Hello, and welcome to Vaisala's fourth quarter and full year 2025 audiocast and results call. I am Niina Ala-Luopa from Vaisala's Investor Relations, and today in this call with me are President and CEO, Kai Öistämö, CFO, Heli Lindfors, and Chair of the Board, Ville Voipio. We have today published our financial statement release. Kai will first go through the results, and then we have time for questions.
Thank you, Niina, and welcome for everybody from my side as well. As the headline says, strong performance in 2025, and a highlight in the fourth quarter really being the orders received improving. If we look at the actual what happened in the year, in the quarter, maybe I'll start with just if we were to teleport ourselves into beginning of 2025, just to remind you what kind of a year we were thinking that we would face and what was the reality.
We had a plan as a company to grow on the renewable energy on the back of many years of good success, building on that and the outlook, albeit a little bit more muted growth on renewable energy investments, but nevertheless, continuing the growth.
U.S. elections have happened, but the speculations on trade wars, import duties, things of that nature, were on the scenarios, but not the most likely ones still in early January. There was, I think not really much of a speculation, which is hard to have the speculation on how volatile the currency exchange rates then became during the year.
What a rollercoaster ride in 2025. First thing is, what happened was the renewable energy market for us really plummeted quite a bit, creating a big hole from a get-go in the year, remembering that this had been one of the growth drivers for the company, and a very profitable one as well. That kind of went away from the beginning of the year. We've quantified about EUR 20 million, or even a little bit over EUR 20 million as a hole that it created from a get-go.
Then during the year, with twists and turns, getting to 15% import duties between U.S. and Europe. In the second half of the year, the euro appreciating vis-a-vis not only U.S. dollar, but many other currencies, Chinese yuan, Australian dollar, Canadian dollar, and so on. It's clearly a broader event than just the import duties between two continents or two countries. In this environment, I think we can be, as a company, very proud how we performed.
We were able to continue on our growth journey. If I look at our long term, first of reminding that our strategic goal was growing the net sales by average 7% over long term. We were clearly above that. As we should be measuring that in constant currencies, 7.4% year-on-year growth rate during 2025. We were able to mitigate the import duties on industry measurement side.
That meant increasing prices the day after where the import duties were clear with no visible impact on the demand. On the weather side, actually pre-shipping into U.S., avoiding the tariffs and giving us time to negotiate as the business on that side is based on longer term contracts and especially public side, so it takes time to negotiate. Happy to report that we have been able to actually, during that time that we bought for the second half, we have been able to actually come to terms and agree with the customers that we are now able to pass also in weather side, the import duties to our customers.
Thirdly, the fluctuation on the currencies, the strong appreciation of EUR during the second half of the year, obviously then created headwind, which is a lead into when we look at the fourth quarter, in this environment where we were kind of during the quarter in 1.118, 1.116 range in terms of a euro-dollar ratio comparing to the year before where we were 1.02. That gives you a flavor of what kind of a headwind one would face.
Despite that, essentially a flat net sales year-on-year. That obviously creating challenges on some parts of the businesses even more than other ones. Xweather being very highly dollar based, we are talking about clearly over 60% of the sales in USD, obviously creating even more headwinds than in some other parts of the business.
That being said, also then when we look at the order intake in fourth quarter, that is really a positive highlight, I think, in the fourth quarter. The order book increased 10% in terms of constant currencies, really driven by industrial measurements, but also in weather and environment, clearly improving to the level the year before, marking a significant change when we go look at sequentially first quarter, second quarter and third quarter, really a significant change in that trend.
Looking forward, the market uncertainties continue. I think that is one thing that is for sure, as an expectation for this year. What are exactly the uncertainties? What are exactly the things that we are going to face? Nobody knows.
But I am actually convinced when we are going to have this call a year from now and we do also, again, the exercise of teleporting ourselves back to this date, we find ourselves how many changes and what kind of rapid changes in the marketplace have happened. In all this, based on the good, strong performance in 2025, the Board of Directors also yesterday or today decided to propose EUR 0.86 as the dividend for AGM to decide.
Before going into specific numbers and more details in the performance itself, maybe good to look at more of a strategy perspective or highlights on the 2025. It really is about technology leadership. It is about climate action. I think we can be very proud of Xweather and subscription sales growing 50% year-on-year.
