Welcome to this webcast presentation for Etteplan's Q2 results in 2023. My name is Juha Näkki, I'm the President and CEO, and after the presentation, there will be a Q&A session where you will be able to ask questions to myself and also our CFO, Helena Kukkonen, who will be online to answer any questions that you may have. The contents of the presentation will be similar to the ones we have had before. We will start a little bit with the operating environment, which was clearly, clearly difficult for this particular quarter. Move on to the highlights, look a little bit more in detail to the financial development, look a little bit on our service areas in particular.
To the end of the presentation, look at how we did against our targets and also our financial guidance for the full year. Of course, followed by the Q&A. If I look at first, the operating environment, clearly this quarter was difficult for us. The Russian aggression against Ukraine has had clear impacts on different things. Inflation is still high, and consumer prices have risen, and interests are high. Clearly this is visible in consumer behavior, and Especially from our customer side, the mainly consumer-driven businesses are having a harder time with the order intakes, and there is more uncertainty.
With the geopolitical tensions and everything else, clearly, the investment activity of our customers has gone down, and especially, R&D investments in this quarter were very slow to start, and even some projects got canceled. In this respect, we did have a difficult market conditions for certain businesses of ours. That being said, there were still customer industries where the demand continued to be quite good. We still had quite a lot of order-to-delivery type of engineering. Our customers still have quite good order , and there is this type of activity continued to be fairly strong.
Also, we can clearly see still that the investments related to defense industry, energy efficiency, and Green Transition overall have been on a high level already before and are still growing, which helped our situation during the quarter. If I look at a little bit the different countries and different markets where we operate, so in Europe, all the countries were fairly similar, so clearly a lower level of investment into new things, especially slower R&D development. Customers are still cautious with timing their investments. We see a lot of opportunity, we see a lot of projects are being planned, but simply they are not started, and some projects have even been suspended or canceled, which has been a bit difficult.
The situation in different countries is, is fairly similar, a little bit depending on the, on the customers and customer segments that we have in different countries, but, but fairly similar. In China, the market situation is, is, and has been, clearly difficult. We still see a movement from Western companies, outside, from China, and investments are, are mainly currently, being targeted to other Asian countries, rather than China. This has had an impact on the demand, and of course, this is due to the geopolitical tension, there, there is, between China and other countries. The market in China has been difficult and has had a clear impact on our business.
If we look at the highlights of the quarter, cash flow was strong, which was very good. We had a slightly declining result, and the revenue growth was slowing down, but still, our cash flow was very strong in this quarter, which was helpful. Demand for Engineer-to-Order projects remained at a good level. Our customers, as I mentioned earlier, our customers still have quite good order books. Even if the new orders were slowing down a little bit, this type of engineering activity was still good. With the support of that, our Engineering Solutions service area continued to grow, and the profitability with the high operational efficiency was at a good level.
R&D investment activity showed signs of recovery, which was positive towards the end of the quarter. We did get some new orders at the end of the quarter, which was a positive signal. Of course, remains to be seen whether this will continue or not in H2, but still it was a positive signal and and helpful for us towards the end of the quarter and and let's say end, or let's say, hopefully for, for the second half of the year. Also, now, we returned to the acquisition path and, and made an acquisition in Germany at the end of the quarter, or actually at the very beginning of the third quarter by acquiring LAE Engineering. This is, of course, positive for us.
Our position in Germany enhanced further, and we are now back on, on, on track with the, with the growth activities in, in the acquisition front. On the, on the negative side, of course, our, our growth slowed down, and in particular, in the Software and Embedded Solutions service area, which is heavily R&D-driven. We did have a hard time with the market demand. There were not enough projects. We did have cancellations of projects. Projects got suspended during the during the quarter, and for that reason, we have had to do different kinds of measures to, to correct the situation and improve the operational efficiency. This had a clear impact on our, our revenue development and also our, our profitability. I will return to that.
