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Introduction & Market Context
Garo AB (STO:GARO) presented its Q1 2025 results on May 14, 2025, revealing a 9% year-over-year revenue decline but improved profitability metrics. The Swedish electrical equipment manufacturer’s stock reacted negatively to the results, falling 9.53% to close at SEK 22.55, reflecting investor concerns about continued weakness in key markets.
The company reported net sales of SEK 264.8 million for the quarter, down from SEK 292.5 million in Q1 2024, while adjusted EBIT improved to SEK 0.4 million from a negative SEK 6.7 million in the prior year. The results highlight Garo’s ongoing challenges in the Nordic residential construction market and e-mobility segment, even as cost-cutting measures begin to show positive effects.
Quarterly Performance Highlights
Garo’s Q1 2025 performance showed a clear divergence between its two business segments. The Electrification unit demonstrated relative stability with only a 2% revenue decline, while the E-mobility segment continued to struggle with a 28% drop in sales.
As shown in the following operational highlights from the presentation, the company faced mixed market conditions across its portfolio:
In the Electrification segment, Garo reported net sales of SEK 204.2 million (compared to SEK 208.2 million in Q1 2024) and adjusted EBIT of SEK 17.3 million (up from SEK 16.9 million). The company highlighted strong development in Ireland and Finland, while noting that the Nordic residential market remains weak.
The following chart illustrates the Electrification segment’s performance trends:
The E-mobility segment continued to face significant headwinds, with net sales falling to SEK 60.6 million from SEK 84.3 million in Q1 2024. However, the segment’s adjusted EBIT loss narrowed to SEK 17.0 million from SEK 23.6 million, reflecting the impact of cost reduction initiatives.
The E-mobility segment’s performance is illustrated in this chart:
Despite the revenue challenges, Garo’s cash flow showed notable improvement. Cash flow from operating activities after changes in working capital was SEK 0.5 million, compared to negative SEK 43.8 million in Q1 2024. The company reported net debt of SEK 286.0 million and an equity/assets ratio of 51.2%.
The financial data is summarized in the following table:
It’s worth noting that Q1 results were burdened with SEK 2.9 million in settlement costs for the former President and CEO, impacting the quarter’s profitability.
Strategic Initiatives
A significant focus of Garo’s Q1 presentation was the introduction of a new leadership team to drive the company’s strategic initiatives. The company has appointed Joe Ree as Chief Operating Officer, Paul Fox as Chief Technology Officer, and Karin Wigert as Chief Human Resources Officer.
The following slide details the focus areas and expected impact of each new executive:
Garo also outlined a three-phase execution path for 2025, beginning with the foundation laid in Q1 (appointing the new leadership team), followed by strengthening and alignment initiatives from May to August, and culminating in integration and acceleration from September to December.
The company’s strategic roadmap is illustrated here:
CEO Jonas Klarén emphasized the company’s adaptability and strategic focus during the earnings call, stating, "We are staying the course with the ability to adapt quickly, act with discipline and always move with a purpose." This approach is reflected in the company’s mantra: "We don’t wait for the wind we adjust our sails."
Forward-Looking Statements
Garo maintains a cautious short-term outlook while expressing confidence in long-term growth drivers. The company noted that market recovery is slow but visible in housing and charging segments, and that long-term demand for electrification remains strong.
The company’s outlook is summarized in this slide:
Management highlighted several positive developments, including operational progress, improved cost control, and strengthened foundations in both the Electrification and E-mobility segments. The company also pointed to cash flow and EBIT improvements as signs of operational progress.
Analyst Perspectives
The market reaction to Garo’s Q1 results suggests investors remain concerned about the company’s revenue trajectory and challenging market conditions. The stock’s 9.53% decline following the earnings release placed it closer to its 52-week low of SEK 17.8, well below its 52-week high of SEK 33.
Analysts have noted that while Garo’s cost-cutting measures are showing results, the continued weakness in the E-mobility segment and Nordic residential markets remains a significant headwind. According to available data, analysts expect 3% revenue growth for FY2025, suggesting a potential recovery ahead.
During the Q&A session, analysts inquired about sales momentum in Q2, with particular attention to the impact of fewer working days. Garo highlighted significant project wins in the UK and the full realization of cost-cutting measures as factors that could support future performance.
The company’s moderate debt level, with a debt-to-equity ratio of 0.54, provides some financial flexibility as it navigates the current market challenges and positions itself for future growth opportunities in electrification and smart infrastructure markets.
Full presentation:
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