Kreate Group (KREATE) Danske Bank Finnish Small and Mid Cap Seminar presentation summary

Company overview and business model

• Specializes in technically challenging infrastructure projects, including bridges, roads, railways, and geotechnical services.

• Operates mainly in Finland (85% of revenue) and Sweden (15%), with a 50% stake in KFS Finland Oy.

• Listed on Nasdaq Helsinki since 2021, with over 500 projects annually and a workforce of 150+ professionals.

• Maintains a balanced customer mix: 50% public sector, 35% cities/municipalities, 14% private sector.

• Focuses on sustainability, material efficiency, and circular economy initiatives.

Financial performance and targets

• Revenue reached €275M with an order backlog of €177M and an EBITA margin of 3.2%.

• Revenue has grown at a CAGR of 8.4% from 2017 to 2024, with a target of 5–10% annual growth through 2027.

• Financial goals for 2024–2027: EBITA margin above 5%, net debt/EBITDA below 2.5, and annual dividend payout of at least 50% of net result.

• Dividend has increased four years in a row, with a 2024 proposal of €0.50 per share (7% yield).

• Maintains a light balance sheet and modest net working capital, supporting good return on equity.

Strategic focus and growth initiatives

• Selectively bids for projects, winning about 20% of bids, with over 96% of projects profitable.

• Aims to double Swedish revenue to SEK 650M by 2027, expanding from subcontractor to main contractor and into new construction types.

• Targets over 25% of group revenue from railway projects in Finland, with major ongoing and upcoming projects like Koskela Tram Depot, Tampere Passenger Rail Yard, and Vantaa Tramway.

• Well positioned for long-term growth driven by urbanization, green transition, transport, and industrial investments.

• Strategy emphasizes sustainable profitability, technical excellence, and being the most sought-after infrastructure partner.