The Technical Communications service area struggled with growth, so the growth stopped. We have, in this service area, a bit more customer-- sorry, consumer-driven customers, and also, we still were, result-wise, a little bit burdened by the Cognitas acquisition in the service area. However, the activities that we have taken and the measures that we have taken to correct the situation with Cognitas are moving forward, and we are improving, but it is taking still a little bit of time. That is, in short, the highlights. If we then look at the results, so growth was slowing down, almost stopping, so 0.7%.
In this particular quarter, the currency effects were almost 2.5%, that had a heavy impact. Also then, our operating profit, EBITA, was 8.9% declining, that was not good, and we have taken measures to improve our profitability going forward. If we look at the split of revenue and personnel a little bit more in detail, Engineering Solutions was 56% of our revenues. Software and Embedded Solutions, the share was declining to 24%. Technical Communication Solutions at 20%. Revenue by area, Finland, 52%, Scandinavia, 24%, Central Europe, 21%, China, 3%. Personnel by area, geography, Finland, 51%, Scandinavia, 18%, Central Europe, 21%, China, 10%. That was the split.
If we look at the revenue by customer segment, so still Industrial Machinery and Equipment, the largest one, Forest, Pulp and Paper, the second one, but Energy, with the investments into Green Transition and energy efficiency, is growing and was at the same level as Forest, Pulp and Paper. We also see clear growth in the Automotive and Transportation area, which is driven by the sort of Green Transition, electrical vehicles, et cetera, and this has been showing it positively. Chemical Industry has been strong for us. Marine and Offshore are starting to grow a little bit.
There is also clear growth in the Aerospace and Defense sector, not showing here yet, but some of the projects there are a little bit slow to start, but we have had quite good order intake in the quarter, and we have had new customers in this area as well, so we expect that to, to start to, to show in these relative numbers going forward as well. Lifting and Hoisting, coming down, ICT coming clearly down with lower level of investment in some of our, our, our customers, and this has had clear impacts. We look at a little bit more in detail, the financial development, with the key figures slightly soft in this quarter.
Revenue, only 0.7% growth, revenue outside Finland, slightly dropping, operating profit, EBIT, dropping by 10.3%, EBITA by 8.9%, so slightly slower pace in this particular quarter in a difficult market. We look at the revenue, 0.7% growth. At comparable exchange rate, the growth was 3.2%. Of course, the Swedish Krona, which has been turning to really weak, has had a big impact on this. Also other currencies, but the Swedish Krona is the one that has the most impact. Organic growth at 0.3%. At comparable exchange rates at 2.7%.
For the full year, 3.3% growth, at comparable, 5.5%, organic growth at comparable rates at 4.8%. Still growing, but, but, clearly, after the weaker second quarter, slowing down. Market situation was difficult, as mentioned, in particular, R&D investment, but also other investments were slow. The market uncertainty is hitting our customers' willingness to, to take the investment decisions and really move forward. We see a lot of opportunity, at the end of the quarter, we did get new, new orders and even large orders in the R&D area. We are hopeful for the future, but, but, still, of course, the, the situation is uncertain and a little bit challenging. Revenue from key accounts was also decreasing.
There were some accounts that were clearly decreasing, but there were also some accounts that were clearly growing, especially in the energy sector and also the Automotive and Transportation sector, where Green Transition and energy efficiency are driving the investments. If we look at the EBITA, 8.3%, it is a modest performance for us. We are not satisfied with that, but we will now, now or have initiated several activities and several actions to correct the situation and look forward to being able to improve the profitability in relative terms, going, going forward. Non-recurring items were at EUR 0.4 million for the quarter. The difficult market situation showed also in credit losses.
We had some credit losses in the Software and Embedded Solutions service area. Also, we had some acquisition-related costs and also some personnel restructuring related costs in the quarter. It was a quite difficult market. If we then look at the full year, in the full year, so far the half year, first half year, we also had in Q1 the one-time salary payment in Finland, which has a clear impact in the full year figures or the year-to-date figures. EBIT was at 6.8%, so EUR 6.1 million.
We cannot be satisfied with this, of course, but there were, of course, non-recurring costs and the amortizations between EBITA and EBIT were EUR 1.3 million for the quarter and EUR 2.6 million for the first half of the year. Earnings per share were at EUR 0.15, so a clear drop. Rising interest costs, of course, do have an impact on this one, and this is something that we will continue to see going forward, and we will also work in the finance area. Cash flow for the quarter was strong, operating cash flow at EUR 8.9 million for the quarter, and for the first half, EUR 6.1 million.
