A Year Ago, Many Were Asking Whether It Still Made Sense to Invest in the Helsinki Stock Exchange – Earnings Season Q3/2025

A Year Ago, Many Were Asking Whether It Still Made Sense to Invest in the Helsinki Stock Exchange

Last autumn, we had numerous discussions with different parties about whether it still made any sense to invest in the Helsinki Stock Exchange at all. Three years of sluggish performance, the absence of AI companies, the strong momentum in the US equity market and the general mood in Finland all contributed to a very pessimistic view of Finnish listed companies.

In situations of total pessimism, company valuations are what give way — downwards. Almost exactly one year ago, our Chief Investment Officer Johan Elfvengren wrote an excellent blog on this topic, comparing expected long-term returns while taking into account the valuation levels of different stock markets. Johan’s blog from last year remains highly relevant, and you can read it here.

This year has been different. Foreign investors have returned, cautious buying interest has increased, and quarter by quarter confidence in a corporate earnings recovery has strengthened. Expectations for the second half of the year — improving profitability but still slow revenue growth — were largely met. Overall, revenues are still growing very slowly, partly due to the clear weakening of the US dollar. Profitability, however, showed some genuinely good achievements and even clearly positive surprises from large companies.

At the same time, valuation levels on the Helsinki Stock Exchange have risen this year, meaning investors are increasingly looking ahead to improved earnings development next year. The need for selectivity in stock picking is clearly increasing.

Let us go through the positive and negative observations by sector and, in some cases, by company.

Positive Observations

Capital Goods as a Whole

The capital goods sector has become an extremely significant part of the Helsinki Stock Exchange when looking at the index structure. Following a very strong earnings track record, capital goods companies received orders in early autumn as expected, and business profitability remained at a very good level.

The stars of this earnings season were Konecranes and Metso. Both exceeded expectations in order intake and improved profitability, beating forecasts. What makes this particularly interesting is that both companies have been valued below the market average on earnings metrics, and both have been held, among others, in our Arvo Suomi fund.

Both are global companies, and Metso in particular is supported by the ever-growing global need for raw materials. To borrow from the old gold rush slogan: by owning Metso, you own a company that sells picks and shovels to gold miners.

Wärtsilä is also worth mentioning for its opportunities as a partner in the electrification of data centres, which has clearly lifted the company’s valuation multiples. Kone, Kalmar, Hiab and Valmet all delivered reasonably solid performances as well.

It is also worth noting that in the capital goods sector, the share of service revenue is systematically increasing over the long term, reducing cyclicality. Defence industry investments will also inevitably be reflected in this sector.

Banks and Financials

Nordea and Sampo continue to lead the way and move forward like a Pendolino train. Nordea’s return on equity now appears to be sustainably above 15%, and credit losses excluding management overlays were 3 basis points — in practice, nothing at all. Considering the current state of the Finnish economy, this says a great deal about Nordea’s risk-taking policy.

At Sampo, the combined ratio continues to improve quietly, and most encouragingly, growth appears to be accelerating following the Topdanmark acquisition. Both companies are among the very best in the Nordics in their respective sectors — and listed on the Helsinki Stock Exchange.

The “N Group”: Nokia and Neste

And what did these listed giants do? After a difficult spring, both clearly exceeded expectations. Although neither company raised guidance significantly, the earnings season gives reason to believe that the worst may be behind both of them.

Neste performed well in renewable diesel, particularly in Europe, and the path ahead remains closely tied to political decisions. If decisions concerning sustainable aviation fuel, or SAF, hold, this will imply strong global demand for renewable biofuels in the coming years.

Nokia’s result was promising and clearly exceeded expectations, while the share price moved significantly higher. But the real news bomb arrived at the end of October, when Nvidia announced a cooperation agreement with Nokia and subscribed for USD 1 billion of Nokia shares at a price of just over EUR 5 per share. This strengthens confidence in Nokia’s technical ability to participate in data centre projects and in its opportunities, for example, in US network deliveries.

Neste and Nokia are back in the game. And both can be found in the Arvo Suomi fund — as well as listed on the much-maligned Helsinki Stock Exchange.

Those were the largest positive groups, but unfortunately the earnings season also included negative surprises.

