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Introduction & Market Context
Netel Holding AB (STO:NETEL) presented its second quarter 2025 results on July 11, showing mixed performance across its business segments. The infrastructure service provider, currently trading at 10.38 SEK (down 1.14% on July 10), continues to navigate challenging market conditions while implementing strategic initiatives to strengthen its core business.
The company’s stock has been under pressure in recent months, trading significantly below its 52-week high of 23.9 SEK, reflecting investor concerns about profitability and cash flow. Following disappointing Q1 results that saw a negative EPS of 0.08 SEK, Netel’s Q2 presentation aimed to demonstrate progress in its strategic repositioning.
Quarterly Performance Highlights
Netel reported Q2 2025 net sales of 789 MSEK, representing a 7.7% year-over-year decline, with organic growth also at -7.7%. Despite the revenue contraction, the company highlighted an increased order backlog of 4.1 BSEK, laying the foundation for potential future growth.
As shown in the following chart of quarterly performance metrics:
Adjusted EBITA came in at 41 MSEK with a margin of 5.2%, slightly down from 5.6% in the same period last year. The company attributed this margin compression to a high level of project startups and an unfavorable project mix, particularly in the Power segment.
The following chart illustrates Netel’s adjusted EBITA and margin trends over recent quarters:
Earnings per share showed significant year-over-year decline at 0.11 SEK compared to 0.30 SEK in Q2 2024. Operating cash flow deteriorated to -62 MSEK from 41 MSEK in the comparable period, while the company’s leverage ratio increased to 3.4x, exceeding its capital structure target.
The following chart shows the operating cash flow and net debt trends:
Segment Performance Analysis
Netel’s performance varied significantly across its three business segments, with Telecom (BCBA:TECO2m) showing strong improvement while Infraservices and Power faced challenges.
The Telecom segment, which accounts for 46% of net sales, delivered 3.0% revenue growth to 364 MSEK and dramatically improved its EBITA margin to 6.7% from 1.8% in Q2 2024. This improvement was driven by strong performance in Sweden and Germany, with the latter showing impressive 33.9% growth. The company noted that one-time effects contributed positively to the segment’s results.
The Telecom segment’s performance is illustrated in the following chart:
In contrast, the Infraservices segment experienced a significant 29.8% revenue decline to 157 MSEK, with EBITA margin dropping to 3.6% from 7.6% in Q2 2024. Despite these challenges, Netel emphasized its efforts to expand its customer base and geographical presence in this segment.
The Infraservices segment’s performance is shown in the following chart:
The Power segment, representing 34% of net sales, saw a modest 3.5% revenue decline to 268 MSEK, but its EBITA margin contracted significantly to 3.0% from 7.2% a year earlier. The company attributed this to a high level of project startups in Sweden and a changed project mix with a lower proportion of power plant projects. Netel expects profitability to improve in the second half of 2025 as new projects begin and transition into the production phase in 2026.
The Power segment’s performance is detailed in the following chart:
Strategic Initiatives & Business Wins
A key strategic milestone in Q2 was the successful completion of the sale of Netel’s lossmaking Finnish operations on June 30, 2025. The company described this as an important step in building a stronger Netel, allowing it to focus resources on its core markets of Sweden and Norway, as well as growth markets in Germany and the UK.
Netel also highlighted several significant business wins across all segments:
In Infraservices, the company expanded its collaboration with Mälarenergi in Sweden, securing two new projects focused on the renewal of heating and water systems.
The Power segment secured a new five-year framework agreement with E.ON in Sweden, with guaranteed volumes totaling 330 MSEK. The contract covers project contracting for local networks in several areas including Örebro, Norrköping, Eastern Småland, and parts of northern Sweden.
In the Telecom segment, Netel signed a two-year contract worth EUR 19 million with envia TEL, a leading telecommunications operator in central Germany and part of the E.ON Group. This agreement represents both a new customer acquisition and geographical expansion in Germany.
The company’s strategic vision is summarized in the following slide:
Financial Position & Outlook
Netel’s financial position shows some concerning trends, with negative operating cash flow of -62 MSEK and a leverage ratio of 3.4x, exceeding its capital structure target. However, the company expects positive cash generation by year-end due to project completions and final invoicing in Q4.
The company is implementing margin-enhancing measures initiated in 2024, which it expects to gradually impact results. For the Power segment specifically, Netel anticipates margin improvements as new projects begin in the second half of 2025 and transition into the production phase in 2026.
Looking ahead, Netel is positioning itself to capitalize on strong mega trends including electrification, digitalization, and infrastructure modernization. With its order backlog of 4.1 BSEK, broadened customer base, and geographical presence, the company believes it has laid the foundation for future growth despite current challenges.
The next quarterly update is scheduled for October 24, 2025, when Netel will present its Q3 2025 results.
Full presentation:
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