We can be very proud of actually meeting and exceeding our long-term growth target as a company. On top of that, maybe a couple of other things that you might not be as familiar with. The work that we have been doing very systematically in the company to improve the health and safety to the level that I am super proud on where we are today, the TRIR being 1.15.
Some of you might not know what exactly that means. It means that we are a top of the range industrial company in terms of health and safety. We really have been able to create this to be a safe working place where everybody gets home safe, comes safe to work and gets home safe as it should be.
This is something that we as a company, we as employees of the company we are very, very happy, and we continue on this journey. Then another recognition on our sustainable growth journey this time by TIME. We continued on our strategy execution. Continuous improvement and a flow of new products and services in all parts of the business. We continue to invest also into our operations, which is a key part of our success formula.
Clear milestone on this was the completion of the automated logistics center here in Finland and taking into full use now giving us benefits going forward on multiple different levels. Then into the financials and starting with overall as a company. As said, orders received improved in fourth quarter driven by very good performance in industrial measurements and a clear improvement on weather side.
Orders received increased by 5% year-on-year in reported currencies and 10% in constant currencies, bringing the order book to EUR 185.8 million. That puts us below what the level was at the beginning of last year or end of December 31st , 2024. At the same time, it puts us clearly above what the order book was at the same time in year 2023.
The year 2024, as you know, was not the bad one for Vaisala. I think this order book level gives us a good comfort at least on the starting of the year on both sides of the business. Net sales in Q4 slightly decreased, and if you look at constant currencies being flat, then you have to remember again that 2024 being exceptionally strong fourth quarter, so the comparable was quite strong on what we compare ourselves to. Gross margin, slight decline.
Here I would kind of pick up two things. When we say that we compensated fully the import duties, the way the math works on that means in terms of a relative profitability in terms of gross margin, there's about 1 percentage point, little bit over 1 percentage point headwind caused by that. Also, as I said, we had an extremely difficult year in, excuse me, on the renewable energy side.
When we compare to previous year, that was a kind of a clear creative business in terms of our profitability for the company turning into much more of a drag to the profitability. No news is good news in cash conversion. As we have been showing as a track record for many years now, cash conversion continued to be strong.
Looking at the industrial measurement side, I have said multiple times the record high orders received, the net sales in 2025. I think it is something that we can be super proud of. We look at the year as such, orders received increasing by 13% year-on-year, and especially in the constant currencies, 21%. We really can be proud about it and it feels very good. This growth was driven by Americas. Despite all the talk about the trade wars and everything else, continued our success in the U.S. especially.
Net sales increasing by 1% in terms of reported currencies, but 7% in constant currencies, which I think really reflects our real underlying performance. Obviously, the headwinds caused by the depreciation of not only U.S. dollar, but also Chinese yuan and several other currencies impact obviously the reported orders received, the net sales, as discussed already earlier.
Gross margin stayed on the same level despite the headwind, as I said, from mitigating the import duties. On EBITA side, slight decline. This was really driven by on the OpEx side one-offs and some investments into sales and marketing and commercial excellence, and a couple of maybe words on that.
When I say investments in sales, that means in the digital channel and building the digital channel capabilities, which we are going to be benefiting in the coming years. Also kind of a clear investment into commercial excellence, which we are running as a program in industrial measurement, which we also expect to be improving the performance even further in the coming years.
On the weather environment side, highlight of the year, I think is really how the year developed, and especially in the fourth quarter, the orders received on the previous year level, and really the increased demand coming from meteorology and aviation segments. Maybe some of you had been somewhat worried about the volatility and the changes of the demand in meteorology and aviation segments.
I think this is a good reminder how cyclical and it changes between the quarters and between the years. But the market itself, when looking at it as we will talk about it in grand scheme, I think continues to be a good market. Order book clearly below the level of end of the previous year. But at the same time, as I said, for the entire company, similar story as actually also for weather environment.
If we compare the order book that we start this year with, actually is on a good level compared to what we ended in 2023 or kind of what we started 2024 with. Gross margin headwinds there are clearly lower, and this is back to what I now said multiple times that the significant decline on the high margin renewable energy business clearly visible on the gross margin.
