improved. At the same time, the order backlog for core businesses continued to grow. It grew from Q1 to Q2. We continued to grow from Q2 to Q3. In particular, in our strategy implementation, we launched our new strategy for core businesses early June. During Q3, we have updated the operating model, so the structures, the positions, the responsibilities to optimally be equipped to implement this strategy.
The value uplift program we started at the beginning of the year is continuing strong. We have now achieved, by the end of September, an EBIT and EBITDA run-rate improvement of EUR 4 million. At the beginning of the quarter, the strategic refocusing of Enersense started a year earlier in the summer of 2024, was completed with the sale of the marine and offshore unit. The revenue for core businesses, and we practically only have core businesses left, was EUR 81 million in the quarter. That's EUR 10 million less than Q3 2024. However, the adjusted EBITDA at the same time increased by EUR 500,000 , and in percentage terms, we increased to 11.2% from 9.6%. Also, our equity ratio, which has been under focus for the past year, has improved substantially.
The EBITDA, so the non-adjusted EBITDA, taking a five-quarter perspective here, we ended at EUR 5.8 million now in Q3 2025, which is somewhat less than a year earlier. However, when we look at the whole picture and a year during which we have refocused Enersense, we have divested and closed down some businesses. We have reshaped the strategy. We have reshaped the organization. Throughout the period, we have stayed positive on EBITDA, and there are some very high quarters in terms of EBITDA result. Our revenue nowadays is only core business, and it is increasing sequentially. We reached a level of EUR 81 million now. When we look at the split of the revenue from three different angles between business units now in the third quarter of this year, it was practically the same as throughout 2024. However, there's more change when we look between the business types.
The share of services in Q3 was more already than throughout last year, and that's, of course, intentional. That's the direction we want to go to in our strategy, which is that the share of services grows, and in other terms, the services grow proportionally, speaking more than projects. Between geographical regions, there's also quite a bit of change coming essentially from two factors. The share of other Nordic countries was now much larger than throughout last year because of strong business in Sweden and Norway. Also, throughout last year, the power business unit's business was particularly strong in the Baltics due to the remainder or the last miles of the projects related to the synchronization of the grid with Europe. We grow in our core businesses now. We have refocused Enersense, and we grow in that core business. The order backlog, we added EUR 5 million to it at the end of Q2 from Q1, and now EUR 4 million more at the end of Q3. We'll talk a bit more about this, both Jyrki and I, as we continue. Our guidance was updated on August 6, and it remains. We expect the adjusted EBITDA for core businesses to be between EUR 16 million and EUR 20 million by the end of the year. With this introduction, I will now hand over to Jyrki, and then I will continue with some words after Jyrki.
All right. Good afternoon from my side also. Let's start the financial review with the group revenue. If we start from the left-hand side of the graph, there you can see on dark blue, revenue of offshore, basically. EUR 20.6 million last year came from non-core businesses. On top of that decline, our core revenue declined by 10.8%. However, this development in order backlog is a very important one, as Kari just showed, a couple of quarters already moving forward. If you compare the situation at the end of Q3 this year and last year, you can find that overall the order backlog is 13% higher than a year ago. Even more important, connectivity is up by 18%, and power up by 23%. Energy transition is on the negative side, but the development is typically stepwise. Therefore, it won't increase steadily.
Moving year to date, non-adjusted figures, starting from last year, then the level was EUR 3.6 million. This year, big profit came from wind and solar power project development portfolio sale, EUR 22.3 million. One year earlier, we had one type of income from wind business of EUR 6.9 million. Also, ramp down of our zero-emission transportation decreased our profitability by EUR 2.9 million during this year. Non-core business, the regular amount of and effect of EBITDA was improvement of EUR 14.6 million, and that mostly came from offshore business, where Q3 last year was strong, and also Q2 was on the EBITDA positive side. Moving to right, there you can see strategy and value uplift cost of EUR 4.5 million this year, but it's good to compare to the run-rate savings we have achieved. We are currently at the level of EUR 4 million, so the payback for this investment time is slightly over one year, which is a good achievement.
Our core business is improved by EUR 1.8 million. We were having a sale of our marine and offshore unit and its profit of EUR 1.9 million. Altogether, EBITDA on a non-adjusted basis, it is EUR 29.9 million, and it also reflects to the remaining profit and loss statement so that earnings per share were close to EUR 1 negative last year, and now we are above EUR 1 already. Moving forward for the quarter and EBITDA, there is both adjusted and non-adjusted figures. The dark orange is non-adjusted basis, and there we ended at the level of EUR 5.9 million. If we are looking at also the lighter orange, you can see that we were improving by EUR 500,000 to the level of EUR 9.2 million.
