Aapeli has made a new company report on Kesla.
Kesla lowered its guidance for the current year last week, which, according to the company, was due to the continued weak demand situation. In our view, increased geopolitical and trade tensions have indeed impacted the company’s operating environment quite rapidly after Q1, which had shown signs of recovery. Following the guidance cut, our forecasts, especially for the current year, were under pressure. We also slightly lowered our forecasts for the coming years, but we still expect the company to achieve clear earnings growth as the demand situation improves.
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Here are Aapeli’s preliminary comments as the company publishes its results on Friday. 
Reflecting on the guidance lowered in June, our expectations are not high, and we estimate that the order flow, in particular, remained at a low level, similar to the comparison period. Consequently, our focus is especially on more detailed market comments regarding the development of the demand situation.
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Here are Aapeli’s quick comments on the morning’s results.
Kesla published its Q2 report this morning. The company’s result fell slightly more into loss than our forecasts, despite a slight revenue beat. Instead, Kesla’s order intake was slightly higher than our expectations, but still at a low level. The company made no changes to its guidance, and we do not see any significant pressure for changes to our forecasts.
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Here is Aapeli’s company report on Kesla after Q2.
Kesla’s Q2 result fell slightly more into loss than our forecasts, despite a slight revenue beat. However, the company’s order intake was slightly higher than our expectations, but still at a low level. The company reiterated its guidance, and overall, the market comments were, in our view, well in line with our expectations. Thus, our forecasts for the coming years remained practically unchanged, and we reiterate our target price of 2.8 euros for the share. The short-term valuation picture of the share is still challenging in our opinion, but due to the share price decline, we raise our recommendation to reduce (previously sell).
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Tomi and Aapeli discussed Kesla.
Topics:
00:00 Introduction
00:24 Market weakness is a burden
01:57 Financial position
03:51 Kesla Defence as a new product group in the portfolio
07:16 Profitability expected to recover
08:45 Share valuation
11:07 Positive scenario
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In Maaseudun Tulevaisuus, it is pondered behind a paywall whether Sampo-Rosenlew’s forest machines, which are for sale, could find a home at Kesla.
Quite an interesting thought, Sampo-Rosenlew is one of Kesla’s biggest customers, but it’s unlikely Kesla would have the financial capacity for such an acquisition right now.
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Kesla adds to its June profit warning, now things are even worse, this was already the third this year, could it be some kind of record: Sisäpiiritieto, tulosvaroitus: Kesla Oyj muuttaa ohjeistustaan | Kauppalehti
As market uncertainty continues and customer investment decisions are further delayed, demand for Kesla’s products has remained weaker than expected. The order intake for the second half of the year has not reached the planned level. Therefore, Kesla Oyj changes its guidance as follows:
Kesla estimates that net sales for 2025 will decrease significantly and operating profit will decrease significantly and remain negative.
Old guidance
Kesla estimates that net sales for 2025 will decrease significantly and operating profit will decrease and remain negative.
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Here are also Viljakainen’s comments on Kesla’s negative guidance.
Kesla yesterday, after the stock market closed, issued a profit warning, in which it revised its guidance for the 2025 operating profit in a more negative direction. According to the company, market uncertainty has continued and H2’s order intake has fallen short of what was planned. The year’s third negative guidance change was a disappointment for us, and it will likely lead to forecast reductions, at least for the rest of the year.
https://www.inderes.fi/anal
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It’s certainly not easy for Kesla, and here are Aapeli’s preliminary comments as the company reports its results on Friday.
We significantly lowered our forecasts for Kesla’s coming years, reflecting the profit warning issued earlier this month and the darkening outlook for domestic timber harvesting volumes during the autumn. With the forecast changes, we find it difficult to find support points for the stock’s short-term valuation. This, combined with the elevated risk level related to the company’s financial position, causes the stock’s risk-adjusted return expectation to become, in our opinion, very weak.
Aapeli wrote comments on Kesla’s Q3 results; the challenging trend continues.
Kesla published its Q3 report in the morning. The company’s result clearly fell more into loss than our forecasts, reflecting the low revenue accumulation. In addition, the company’s orders remained at a weak level. However, the company had succeeded in defending its cash flow, which remained slightly positive despite the negative earnings development.
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Aapeli has also prepared a new company report on Kesla after its Q3 results.
Kesla’s Q3 result fell clearly more than our forecasts into loss, driven by low revenue. In addition, the company’s received orders remained at a weak level, and in our opinion, no significant signs of improvement are visible in the short-term market outlook. Reflecting this, we lowered our forecasts for this and next year, while our longer-term forecasts remained almost unchanged. With our forecasts, we believe it is difficult to find support points for the stock’s short-term valuation, which, combined with the elevated risk level of the financial position, makes the stock’s risk-adjusted return expectation very weak. We therefore reiterate our sell recommendation for the stock and lower our target price to 2.2 euros (previously 2.4 €) in line with the forecast changes.
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Aapeli’s comments on how Kesla is initiating the recovery of its business and financial situation and a structural assessment process.
Kesla announced yesterday that it is initiating the recovery of its business and financial situation, as well as a structural assessment process. The news did not come as a significant surprise, as the company had already indicated in connection with its Q3 results the need to implement even broader efficiency and cost-saving measures, as well as potential structural changes. The announcement does not cause immediate changes to our forecasts or our view of the company; instead, we will await the concrete outcomes of the process.
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Rikhard Wacker has been writing about Kesla and, among other things, how Kesla sold the product rights for its chipper product line today.
To compensate for the challenges and reluctance to invest in the forest industry, Kesla has recently been shifting more of its focus toward the defense industry. While investments in the forestry sector have been scarce, the defense industry has been running very hot in recent years as NATO countries have increased their defense spending.
Subheadings:
- Chipper product line difficulties finally come to an end
- Restructuring measures continue
- Difficult times
- Can the defense industry fill the gap for Kesla?
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