Negative Observations

Several Small Companies Issued Profit Warnings

During October, several small companies issued profit warnings. In that sense, we can be reasonably satisfied that, according to our calculations, only three of them were held in our Micro Finland fund — alongside three positive profit warnings — while in total at least 14 companies issued negative profit warnings during the season.

The group included, among others, Dovre, Kesla, Wetteri, Nurminen Logistics, Suominen and Remedy. At the same time, positive profit warnings were also issued by companies such as Alma Media, L&T and GRK.

Overall, the weaker demand environment in the Finnish economy was visible to some extent among smaller companies. At the same time, investor interest in small caps, both in Finland and globally, remains fairly weak. This is reflected even in the valuations of good small companies and also means that majority owners, together with private equity investors, are taking companies private from the stock exchange, as seen with WithSecure and Citycon.

In other words, a certain apathy continues in this part of the market. Investor enthusiasm is lacking, some companies face major challenges, and at the same time companies are being acquired away from the market.

A positive feature of the season was the listing of two new companies: Cityvarasto and Posti. Both fall into the small-cap category on the Helsinki Stock Exchange by market capitalisation. The offerings were oversubscribed, and Posti’s journey as a listed company began with a pleasant rise. Cityvarasto, on the other hand, has so far left investors waiting in terms of share price development.

We participated in both offerings, and hopefully this will help open the IPO window more broadly. There is plenty of potential in small caps, but when capital will begin flowing into them more widely is impossible to predict. While we wait, several companies will likely be taken private, because valuation levels in many places look like something from a joke book.

QT

Unfortunately, this former star growth company has stalled, either because of the difficulties in the automotive industry or because competition has increased. Investors are still debating which explanation is correct, and this is reflected in highly uncertain share price development.

At the moment, the issue appears to be customers’ reluctance to invest, and it is extremely difficult to assess when that will end. Due to disappointments, confidence in QT’s forecasts and growth outlook has fallen clearly.

Elisa

The result itself was still reasonably okay, but the layoff of 400 employees speaks of a significant tightening in competition and has brought dark clouds over Elisa. The valuation premium relative to European peers has melted away, and Elisa, previously seen as a highly predictable company, has introduced a great deal of uncertainty around future earnings — as well as the dividend and its ability to grow.

Those were the most positive and negative observations from the earnings season. There were also many neutral cases, where demand or prices remain weak, but companies’ own capabilities are gradually beginning to emerge. This was visible, for example, in the forest industry and construction sector. We are at the bottom, but how long we stay there remains a mystery.

In the private healthcare sector, pressure was created by a “delayed flu season”, although there were also issues related to the shift from public sector services to the services provided by wellbeing services counties.

Helsinki Q3/2025 Earnings Season: Promising, and in Many Ways Already Good

The Q3/2025 earnings season on the Helsinki Stock Exchange was, at its starting point, encouraging and in many respects already good. Not excellent, but good.

At the same time, the average P/E multiple for this year has risen to around 20x, which is high. But when taking into account the earnings difficulties many large companies faced in the first half of the year, as well as expectations for a return to more normal conditions next year, the multiple falls to around 16x — roughly the historical average. This is lower than in the United States, but higher than in broader Europe.

For next year, the most important factor would be continued and accelerating growth in Europe. Our listed companies are not dependent on the development of the Finnish economy, but they are dependent on the development of the European economy.

Lower interest rates, slowing inflation and rising wages give all consumers the opportunity to increase spending next year, provided psychological factors allow it. In addition, the German government’s major investment programmes and Europe’s defence industry investments provide a credible basis for expecting a clear earnings improvement next year.

If both Finnish and European consumers also dare to loosen their purse strings a little more, next year could be quite good.

Investors in the Helsinki Stock Exchange have this year enjoyed returns among the best in the Western world, with gains of around 20–30% depending on the index. Claims that our listed companies lack capability, are poorly managed or interest no one are simply not true.

Finland has excellent companies by international standards. Most of them are professionally and well managed, we have highly skilled and well-educated employees, and valuation levels have been low. After this year’s share price rise, only one of those factors has changed: valuations, which are now neutral.

When the economy eventually returns to stronger growth, our listed companies will be in excellent shape to grow, hire more employees and create additional value for shareholders.

This year has shown that rumours of the death of the Helsinki Stock Exchange were greatly exaggerated.

6.11.2025, Espoo