Improvement on last year, which was positive. Of course, now, when the growth has a little bit stalled or slowed down, we have less capital tied into the operations. That is the main reason for the improved cash flow. Personnel, at the end of the period was EUR 3,942, so a 0.8% drop. We have been slightly slower in the recruitment in the difficult market conditions, and this has led to a slight drop. We are still recruiting, and we are monitoring the situation very carefully.
Whenever we have opportunities to grow, we will take the opportunity and our, our, our recruitment engine is still ready and running at full speed whenever the opportunity presents itself. Outside Finland, we had 1,938 employees at the end of the period. If we look a little bit more detailed onto the service areas, so in Engineering Solutions, we still had a very good situation. We have very strong performance in the operational efficiency, and this led to still good good growth. The demand situation was good in the Engineer-to-Order. Investment, large investment projects in, in plant engineering were continuing. There were no stops in these kinds of projects, and we still had some R&D activities.
Overall, in this service area, we had a solid situation regarding demand and also our operational efficiency and operations were performing extremely well, which led to good results. Revenue was growing at 10.4% and EBITA was at a 10.3% level, which was strong. We did have a change between this Software and Embedded Solutions service area and Engineering Solutions service area. There were about 33 employees moved and approximately EUR 5 million in revenues moved to Engineering Solutions from Software and Embedded Solutions service area. In the beginning of the year, slightly still clarified during the first quarter, this is the sort of end result of it.
This kind of a move took place, which is affecting a little bit, the comparison figures here in this service area and also in the Software and Embedded Solutions service area. The Software and Embedded Solutions service area was a problem for us in this quarter. We clearly had issues with the demand. We did see a low number of new projects starting. The whole quarter was a bit shorter for all the service areas than the comparison period. We also had a bit more vacations, but here in particular, in this service area, we did have lower number of R&D projects starting.
Especially, April was really difficult, but then, towards the end of the quarter, we did see a little bit better situation, and we did have and get several large orders towards the end of the quarter, which will help us going forward for the, for the second half. Clearly, the profitability was, was not what it should be. We have taken clear measures to improve that, and, and, we expect things to, to improve and pick up towards the end of the year. Also on the revenue side, we are, are now seeing a little bit better activity on the investments and are ready to, to accelerate again, once we see a better market.
In the Technical Communication Solutions side, this service area is of course, we have a little bit more customers that are, are directly affected by the consumer demand, and this led to a little bit weaker market situation in certain customers, which basically then stalled our revenue growth. Our revenue was slightly dropping by 1.5%. Of course, the impact of a shorter quarter and vacations had an impact here as well, but nonetheless, the revenue growth was stopping and stalling. EBITA was at EUR 1.4 million, so 8.1%. Not where it should be, but, but slightly declining, declining demand had a burden on, on this area.
Here, in China, we did have a little bit issues with this service area, with the lower demand and with the lower sort of order intake. It had an impact on this service area. Cognitas still is burdening the result, we have taken measures now to improve the situation, and the improvement activities are going as planned. They are progressing, we still have certain customer contracts which are at a very low profitability level, and this is something we are continuing to work with. With that, moving on to the financial guidance for the full year.
Due to the slightly weaker Q2, we are now specifying our guidance within the range that we have given earlier. We are now estimating our revenue to be between EUR 360 million-EUR 380 million. Previously, the higher mark was at EUR 390 million, so EUR 10 million down in that sense. In the operating profit, EBIT, we are estimating that to be between EUR 28 million and EUR 31 million for the full year. Previously, it was between EUR 28 million and EUR 33 million. With a slower second quarter, we don't believe in reaching to a EUR 33 million this year. We have specified the guidance a little bit.
