Garo Q2 2025 slides: Profitability improves despite 13% revenue drop

Introduction & Market Context

Swedish electrical equipment manufacturer Garo AB (STO:GARO) presented its Q2 2025 results on August 22, 2025, revealing a continued sales decline but improving profitability metrics amid challenging market conditions. The company’s stock traded down 1.11% to SEK 19.82 following the presentation, reflecting ongoing investor concerns about market headwinds.

Garo reported net sales of MSEK 266.5 for the quarter, representing a 13% year-over-year decline from MSEK 306.3 in Q2 2024. Despite the revenue drop, the company managed to improve its adjusted EBIT to MSEK 1.0, up from a loss of MSEK 4.3 in the same period last year, resulting in a positive adjusted EBIT margin of 0.4%.

The presentation highlighted the varied market conditions affecting Garo’s business segments, with continued weakness in Swedish residential construction contrasting with stronger performance in international markets, particularly Ireland.

Quarterly Performance Highlights

Garo’s Q2 2025 results showed divergent performance between its two main business segments. The Electrification segment, which accounts for approximately 77% of total revenue, reported net sales of MSEK 206.0, down 7% from MSEK 221.9 in Q2 2024. Despite the decline, this segment remained profitable with an adjusted EBIT of MSEK 15.2, though down from MSEK 20.4 in the prior year.

As shown in the following chart of Electrification segment performance:

The E-mobility segment continued to face significant challenges, with net sales declining 28% year-over-year to MSEK 60.5 from MSEK 84.4. While still operating at a loss, the segment’s adjusted EBIT improved to MSEK -14.2 from MSEK -24.7 in Q2 2024, reflecting the impact of cost reduction measures and a more focused go-to-market strategy.

The following chart illustrates the E-mobility segment’s performance trends:

Cash flow showed marked improvement, with operating activities generating MSEK 9.4 compared to MSEK -9.3 in Q2 2024. The company’s balance sheet remained relatively stable with net debt of MSEK 279.6 (down from MSEK 293.2) and an improved equity/assets ratio of 51.4% (up from 49.6%).

The following table provides a comprehensive view of Garo’s cash flow and balance sheet metrics:

Strategic Initiatives

Garo outlined several strategic initiatives aimed at stabilizing performance and positioning for future growth. A key development is the leadership transition in the E-mobility segment, with CEO Jonas Klarén assuming interim responsibility following Niklas Rönnäng’s departure. This move aims to ensure stability and clear direction for the struggling segment.

The company is also implementing a significant restructuring of its Swedish operations, merging two separate sales structures into one national organization under newly appointed Country Manager Sweden, Daniel Emilsson. This integration is expected to increase customer proximity, capitalize on synergies, and strengthen Garo’s commercial impact in its home market.

As illustrated in the following strategic overview:

Garo presented a three-phase execution path for 2025, with the foundation laid in Q1 through key leadership appointments, followed by the current strengthening and alignment phase from May to August, and culminating in an integration and acceleration phase from September to December.

The execution roadmap highlights the company’s systematic approach to transformation:

Detailed Financial Analysis

Comparing Q2 2025 results with Q1 2025, Garo showed slight sequential improvement. Net sales increased from SEK 265 million in Q1 to MSEK 266.5 in Q2, while adjusted EBIT improved from SEK 0.4 million to MSEK 1.0, demonstrating incremental progress in the company’s recovery efforts.

The operational highlights presented by Garo provide context for the financial performance, noting continued strong performance in Ireland, stabilization in Norway, and challenges in the Swedish residential construction market. The company also highlighted stronger margins in several markets outside Sweden and ongoing cost reduction measures in the E-mobility segment.

The comprehensive operational overview presented by the company:

The financial highlights slide summarized the key metrics and market conditions affecting performance:

Forward-Looking Statements

Looking ahead, Garo maintains a cautious but constructive outlook. The company expects gradual recovery in public charging, particularly in AC charging, and sees its long-term growth drivers as intact despite current market challenges. The strategic framework agreement signed for a large infrastructure project is expected to strengthen Garo’s reference base in charging infrastructure.

The integration of Swedish sales operations under new leadership is a key focus area, along with the full implementation of the group governance model by the end of 2025. Garo emphasized its readiness to accelerate when market conditions improve, while continuing to navigate actively in the current environment.

As outlined in the company’s outlook:

Garo’s Q2 2025 presentation reflects a company in transition, balancing short-term profitability improvements with strategic restructuring to position for future growth. While sales continue to decline, particularly in the E-mobility segment, the improvement in adjusted EBIT and cash flow suggests that cost control measures are yielding results. The success of the ongoing leadership changes and Swedish sales integration will be critical factors to watch in upcoming quarters as Garo works to stabilize performance and capitalize on long-term growth opportunities in electrification and smart infrastructure.

Full presentation:

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