Obviously, there are exchange rate impacts and then the impact also from the U.S. tariffs as discussed previously. Despite all that, the headwinds and the challenges that we faced in the year, the EBITA level stayed in a good level of close to 15% EBITA. Looking at the cash flow, I said strong cash flow continued, and we actually increased the cash flow from operating activities over EUR 10 million compared to the previous year.
And mainly really as a good work on improving the net working capital by the company, yielding their cash conversion to 1.1. I understand that there was a break in the internet connection, and I assume we are back. Just a summary for 2025. Not sure where you dropped off, so I'll start from the top of the slide. A reminder that net sales grew in line with our long-term targets.
We grew over 7% in constant currencies. If I pick a couple of highlights on this slide, the subscription sales were up by 50%, boosted by the acquisitions that we did at the very end of the previous year on WeatherDesk and Speedwell Climate now being fully integrated and bringing, when you exclude the WeatherDesk and Speedwell Climate there, on constant currencies the organic growth well in double digit.
On gross margin, slight decline due to several headwinds, exchange rates impacts, the proportional impacts of the U.S. tariffs as far as I discussed earlier, and then the strong decline in the high-margin renewable energy business. EBITA being roughly on the same level as year before. The earnings per share slightly below the year before.
The financial position for the company remains strong. Again, no news is good news, and when we were preparing these slides we should, for the next quarter maybe, count how many quarters have we had the same heading, and I am super proud to have the same heading on this slide. It gives us very solid ground obviously, and it's a testament on low leverage on the balance sheet and the asset-light business model that we have as a company, strong cash flow generation that we have as a company.
Now with the automated logistics center completed, that obviously gives us another leverage going forward as well. Moving on to the market and business outlook. The market outlook as we see it for 2026, we see growth in industrial, in life science, in power, and the markets for Xweather subscription sales. Then stable market outlook for meteorology and aviation, as well as for renewable energy. On the renewable energy, obviously now stable on a clearly lower level where we started a year and a half ago. What does it look then in terms of business outlook for this year?
We estimate that our full year net sales will be in the range between EUR 600 million- EUR 630 million, and our operating result in terms of an EBITA will be in the range of between EUR 95 million- EUR 110 million. With that, I'll conclude the prepared remarks, and happy to answer any questions that you may have.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Nikko Ruokangas from SEB. Please go ahead.
Hello. This is Nikko Ruokangas from SEB. Thank you for the presentation. Sorry, there was some technical error in the line, so I lost or didn't hear anything for a couple of minutes. I am sorry if I am repeating something. But I have three questions, and I will start with order intake for the industrial measurements.
You showed very strong 21% FX-adjusted order intake growth in industrial measurements, and you, for example, mentioned their data center orders and so on. Was there something extraordinarily strong in this quarter or does that kind of describe or reflect the current strong trends overall in industrial measurements?
The only thing I think that is maybe little bit more pronounced this year than last year, and certainly the year before, has been the longer-term orders from Chinese companies that you may recall if you have followed us a little bit longer, that we have had for a long time A year-end, early in the year orders, kind of full year orders, blanket orders from our customers especially in China.
They became almost absent in 2022, 2023, 2024, when there was more of a uncertainty in the market, driven by uncertainty in economic development in China. I think it is a very positive news that at least the confidence of our customers seems to be there in a higher level than in the previous years.
But that is only a portion of this, and big part of it is really is, as we said in the release as well, that it really is driven by the demand of our products, and remembering that we are, as we have been saying, well-situated vis-a-vis the mega trends. There is lots of growth industries that we serve that are sizable for us. Be it life sciences, be it data centers, as you said, Nikko, be it semiconductor, and the power are good examples, as just mentioning a few.
Okay, understand. Thanks. So you would have had also significant FX-adjusted growth even without those Chinese orders?
Correct.
Then my second one is on the order or potential order from Indonesia. So you mentioned in the report that the Indonesian airport order will be included in orders if the client receives financing in H1. Can you open that situation a bit more so that, does it mean that if they do not receive the financing, so you will lose this order totally? And are you including that order in your guidance assumptions?
Yeah. So, couple of things on that. So, good question. Thank you, Nikko . It is not included in our order book or the guidance. As we do not do anything with these kind of orders, bigger orders, especially from emerging markets where timings of such orders is extremely difficult to predict even in a year. So, that is one.