The outlook remains as said, still there is uncertainty clearly due to the war in Ukraine. Interests are still high. Inflation is still high, but currently there are signs that the inflation is coming down. In certain countries, it already has a little bit, and there is a downwards trend. The expectations are that that will continue. We do believe that if that trend continues and the interest do not continue to rise, this will lead to a situation where our customers will start investing into R&D, into new things again, and this will improve the market situation.
This can happen quite rapidly for us as we have seen in the past, and we expect this to happen in the H2. Even if there is not a significant improvement in the market conditions, with the measures that we have taken now to improve our operational efficiency, we are confident that we will be able to meet the numbers that we are giving here. We expect that that of course, the investments in Green Transition, defense industry will be growing, and that will also support our progress going forward. If we look at the financial targets and our results against the targets, so the revenue target is still at EUR 500 million for next year, so this is a hefty target.
The rolling 12 months is at EUR 356. We are now trying to accelerate the, the revenue development with acquisitions, and we completed now LAE. There are other things that we are looking at as well, but with the given market situation, we also need to monitor the situation clearly and and make wise decisions related to acquisitions so that we don't, we don't end up in overpaying, and we only make deals which are generating value for our shareholders immediately once the deals are signed. Revenue outside Finland at 48%, we had issues in China.
We had certain issues in, for example, Denmark, which slowed the development here down, but we do expect to improve on this situation with the LAE acquisition and also other measures that we have taken. We do expect to reach the previous target of 50% in the near future, then move forward towards the reset target setting of 55% going forward. Managed Services share of revenue, slight growth to 67% now. We are working hard with our offering development to come up with new solutions, with new technologies to generate more value for our customers, and with that, drive the Managed Services index up and also drive our profitability up.
In operating profit, EBITA, we were at 8.1% for the full year. This is, of course, not where we should be, and we are now working hard to improve the profitability of our business. Of course, the first half year was affected by the one-time salary payment, which we took in one basically booking in the first quarter. Going forward, this will not burden our salary costs anymore, so it should also help a little bit. With the operational efficiency measures that we have taken, we expect to be able to improve the profitability going forward towards the end of the year. That concludes the presentation at this point. Now, we are, are open for, for questions, to myself or our CFO, Helena Kukkonen. So please go ahead.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Juha Kinnunen from Inderes. Please go ahead.
Hello, this is Juha from Inderes. I'm asking about Software and Embedded Solutions. I'm kind of struggling with the outlook here, with the significant drop in net sales now and orders coming in in the end of the quarter, and also, slightly positive outlook on the R&D investments in, for the rest of the year. Maybe you could open up how this all play out in your own mind, maybe comment on the growth expectations of the business in the coming quarter.
Well, if we look at the full, full quarter, second quarter, so we, we did have a very, very, very slow April. And, there were cancellations of, of large projects, few of them, and, and it was very short. We had lots of vacations, so the first month of the second quarter was really, really bad. We also didn't see any basically new R&D projects coming up from our customers, so the situation was, was, worrying at that point. Then towards the end of the quarter, of course, we took measures to, to accommodate for this kind of a situation. We also did see a little bit better, activity on, on, on investments in R&D from our customers. Not good, but still a little bit better.
Then at the end of the quarter, we were able to, to, to finalize and close some of the, the bigger orders that we have been working on for, for the energy sector and also for the defense sector. We did see a little bit activity on the other sectors as well. These were encouraging signs that there could be a recovery in the R&D, and this is what we are, are, are hoping for. Even without that, we have now taken measures. We have changed our organization a little bit here and there. We have taken measures to, to correct the, the operational efficiency, and we believe that even in a slightly weaker condition, we will be able to improve on, on, on the situation. It was a tough quarter for that service area.
We're not really used to these kind of numbers, and we need to improve. Now we see that the level of investment at least showed signs of recovery. Normally in our business, when things when, when the market and our customers start to believe that, "Hey, the, the, the future might be a little bit better," then they will gradually start the R&D investments at first, so that they would be ready for, for any kind of positive turns in the market.
This normally has a very good impact on our, our demand situation quite fast. We saw that with COVID period, for example, that there was a quite rapid development of the demand situation, and this is what we are, are hoping for. Even if there wouldn't be a rapid improvement, we have now taken measures and made changes in our organization so that we will be ready for, for even a slightly weaker market, that we're able to, to stop the sort of declining revenues and then move forward with our business.
