Nobia Q2 2025 slides: Profitability improves despite sales decline

Introduction & Market Context

Nobia AB (STO:NOBI) released its Q2 2025 results on July 18, showing improved profitability despite continued sales pressure. The kitchen manufacturer’s stock fell 6.18% following the announcement, reflecting investor concerns over declining sales and challenging market conditions. According to the presentation, Nobia continues to face headwinds from soft project markets and store closures in the UK, though the company notes a gradual recovery in the consumer segment.

The kitchen market across Nobia’s operating regions shows mixed signals. In the Nordic region, there’s a slight recovery in housing transactions with government grants supporting home renovations, while housing completions remain at historically low levels. The UK market continues to struggle with low consumer confidence, though house prices are trending upward with a gradual increase in residential transactions.

Quarterly Performance Highlights

Nobia reported net sales of SEK 2,695 million for Q2 2025, down from SEK 2,933 million in the same period last year, representing an organic decline of 5%. Despite the sales decrease, the company improved its EBIT to SEK 68 million (up from SEK 42 million), resulting in an EBIT margin of 2.5% compared to 1.4% in Q2 2024.

As shown in the following financial highlights table:

Gross margin declined slightly to 38.8% from 39.4% in the previous year, which the company attributes to under-absorption and increased depreciation, partially offset by mix improvements. Notably, operating cash flow showed significant improvement, reaching SEK 100 million compared to negative SEK 53 million in Q2 2024.

The company highlighted that cost reductions are materializing ahead of plan, with selling, general and administrative expenses (SG&A) decreasing to SEK 831 million from SEK 944 million in the comparable period.

Regional Performance

Nordic Region

The Nordic region continues to be Nobia’s strongest market, achieving an impressive EBIT margin of 8.9% despite challenging market conditions. Organic net sales declined by 3%, which represents an improvement from the 14% decline in Q1 2024. Consumer sales increased while project segment sales continued to decline.

The following chart shows the detailed performance of the Nordic region:

Denmark remains the largest market in the Nordic region, accounting for 52% of sales, followed by Sweden (23%), Norway (19%), and Finland (6%). The retail segment represents 37% of sales, while the project segment accounts for 46% and trade for 17%.

The company noted that Denmark and HTH continue to show strong development. However, gross margin was impacted by ramp-up costs for the new Jönköping factory, decreasing to 36.4% from 38.2% in Q2 2024.

UK Region

The UK region continues to face challenges but shows signs of improvement. Organic sales decreased by 7%, compared to 5% growth in Q2 2024, primarily due to project market decline. However, when adjusted for store closures, net sales remained unchanged.

The following breakdown shows the UK region’s performance:

The UK operations still posted a loss with an EBIT of negative SEK 21 million, though this represents an improvement from negative SEK 32 million in Q2 2024. The EBIT margin improved to -1.8% from -2.4%.

Gross margin in the UK improved to 41.6% from 40.6%, which the company attributes to favorable mix development and cost reductions that partly offset negative volume impact. The retail segment dominates the UK business, accounting for 45% of sales, followed by trade (21%), project (15%), and other segments (19%).

Strategic Initiatives

Nobia continues to execute on several strategic initiatives aimed at improving operational efficiency and profitability. The company is focusing on three main areas: maximizing cost efficiency, realizing the full Nordic potential, and transforming UK operations.

Cost reduction programs have exceeded SEK 600 million in run-rate improvements, with the company implementing a new Group organization focused on decentralization and local accountability to enable further cost savings.

In the Nordic region, Nobia is strengthening its supply chain with the ramp-up of the new Jönköping factory, which has received a prestigious BREEAM "Excellent" sustainability certification. The factory is gradually increasing shipments with complete kitchens to external customers starting in August 2025.

The transfer of production from Tidaholm to Jönköping is scheduled to be completed during 2025, with remaining investments of approximately SEK 120 million in capex and SEK 250 million in cash outflow. Additionally, the company is transferring production in Finland to Denmark to further consolidate its manufacturing footprint.

In the UK, Nobia continues its transition to an asset-light operating model by closing underperforming stores, adding sales through partnerships, and consolidating its supply chain. The company is also focusing on driving average order values through better products in higher price points.

Financial Position

Nobia’s financial position shows improved cash flow but increased debt levels. Cash flow from operating activities increased to SEK 236 million from SEK 165 million in Q2 2024, while operating cash flow turned positive at SEK 100 million compared to negative SEK 53 million.

The following table details the company’s financial position:

Financial net debt increased to SEK 2,499 million from SEK 1,934 million a year earlier, with the financial net debt to equity ratio rising to 63% from 37%. Total (EPA:TTEF) net debt, including IFRS 16 leasing liabilities and net pension debt, stood at SEK 4,955 million, with a net debt to equity ratio of 124%, up from 90% in the previous year.

In July, Nobia received SEK 70 million of the amount withheld by the buyer of the Jönköping property in 2024, with approximately SEK 30 million still remaining withheld.

Forward-Looking Statements

Looking ahead, Nobia outlined several priorities for the coming quarters. The company plans to continue advancing its strategic agenda by ramping up the Jönköping factory, turning around UK operations, and delivering on cost reduction programs.

Nobia aims to leverage its strong brands and new organization to capture growth in consumer sales, increase average order values, and enhance productivity. The company emphasized its commitment to disciplined cost control and strict working capital governance.

While the presentation maintains an optimistic outlook, investors appear concerned about the continued sales decline and challenging market conditions, as reflected in the stock price drop following the results announcement. The stock is currently trading near its 52-week low of SEK 2.86, with a current price of SEK 4.79, down 6.18% from its previous close.

Full presentation:

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