Then we are having a bridge between last year and c urrent year f or the quarter on an adjusted basis, you can see that Power EBITDA declined by EUR 1.2 million. Energy transition improved by EUR 600,000 , and Connectivity with EUR 200,000 . I'm coming back to this business unit separately in the following slides. Moving on to strategy and value uplift, the quarterly effect was EUR 1.4 million. The first three quarters have been quite even on that front. Our administration costs were rising also by EUR 500,000 . All that together, we added to EUR 5.9 million. Moving to the business unit and starting from Power, you can see that last year during this quarter, the role of non-core was very limited. The revenue of core business now declined by 20%. However, it's good to understand that the maintenance and services side was stable, and the decline came from the project side.
Moving to the EBITDA on the right-hand side, core adjusted EBITDA came from EUR 5.2 million to EUR 4.2 million. That came in line with the revenue decline. It's a very good achievement that the EBITDA margin remained stable when there was so big difference in revenues. Just to remind you, order backlog is now 23% higher than one year earlier. For future, it's very important and a nice figure. We are having energy transition. Offshore had quite a big role during Q3, both in revenue and EBITDA. As said, it was roughly EUR 20 million in revenue. On top of that, revenue in core energy transition declined by 5%. That 5% came from those maintenance centers which we were selling or closing, and also some changes in customer agreements. On EBITDA front, adjusted core remained stable at EUR 2.2 million.
The last business unit, Connectivity, quarter- on- quarter basis, it was very, very stable. The revenue was basically in line at EUR 25 million. There was EUR 0.7 million decline to be exact, and EBITDA increased by a couple of hundred thousand to EUR 2.5 million. The profit improvement came from the fixed side of the business. Let's move to cash flow and balance KPIs, balance sheet KPIs. Starting from left-hand side and operating cash flow, there, you can see that the decline is somewhat bigger than a year ago. However, it's good to understand that there is EUR 4.6 million income from offshore deal, which is on pledged account, and therefore it's treated as receivable, not as cash. That makes both this figure and net gearing look worse than when the item is released into cash.
However, if we are moving to the right-hand side, net gearing is still below our target level of 100%, and equity ratio raised to 22.9%. One picture from our value uplift program. There you can see that we reported for the first time at Q2. The run-rate figure which we received was EUR 2.5 million. Now we are at the level of EUR 4 million, and we are still having a strong belief that we can reach EUR 5 million at the end of this year. The next summer target level is still at the level of EUR 6.5 million. Basically, that's what I wanted to say, and I'm giving speech back to Kari.
Thank you, Jyrki. Let us continue with what is going on now and in the near future. This is how we assess our market. In our strategy, we identified the key trends shaping our markets: green transition, the times of unrest, which only goes to worse, the need for operational resilience, and the need to advance digitalization in our businesses. During Q3, we saw evidence in particular of the needs in the business, the investments increasing in the segment that we serve with our power business unit. There are increasing investments into electricity consumption, especially coming into Finland, and that drives, of course, investments in the transition grid. Fingrid is busy building the network, and they also updated their forecast for electricity consumption in Finland, which is simply that it will double from this year to 2035. In just 10 years, the electricity consumption in Finland is set to double.
You can imagine what that means in terms of the need to build the grid and where the consumption comes from. We are busy building the grid. We're busy working also with notably data centers, which are among all the biggest additions to the consumption side into the grid. I'm pleased with how the team has started to work according to our new strategy. In the middle here, the balanced portfolio, which is narrowed down from what Enersense used to be to the offering across the asset lifecycle in four distinct segments and in three different market areas, is really what our team is executing now. That's what we call now our core business, and the order backlog is increasing along that portfolio definition. In Q3, for the development areas that are here on the right-hand side, we updated our operating model.
This was important in order to get going with these development areas. We now have the structures and the responsibilities in place to truly, during the strategy period, advance on the delivery models, the customer-centric solutions, and value capture in commercial terms. Good start in strategy implementation during the third quarter. If we look at the full year 2025 in terms of this renewed Enersense around the core business, just a recap and what is happening then now in Q4. During the first half of the year, we updated the strategy for the core businesses. In quarter three now, we have renewed the operating model to be in line with what is required by this strategy. Now in Q4, we are busy in the operational planning, the concrete planning for the steps we take during the first full year of implementation in 2026.
