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Introduction & Market Context
NCAB Group’s stock plummeted 19.05% on April 25, 2025, following the release of its Q1 2025 results, despite showing signs of business stabilization. The PCB solutions provider reported a modest 1% increase in net sales to 958 MSEK, while order intake grew 5% to 1,014 MSEK, yielding a positive book-to-bill ratio of 1.06. However, profitability metrics declined significantly year-over-year, with EBITA falling to 100 MSEK (10.4% margin) from 143 MSEK (15.0%) in Q1 2024, and the board proposed suspending dividends due to market uncertainty.
Quarterly Performance Highlights
NCAB’s Q1 2025 results showed mixed performance across key metrics, with order intake outpacing sales growth, suggesting potential future revenue improvement. The company emphasized a recovery from the particularly weak Q4 2024, when net sales had fallen to 830 MSEK.
"Positive order intake and adapting to tariffs" was highlighted as a key takeaway in the company’s presentation, with continued strong order development in North America and East regions, while Europe showed improvement compared to Q4.
Performance varied significantly across NCAB’s four geographical segments. The East segment delivered the strongest results with 24% net sales growth and improved EBITA margins of 16.3%. North America showed robust order intake growth of 18% despite a 2% decline in sales, while Europe and Nordic regions faced more significant profitability challenges.
Strategic Initiatives
NCAB announced the acquisition of B&B Leiterplattenservice GmbH in Germany, continuing its active M&A strategy. The acquisition target generates approximately 150 MSEK in annual revenue with EBITA exceeding 20 MSEK, and focuses on industrial and energy customers in eastern Germany. The deal is expected to close in early May.
The company’s acquisition pipeline remains robust, with NCAB having identified approximately 300 potential target companies, primarily in Europe, US, and East regions. The presentation highlighted six acquisitions completed in 2024/2025, including Cumatrix (Belgium), EPI Components (Austria), and DVS Global (Italy), among others.
NCAB also addressed the impact of tariffs on Chinese imports, particularly affecting its US business. Management noted that tariff costs are being transferred to US customers, while also highlighting the opportunity to leverage non-Chinese supply sources. This aligns with the company’s strategy of maintaining flexibility in its supply chain.
Forward-Looking Statements
In a significant move that likely contributed to the negative market reaction, NCAB’s board proposed withholding dividends, a stark contrast to the 1.10 SEK per share paid in 2024. The company cited "market uncertainty" as the primary reason for this conservative approach to capital allocation.
The company’s presentation emphasized "Focus on flexibility in the turbulence" as its overarching theme, suggesting continued challenging market conditions despite the modest recovery from Q4 2024. This cautious outlook appears at odds with the relatively stable top-line performance, potentially explaining investor concerns.
Detailed Financial Analysis
NCAB’s long-term financial trends show stabilization in sales after a significant decline from the peak of 4,458 MSEK in 2022 to 3,614 MSEK in 2024. However, gross margins have weakened from 38% in 2024 to 35% in the last twelve months ending Q1 2025.
The company’s financial position shows increasing leverage, with net debt to EBITDA rising to 1.6 from 0.7 in 2024. Return on equity has declined significantly to 15.1% from 26.3%, while working capital as a percentage of net sales increased to 9.0% from 8.0%.
The quarterly EBITA trend illustrates the recovery from Q4 2024’s low point of 72 MSEK, but also highlights the substantial year-over-year decline from Q1 2024’s 143 MSEK. This pattern of recovery from a low base, yet significant year-over-year deterioration, characterizes much of NCAB’s Q1 2025 performance.
The market’s strongly negative reaction to these results suggests investors were expecting more substantial improvements in profitability or a more optimistic outlook, particularly given the company’s decision to suspend dividends despite showing signs of stabilization in sales and order intake.
Full presentation:
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