Then why the wording was as it was, the background is that, as you know, it has been for a while announced publicly where it actually was done by our customer who wanted to publish it even before we had the final commercial agreement done. And the Indonesian order is one of these MICD projects, where it is based on public financing.
The public financing rules are when these kind of projects are done, the public financing vehicles are guaranteed for a period of time, and there needs to be, for good governance, a backstop on when they expire. If when they expire, then obviously, then you would have to restart the building the financing package if that kind of a case were to happen.
So that is what the wording is reflecting. The customer feedback is that they absolutely want this to happen. Now, sometimes these kind of things have quite a bit of red tape in both timing reflects back to my comment on the timing itself. So, again, the predictability is hard.
Yeah, totally understand. Thank you for a good color. My last question on USA and the public client side. Have you now seen a stabilization there in demands, and did you have any impacts from the U.S. government shutdown in Q4?
Good question. Thank you. I am very happy to actually give you color on this. We now have verbal insight on, for example, the budget for National Weather Service, and it seems to be on a good level. The cuts really in the end did not materially occur in the end in National Weather Service. In some other agencies, much more so. The budget is, like I said, on a good level. Regarding the fourth quarter government shutdown, in the end, it actually did not affect our sales. We were able to cope with it.
All right. Good. That is all from me. Thank you.
Thank you.
The next question comes from Waltteri Rossi from Danske Bank. Please go ahead.
Hi, it's Waltteri Rossi from Danske Bank. Thank you for the presentation. Few questions. Maybe first I'll ask about the semiconductor segment that you say is also driving the growth currently in the industrial measurements. Could you open a bit how Vaisala products are used in the semiconductor segment?
First of all, let's define what semiconductor, when I say semiconductor, what it means for us. It actually is, we are present from different types of memory processes to commodity silicon to really the leading-edge compute nodes in terms of fabs, in terms of manufacturing equipment, and so on. We sell to the semiconductor environment via multiple different ways.
Our equipment may be sold sometimes directly into the fab itself, sometimes through an OEM that is creating the environment in the fab, sometimes to the equipment that are actually used in the production of the different types of silicon products. And we are present all around the world. It's much broader kind of a coverage when we typically when talked about semiconductor.
All right. Thank you. Then about the meteorology and aviation segments, which you expect to be stable going into 2026, does that mean zero growth, or could it be a small positive number still?
When we have said stable and we have said stable for the long term as well, the stable, if I take a little bit longer-term view averaging things out, it is inflation-corrected stable. It is not a market that is declining in real terms. It is actually stable in real terms. Now, then how does that behave between a kind of, as you saw last year, between different quarters and so on, the nature of that business is somewhat volatile.
Great. Thanks.
Just, I will.
Few questions on.
I'll give you a little bit more color on, for example, we just talked about with Nikko on the Indonesian order is a great example. It's a sizable order that would even impact the entire market size when it happens. Predicting which quarter it comes is super hard.
Yeah, good addition. Thanks. Still a few questions about Xweather. First, what is driving the growth in that business? You're expecting to grow this year, but any indication here, could it mean double digits or more like 5%?
Our ambition is to continue to grow double digit this, the business itself. That being said, when I say double digit, I can really talk about in constant currencies. Given the currency exchange rate, speed of the currency exchange rate changes and the fluctuation, especially in this business where the exposure to non-euro currencies is larger than anywhere else that we have, the impact also is the biggest on euro-reported numbers.
Yeah, great. Can you say anything about what's driving the growth here?
Yeah.
Where are you potentially getting new customers and so on?
Yes. We are strong on several customer segments. Finance and insurance, renewable energy and transport. We see both more usage from existing customers and then clearly a potential in getting more customers. We see that there is an opportunity to grow both ways, that it is more usage, and wider usage for existing customers as well as then getting new customers. Then obviously we are looking at the adjacencies at the same time that is a further growth initiative.
Great. Lastly, on the Xweather profitability, as we know this profitability should improve once you lower the investment in the growth. Two questions. What are you actually investing in right now as the business that is still keeping the profitability down? What is your ambition level on the profitability during this strategy period for Xweather?