Simultaneously, since Q2, the order backlog is growing now in line with the strategy in the core businesses that we want to work in. In Q4, we continue that focus on selected customer segments and selected offering types with our customers. We reached an important milestone now in October after the review period with the submission of our climate targets to the SBTi initiative. I will say a few more words about that next. Looking still back, that strategic refocusing of Enersense International Oyj is now behind us. We're fully in that core business. We're improving our efficiency and performance with the value uplift program, and we're continuously strengthening the financial foundation of the company.
We have created the sustainability plan for this strategy period in line with our strategy, where it is fundamental for all of us at Enersense that we focus on improving our customers' success, on delivering our customers' success. This goes also for sustainability. We need to understand what the customer's success in sustainability is made of and what part of it can we deliver. As an example, yesterday we announced a significant deal for a substation. It has options, so the customer has the option to implement it with more recycled steel and with greener concrete. That's what we are doing. We are delivering to their success. We're providing them the means to move forward. On the overall emission reduction target, we target a reduction between 2023 and the starting point and 2035, so 10 years from now, of 40% in our emissions.
We do that by maximizing the handprint on our customer side so that example of the substation and the options, which are very concrete and selectable by the customer, tells the story. On sustainable worklife, we strive towards zero incidents with a continuous decrease in lost time incident frequency. In Q3, we delivered that the frequency is coming down. Also, all the incidents, including those that don't generate lost time, are coming down. We're aiming for an engagement index or an ENPS index on a scale of 1- 5 to 4.2 by the end of the strategy period. We're fostering a diverse and inclusive workplace. We have. Reshaped the target we have for the share of women to make it more specific between blue-collar and white-collar employees and more manageable, more steerable.
In our procurement, in our supply chain, not only do we generate monetary results with value uplift, we also take care of sustainable working practices with our supplier code of conduct. Q3 was a good start for our strategy implementation. Look at the deals we have signed here. The first one, a EUR 25 million deal in Estonia, renovation of a high-voltage line. There was a short, somewhat more silent period in Estonia too after the big grid synchronization projects. We're back to growth there with a significant deal of EUR 25 million that we won in August. In Finland, several new deals, a transmission line project worth EUR 9 million first, then after the review period now in October, a 100-kilometer transmission line worth EUR 27 million for Fingrid and the substation. Our largest substation deal ever that we announced yesterday, another EUR 27 million added to the order backlog.
The percentages and the growth that Jyrki described, we're adding in October quite a bit to that already. We develop our lifecycle offering. There's concrete progress we have made during Q3, and we continue now on developing the maintenance delivery models and the teams to meet customer needs. The operating model adjusting to the strategy is also about this. We're creating new teams, new responsibilities to really deliver new types of value in maintenance to our customers. That includes or will be complemented with digital solutions to improve efficiency, the value we create to customers, the productivity for ourselves, and also the meaningfulness of the working day for our people in the field so that they work in more clever ways. Also, we're adding some non-human employees here. We have a robot dog.
He's called, I think it's a, well, the name is Woltti, working in Helen, so equipped with loads of sensors and going to places where it is better to send a robot dog than a human. We progress also in promoting our customer sustainability. We are using, like never before, recycled steel in a new substation construction in Finland. We provide low-carbon concrete structures in high-voltage grid construction for the first time in Finland also. In our own operations, by the end of the year, we have very quickly renewed our car fleet to more modern and taking down emissions. 1/3 of our maintenance fleet is changed in the space of one year, and we will continue from there. Enersense which is much more focused, working fully on the core strategy, order backlog progressing, value uplift doing well, and good evidence of the strategy being worked on by our teams and delivering already good results. This is a good place to continue from here. Let's now go to questions and answers, Liisi.
Yes, thank you. Please, Jyrki also here on the stage. We have an active audience, as always. Thank you for the questions and keep writing them. We have a good time to answer them. Let's start with value uplift. Kari, is there still room to increase run-rate improvement levels in the value uplift?
We have that target of bringing EUR 1 million in the performance level and then another EUR 1.5 million during next year. We keep on working on procurement items development now in Q4, solely procurement. We will then add to the toolbox a new stream, which is about commercial excellence that we will start after the new year. There is more to do. We have achieved quite a bit, but there are many projects that we are closing now during Q4 to get to that EUR 5 million, and then we will add more.