All right. Understood. One detail question: You told that some R&D projects were even canceled. How exceptional is this? Is there any kind of sanction for clients, who do this?
Well, unfortunately, in some customer contracts, there are some, some rules and sanctions how these can be canceled, but, but unfortunately, this happened. In the software area, this has been highly unusual, so customers have not really stopped. If they have stopped projects, they have stopped in other areas. In software, these kind of large cancellations have been quite unusual, and this now happened with, with several or couple of large projects. In this particular market, especially in the, in the beginning of the quarter, it was really difficult for us, and from what I understand from the market in general, also for others to find new assignments because the, the level of investment just was simply low.
This really had an impact, but, but we are, are now ready for, for similar things. Of course, if they are large and got canceled, so it will have some impacts. We hope that these kinds of things will not happen going forward in H2. We don't anticipate that, and I would say that these are quite exceptional for this particular service area.
All right. Fair enough. Then about guidance, I guess I'm going to just kind of reiterate what you already said, but, if I understood correctly, even if the market doesn't pick up, you believe that, you will reach your guidance? I guess this relates to the current situation that you see, in the market demand.
This is, this is the case. I mean, we don't see... Yes, we do see that some of our customers have not received as many orders as, as they have in the past. With some customers, the, the order intake is a bit lower. Then on the other hand, there are customers in other segments which are doing rather well, and we have been putting heavy effort to, to improve our business in these customers. That has also paid off to, to a certain extent. If the market situation does not get worse, with the activity and with the measures that we've taken, we do believe that we will be able to, to improve our profitability and, and reach the numbers that we have now given.
Of course, if the market starts to turn even worse and, and the level of investment goes even down further, then, then, it will be difficult, not impossible, but difficult. With the current estimate, we do believe that the situation either stays the same or improves a little bit towards the end of the year. This is our assumption, and this is what we are currently believing in based on the signals and signs that we see from the market.
Understood. Final question about the strategic options. I'm just wondering whether you would like to be in infrastructure or real estate business in the long run, because currently you are not really heavily there, anything tied to constructions, because, of course, the current situation seems to be quite difficult there, and maybe there could be some M&A opportunities in these areas if you would like to expand there.
Well, of course, this is not the place for me to talk about our strategic plans, but I would say that one of the, the core strengths of Etteplan has been that we have been focused on activities and customer groups, which we truly know, understand, and can really understand our sort of value for the customer. We've focused on industry- industrial products and, and, and plants, and on a very wide range of services with that. I think that that is one of the strengths and one of the, you know, best strategic choices that we have made so far. Of course, with the growth ambitions, so never say never.
I, I wouldn't say that we will never enter these things, but currently, we have been thinking and, and working with the business in such a way that we are focusing on, on industry, industrial products, industrial plants, and anything around those. Of course, we do a little bit here and there, of course, with a large capacity and a large operation, but still, still, this has been a clear focus for us, and I, I don't see that we would be changing that soon, but I cannot say that this will not happen because we obviously need to evaluate different kinds of choices going forward.
Okay, that's very clear. Thank you very much.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time, I hand the conference back to the speakers for any closing comments.
Okay, thank you very much. Yeah, I mean, this was a difficult quarter for us, and the, and the growth slowed down. The market conditions were difficult, so, so the war and, and related impacts have started to have an impact also on our demand situation, and, and we have had to cope with that. Still, we still kept going, we still kept growing, even if it was only a bit, but we have now made activities, acquisitions to, to accelerate the growth a little bit, and we have taken measures to, to improve our, our profitability.
I am confident that going forward, we will be able to recover and improve on the numbers from this quarter, and we will still have a good and decent year, providing that the market doesn't really turn bad. We are confident that we will be able to move forward in a positive manner going forward. Of course, if you want to ask questions to us, we are always available for you. So you can contact myself, our CFO, Helena Kukkonen, or our SVP for Marketing and Communications, Outi Torniainen , for any questions or comments that you may have. Thank you very much for listening at this time, and we will return in Q3.