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Investing.com -- Nibe Industrier AB (ST:NIBEb) shares dropped over 6% on Friday following its fourth-quarter earnings, which showed a mixed financial performance.
While overall sales beat expectations, profitability pressures and ongoing challenges in key markets weighed on investor sentiment.
Nibe reported fourth-quarter sales of SEK 11.03 billion, a 5% year-over-year decline. However, this figure surpassed consensus estimates by 3%, driven by a pickup in demand and improved inventory levels at distributors and manufacturers.
The company's smallest divisions, Element and Stove, posted better-than-expected results, benefiting from higher demand in North America and a more moderate slowdown in Europe.
Despite the positive sales momentum, Nibe's profitability came under pressure. The company's Climate Solutions segment, its largest division, reported an EBIT of SEK 830 million, a 32% decline compared to the same period last year.
This was in line with consensus expectations, but the steep year-over-year drop raised concerns among investors. The division’s sales fell 6% year-over-year to SEK 7.19 billion, although they exceeded forecasts by 2.4%.
Morgan Stanley (NYSE:MS) analysts noted that while Nibe's cost-cutting program contributed positively to fourth-quarter profitability, the broader market environment remains weak.
The German market, a key region for the company, is expected to remain a drag on performance for at least another quarter or two.
Additionally, acquisitions-related revaluations provided a one-off boost to reported profitability, which analysts believe is a non-cash event and not a sustainable driver of future earnings.
Nibe reaffirmed its full-year 2025 outlook, expecting a return to historical operating margins across all divisions.
However, analysts caution that further clarity on volume and pricing risks is needed, with the market likely to focus on these issues in upcoming earnings calls.