Approval for this small pallet business acquisition came from KKV on Friday, and the deal should be completed in June. Annually, this means about 10 MEUR more in turnover, and, as far as I understand, with quite decent profitability. Presumably, some synergies will also be achieved when combined with L&T’s existing corresponding operations.
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Apparently, OP lowered its recommendation to ‘add’ level, probably due to the share price increase compared to the previous update. Usually, OP has been a bit more optimistic than Raul, but now things are evening out 
Kauppalehti’s flash news: OP lowers Lassila & Tikanoja’s recommendation to ‘add’ level (previously ‘buy’), reiterates target price of 10.50 euros.
Thanks for sharing @Lexus !
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Yes, an update just came out today.
Briefly summarized:
- Thanks to Real Estate Services Finland, the beginning of the year was better than expected.
- The clearest driver for the share price would be the realization of the turnaround in Sweden. The company itself (L&T) expects the turnaround to be possible this year.
- Recommendation downgrade after the clearest undervaluation was resolved.
- Forecast changes 2025: revenue -3% and operating profit +5%
- Forecast changes 2026: revenue -2% and operating profit +0%
- OP expects that revenues and operating profits for 2025 and 2026 will be the same
- According to OP’s calculations, the enterprise value of the Circular Economy business is €459 M and Real Estate Services is €100 M before group expenses.
Edit:
One more addition as I look at historical valuation multiples from the report.
P/E, EV/EBITDA, P/B, EV/EBIT, P/S and EV/SALES are all significantly below the median.
If Sweden shows the turnaround materializing, and other potential positive buzz from the stock market on top of that… a 20-30% upside would be easily justifiable given the multiples.
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Attempting to unearth value, will it be found?
Eero Hautaniemi has been nominated as CEO for the circular economy businesses and Antti Niitynpää for the real estate services businesses as part of Lassila & Tikanoja Plc’s planned partial demerger.
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Rauli has written comments on the appointments of the management of the demerging companies and a little more.
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From Rauli: New extensive report on L&T:
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Here’s also a video breakdown of the company:
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Here are Rauli’s pre-earnings thoughts, as L&T reports its results this Thursday.
We expect adjusted operating profit to be approximately at the same level as the comparison period and the company to reiterate its guidance for the current year, i.e., revenue to be at the same level and adjusted operating profit to be at the same level or better.
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Second quarter revenue was 196.3 million euros (199.2)
Second quarter adjusted operating profit was 14.9 million euros (12.7), which was 7.6% (6.4) of revenue
Revenue was in line with forecasts, but adjusted operating profit was slightly better than expected.
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This matter is also progressing.
The preparation for the partial demerger, initiated in December 2024, progressed as planned during the review period. The Board of Directors of Lassila & Tikanoja Oyj has, at its meeting on August 7, 2025, approved the demerger plan to separate the circular economy businesses into a new listed company. Further information on the demerger plan will be provided in a separate stock exchange release.
Edit: Here it is:
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Here’s my short tweet thread about the result. A slightly better result than predicted.
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Here are Rauli’s comments.
L&T’s adjusted operating profit improved from the comparison period and exceeded our expectations, even though revenue decreased slightly as expected. The company kept its guidance unchanged, meaning it expects the adjusted operating profit to be at the same level or better. The company also confirmed its plan to split into two listed companies at the turn of the year and published the financial targets for the new companies. At first glance, there were no major surprises in these.
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Lassila & Tikanoja’s Board Gives Green Light to Demerger, Investors Get More Information on Companies’ Figures
The planned implementation date for the demerger is at the turn of the year, December 31, 2025. Trading in new shares could begin approximately on January 2, 2026.
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Regarding adjusted operating profit, we are already approximately €5 million ahead of last year, and in addition, the CEO commented that the performance of Swedish property services will improve towards the end of the year. Furthermore, the good early-year development of Finnish property services should also be reflected as an improvement in the latter part of the year. However, management is very cautious with the guidance, as the guidance was still maintained as “adjusted operating profit at the same level or better”. When asked about the guidance in the webcast, management did not indicate any particular weakness expected for H2, but merely stated that the larger half of the year in terms of results is yet to come.
Mikko Mäkinen also commented on L&T on X:
https://x.com/Mikko_M_Makinen/status/1953479638866448703?t=_Gd389HwvdpaWXqVrHKeLw&s=19
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In these demerger cases, where a company splits into two, their sum is often 1+1=2.5, especially in the longer term. Of course, there are also weak examples, such as Nokia (+ Microsoft, which was actually a divestment) and Withsecure + F-Secure, which has been among the weakest in terms of demergers so far. In other words, demergers have often been profitable for investors, although one half is often weaker or less interesting than the other. I believe that Mikko, thanks to his experience, sees the same thing here as I do, because history contains numerous cases where shareholder value has been unlocked quite commendably after a demerger.
History knows somewhat similar demergers, e.g., UPM + Raute, Digia + QT Group (QT’s divestment and listing years later), Outokumpu + Outotec, Metso → Valmet + Metso, Metso + Neles (Neles eventually merged with Valmet in 2022), Fiskars + Wärtsilä, Kemira + Kemira Growhow (separation and sale to Yara International), YIT + Caverion, and Sampo + Mandatum.
There are certainly others, and I might remember some incorrectly. In any case, value has often been unlocked after a demerger, sometimes quickly and in many cases eventually over time. From an investor’s perspective, the situation is not hindered by the fact that the interest in defensive Lassila & Tikanoja is at rock bottom, the result in this market situation is good, the multiples are very affordable, and the dividend is decent to cover risks.
EDIT: Apparently, Withsecure’s value was just unlocked as a consortium of CVC and Siilasmaa attempts to acquire Withsecure. Raute and UPM have indeed not been together, and it’s hard to say where that memory came from.
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The spin-offs have indeed produced a good result. Especially the spun-off company has succeeded.
L&T is interesting, the numbers look good. I think I’ll buy it for my portfolio for the first time.
In addition to those mentioned, Fortum → Neste and, from the Swedish side, Atlas Copco → Epiroc come to mind.
To my knowledge, Raute has never been a part of UPM?
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Rauli has prepared a new company report on L&T.
L&T’s Q2 result exceeded our forecasts as Finnish Property Services continued its strong earnings improvement. We slightly raised our forecasts due to the good result. We reiterate our Add recommendation and a target price of 10.5 euros.
Quoted from the report:
If we roughly estimate the value of Property Services at 100 MEUR, the EV of the rest of L&T would be approximately 370 MEUR. L&T without Property Services generated over 40 MEUR in adjusted operating profit. Thus, the EV/EBIT for continuing operations would be around 9x. In our opinion, this would be too low a level, as without Property Services, the quality and stability of L&T’s earnings would, in our view, be clearly better than before. Furthermore, a strengthened focus on the circular economy could make the company a more attractive investment target and potentially also an acquisition target.
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OP was a bit bolder in its reaction, as they raised the target price from €10.50 to €10.70. The ‘Add’ recommendation was reiterated.
Profitability is improving, and the partial demerger could highlight the value of the Circular Economy business. On the other hand, the clearest opportunity for value creation lies in the success of the Swedish turnaround. OP considers a positive profit warning this year very possible - and if the Swedish turnaround succeeds, this is almost certain.
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Let’s add from Kauppalehti’s flash news, SEB was more generous:
SEB raises Lassila & Tikanoja’s target price to 11.20 euros from 10.30 euros and its recommendation to buy from hold.
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