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Introduction & Market Context
Mips AB (STO:MIPS) presented its Q2 2025 interim report on July 16, revealing a quarter marked by continued organic growth despite significant challenges from tariff implementation. The safety technology company, known for its helmet safety solutions, reported 12% organic growth for the quarter, though EBIT declined by 22% year-over-year due to legal costs and negative currency effects.
The stock closed at 441.8 SEK on the presentation day, down 1.22% or 5.4 SEK, continuing to trade closer to its 52-week low of 319.6 SEK than its high of 612.5 SEK, reflecting ongoing investor concerns about tariff impacts on the company’s performance.
Quarterly Performance Highlights
Mips reported net sales of 135 million SEK for Q2 2025, representing a modest 1% increase compared to 133 million SEK in Q2 2024. However, organic growth was significantly stronger at 12%, indicating that currency effects negatively impacted reported figures.
Gross profit increased by 3% to 100 million SEK, with gross margin improving to 74.2% from 72.9% in the comparable quarter. Despite this improvement, operating profit (EBIT) declined by 22% to 41 million SEK, resulting in an EBIT margin of 30.1% compared to 38.9% in Q2 2024.
As shown in the following financial performance summary:
Performance varied significantly across Mips’ three product categories. The Sports category, which remains the company’s largest segment, showed resilience with 3% net sales growth despite tariff challenges. The Motorcycle segment was hardest hit, with sales declining 28% year-over-year, while the Safety category demonstrated strong momentum with 12% growth.
The following breakdown illustrates the performance across categories:
Tariff Impact Analysis
The rapid implementation of tariffs emerged as the quarter’s dominant theme, creating significant uncertainty in the US market, which accounted for 53% of Mips’ net sales in 2024. Management noted that more than half of Mips’ volume lands in the US market, making it particularly vulnerable to trade policy changes.
The company reported that helmet brands implemented price increases to offset tariff costs, which were well-accepted by retailers. Additionally, many helmet manufacturers have begun relocating production outside China to mitigate potential impacts from further tariffs.
The following slide details the current situation and expected impact from tariffs:
The Sports category demonstrated resilience despite these challenges, with volume growth for the seventh consecutive quarter and particularly strong performance in snow products. The company also highlighted continued momentum in the European market.
The Motorcycle segment faced the most significant challenges, with sales declining 28% in the quarter. Management attributed this entirely to tariff implementation effects and negative currency impacts, while maintaining that the long-term outlook for the category remains positive.
Financial Position
Mips maintained a strong financial position with cash and cash equivalents of 244 million SEK, though this represented a decrease from 266 million SEK in Q2 2024 and 382 million SEK at the end of fiscal year 2024. The company distributed a dividend of 172 million SEK (6.50 SEK per share) in May 2025.
Operating cash flow for the quarter was 18 million SEK, down from 29 million SEK in the comparable period. However, year-to-date operating cash flow showed significant improvement at 55 million SEK compared to 20 million SEK in the first half of 2024, representing a 176% increase.
The company’s balance sheet remains robust with an equity ratio of 85%, unchanged from the previous year, and no outstanding loans.
The first six months of 2025 showed stronger overall performance than the second quarter alone, with net sales up 16% (23% organically) and gross profit increasing 19%:
Outlook & Guidance
Despite the challenges faced in Q2, Mips’ management expressed confidence in the company’s long-term strategy and financial targets. They acknowledged that short-term uncertainty is expected to continue but anticipated that it would not be as severe as experienced in the second quarter.
The company noted that the situation improved toward the end of the quarter as tariff effects became more predictable. Helmet brands’ relocation of production outside China is expected to gradually reduce tariff-related disruptions.
In the Sports category, which represents the bulk of Mips’ business, management maintained a positive long-term outlook and highlighted new product launches, including the Mips® Air Node Pro version for bikes and a new event concept at Eurobike in late June.
For the Safety category, which showed 12% growth in Q2, the company characterized the performance as "moderate" but emphasized that the softness in sales was temporary and fully explained by tariff implementation delays in ordering. Management pointed to new brand wins and new products as indicators of good underlying performance.
This quarter’s performance represents a significant shift from Q1 2025, when Mips reported 42% organic growth and a 78% increase in EBIT. The tariff concerns mentioned in Q1 have materialized and substantially impacted Q2 results, particularly in the US market. However, the company’s continued organic growth and improved gross margins suggest underlying strength in the business model despite these external challenges.
Full presentation:
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