Yes, thank you. Can you also remind us what kind of costs we expect value uplift to generate at the end of the year or in the coming quarters?
In Q3, it was EUR 1.4 million, so it is in that range in Q4 also.
Yes.
It will add up to close to EUR 6 million by the end of the year.
Yes, a couple of questions regarding cash flow. Jyrki, you could take these ones. What should we think about the Q4 cash flow? Could you remind us about the typical seasonality and if there is anything unusual this year?
Yeah. Typically, Q4 is strong in cash flow, and the same cyclical pattern is there. There might be some variance due to the timetable when the projects are closing and documents are finalized. The cyclicality is there.
Yes. Our year-to-date net operating cash flow is highly negative at the moment. How do you see development going forward?
As I said, the cyclicality is there and I'm waiting for Q4. However, it's good to understand that the EUR 70 million decrease we are having there. Currently, there are two elements which are unusual. I already mentioned that EUR 4.6 million, but there is also EUR 10.2 million, which is coming from how items are classified. We transferred also on a classified basis our VAT debt into interest-bearing item, and therefore it was increasing net working capital, but eliminated later on the cash flow statement. It's EUR 14.6 million less in a comparable way.
Yes. Good. Moving on to energy transition business unit, how does the order pipeline look, and any market activities in the energy transition?
The pipeline is strong. At the same time, it's good to highlight that the energy transition business unit is the one in which we do most refocusing with this latest strategy compared to our market approach until now. That refocusing is now visible in the order book or the order intake in Q3, but we're confident about the development with a strong pipeline now focused on the core business. Where the change essentially is that we work for the same customers along the lifecycle. Projects should be followed by a maintenance or an operation and maintenance contract, and we should do more and more projects for the customers where we already have an operation and maintenance contract. We're doing this refocusing, and the sales pipeline is reshaping well.
Was there some timing tailwind regarding core earnings level?
In energy transition?
No, in overall, in the whole group.
There are always these variations. We're in a business which is still, for more than half of it, project business. To name a few, in the comparison period in Q3 last year, there were sizable projects in the power grid in the Baltics, which were not there now. On the other hand, we had a strong business, so that took power somewhat down. In energy transition, we had a strong business in Sweden and Norway this time in Q3 2025. The project business is like that. There is some variation between quarters.
Yes, another question related to this one. We had a growth in share of services now. Was it more related to weaker demand in projects, through our initiatives, or a combination of both?
No, the share of services is growing. It also includes sort of small projects, which we count into service. Small service projects, small enhancements and such, which we do to our service customers, we do more and more of. It's really the refocusing and this lifecycle partner strategy, which is working. It is growing.
Yes. We have a question regarding our guidance. Our full year guidance indicates EBITDA of EUR 1.5 million- EUR 5.5 million for Q4, compared to EUR 9.2 million that we reported for Q3. Is this seasonality or where is this decline quarter- on- quarter coming from?
We believe that guidance of EUR 16 million - EUR 20 million to be accurate. The EUR 1.5 million, of course, refers to year-to-date. The core business adjusted EBITDA is now at EUR 14.5 million. Our guidance is EUR 16 million - EUR 20 million. That guidance is valid. That is where we will end, between EUR 16 million and EUR 20 million.
Yes. Last question at the moment. Can you briefly talk about your business opportunities in data centers?
Sure. That's a pleasure to do so. It is very active. A few things I'd like everyone to capture here. There's threefold opportunities, and the three opportunities come from the three different business units. It's really an act of putting the power of all of Enersense together. We are strong in substations. The substations the data centers need are of the type of the 400, 100, 10 kilovolts substations. The heavy-duty stuff that we do for the transmission system operators is needed by data centers. There's the power business unit side of data centers, which is the substation. It's the lines between the transmission system operator and the data center facility. It's also BESS, so battery energy storage systems on site. It's all of this. Secondly, it's the fiber connection, so the data connection. We are indirectly already working for several customers who provide such connections to data centers. The third part, the third opportunity, is everything related to capturing heat and transferring it to the district heating network. It's a very concrete, sizable, and very concrete opportunity for us, and our sales pipeline is getting busy with these opportunities.
Thank you. There are no further questions at the moment. Thank you all for active participation, and we'll see you in February with the Q4 results.