First comment is that the profitability improved significantly last year. We saw the direction is we are super happy with the direction on the profitability. Where are we investing today? It really is about growth. It is sales and marketing. I mean, we all have like think about this as a recurring software subscription business. The investment into it is relatively easy to measure the impact of sales and marketing impacts both to new leads, qualified leads into then conversions from qualified leads into sales. Really the focus is driving growth and therefore the focus on the investment side is increasing the reach of sales and marketing.
About your target level on profitability during this
We have
period. Any kind of
We have not said any concrete target level on Xweather during the strategy period. I will just repeat what I said earlier, that super happy on the development that we had last year.
Understood. Thank you for the answers.
Thank you.
The next question comes from Joonas Ilvonen from Evli. Please go ahead.
It is Joonas from Evli. Your industrial measurements product sales grew only 1% year-on-year. So I think that seemed relatively low. Was that only a timing issue?
Less of a timing issue. You are talking about the fourth quarter, I assume.
Yeah.
That is more of a, think about it, the kind of significant headwind in terms of the currency exchange rates. That is the biggest impact on it.
Okay. If on constant currency terms, how much would these product sales then grow?
Let me get back. Net sales growth, fourth quarter on 7% on year, that is the annual number. Then quarterly number, it is a bit between timing, as you said.
Okay. Nothing really special happening there.
No
We can just assume that basically the volumes are growing at around 5%-7% or so.
We report the constant currencies, the net sales growth, only the total net sales in industrial measurements, but not on a product or service sales level.
Right.
They are fairly the same.
Okay.
You can apply the same percentage gap to the below items, roughly.
Correct.
All right. That's clear. Weather and environment on the cost side. You've implemented these cost adjustments, and I think they were already quite well visible in the Q4 figures. Do the Q4 figures already fully reflect all these cost adjustments that you have recently made? Or can we expect even more to be visible in 2026?
Already announced cost savings that to a very large extent they are visible in the fourth quarter already. They were done during the third quarter, and they are very large extent already visible there.
Yes. Mostly it's done. As we recorded also the one-off cost already in Q3.
Okay. That is clear. Could you remind us of the gross margin outlook for industrial measurements and to weather and environment for 2026?
I cannot remind you because we do not give it.
Okay. Can you describe some of the drivers that might impact it this year?
Sure.
What might change in that respect?
Yeah. So obviously if you look at from a gross margin side, similar impacts obviously as in a typical year. But if I take weather side first, the project sales, if you look at individual quarters, how was the extent of the project sales versus product sales, that has a big impact on gross margin on an individual quarter and sometimes even in a year to some extent, at least.
Last year, we had a significant headwind from the renewable energy into the gross margin as well in weather environment. As we are fixing that business, obviously we can't completely fix it, since it's now inherently in a lower level than it was in 2024. We are working on that side.
Then of course, the creative thing in gross margin in weather environment is Xweather, where the bigger that gets to be and it clearly has a very creative gross margin in the weather environment numbers. On wind side, again, if I look at the quarterly side, some fluctuations between quarters based on product mixes that happen to be sold in a quarter. That's less so when you look at on an annual level. Then it continues to scale like we have seen in the past, that as the business scope continues to grow, that should be bringing leverage, not only on the profitability, but also on the gross margin side.
Okay. Finally, could you remind us of the geographic sales drivers? I mean, the big picture, so IM should grow this year quite a lot, and it's mostly driven by the U.S. and Europe. But the big picture, are there anything to highlight from a geographic?
U.S., if I look at overall, actually last year, U.S. grew more than any other, or Americas, as we say, but it really is U.S., grew much more than other regions. It kind of reflected also the industrial activity and the growth of industrial activity in the U.S. I think that overall, when you look at the geographic mix, it reflects often the industrial activity and investments into industrial activity in different geographies.
I would expect that the U.S. continues to be probably ahead of Europe. I think that's a safe bet. Then positive dynamic in China, short-term at least, but we will see. Important events, for example, like the Trump-Xi meeting now in April. We'll see how that impacts on in the U.S.-China relationships, and may be positive, may be negative.
Okay. That is clear. That is all from me. Thank you.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you, everyone, for joining the call. Thank you, Kai, for the presentation. Next in our financial calendar, we have the annual general meeting on March 24, and then the first quarter result sharing on April 24. But now, thank you very much, and have a pleasant week.