Earnings call transcript: Alphen Q2 2025 reveals reduced losses and strong margins

Alphen (ALFA) reported its Q2 2025 earnings, showcasing a notable improvement in financial performance despite a challenging market environment. The company recorded a significant reduction in net loss and an increase in gross margin, although revenue saw a decline compared to the previous year. The stock price reacted negatively, with a 5.57% drop following the earnings release. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 1.68, while operating with moderate debt levels. InvestingPro analysis indicates positive expectations for net income growth this year, despite recent challenges.

Key Takeaways

• Alphen’s net loss reduced significantly from €11.1 million to €1.3 million.
• Gross margin improved from 22.3% to 29.1%.
• Revenue for H1 2025 was €211.5 million, a 13.9% decrease from 2024.
• Stock price fell by 5.57% after the earnings announcement.
• New CEO, Michael Kolain, to take office on October 1st.

Company Performance

Alphen demonstrated resilience in Q2 2025, focusing on cost control and margin improvement amidst a competitive market landscape. The company’s strategic initiatives in product innovation and operational efficiency contributed to a substantial reduction in net loss. However, revenue experienced a decline, reflecting broader industry challenges and market saturation, particularly in the EV charging segment.

Financial Highlights

• Revenue: €211.5 million, down 13.9% year-over-year.
• Gross Margin: Increased to 29.1% from 22.3%.
• Adjusted EBITDA: Improved from 5.5% to 6.2%.
• Net Loss: Reduced from €11.1 million to €1.3 million.
• Personnel Costs: Decreased by 9.8%.
• Other Operating Expenses: Decreased by 18.3%.

Market Reaction

Following the earnings release, Alphen’s stock price dropped by 5.57%, closing at €11.22. The decline reflects investor concerns over the company’s revenue decrease and the competitive pressures in the EV charging market. With a beta of 1.9, the stock shows higher volatility than the market average. InvestingPro analysis suggests the stock may be undervalued at current levels, with 8 additional exclusive ProTips available to subscribers. The company’s strong free cash flow yield of 17% indicates efficient cash generation despite market challenges.

Outlook & Guidance

Alphen provided revenue guidance for 2025, projecting between €430 million and €480 million, with an expected EBITDA margin of 5-8%. For 2026, revenue growth is anticipated to be between 0-5%, maintaining the EBITDA margin at 5-8%. The company refrained from offering guidance for 2027 due to market uncertainties. InvestingPro subscribers can access comprehensive analysis of Alphen’s financial health score of 2.43 (Fair) and detailed revenue forecasts. The Pro Research Report, available for premium subscribers, provides deep-dive analysis of Alphen’s market position and growth prospects among 1,400+ top stocks.

Executive Commentary

• Onno Grag, CFO, emphasized the company’s cautious approach: "We are extremely careful and bracing relatively slowly and carefully."
• Marco Ruehlefeld, CEO, highlighted the importance of pricing strategy: "Price is not just about functionality and design."
• Ruehlefeld also noted the ongoing market challenges: "We do not see short-term improvements due to market constraints."

Risks and Challenges

• Competitive pressures in the EV charging market could impact pricing and margins.
• Market saturation and slowing growth in key segments pose challenges.
• Supply chain constraints and labor shortages may affect operational efficiency.
• Uncertain regulatory environment and permit issues in the Smart Grid Solutions sector.
• Potential volatility in battery prices could affect Energy Storage profitability.

Q&A

During the earnings call, analysts focused on inventory management, particularly in the EV charging segment. The company addressed concerns about competitive pricing pressures and highlighted ongoing efforts to resolve moisture issues in their products. Analysts also inquired about the potential for margin improvements, which the company acknowledged as a focus area moving forward.

Full transcript - Alfen Beheer BV (ALFEN) Q2 2025:

Moderator: Welcome to the ALFA twenty twenty five Half Year Results Conference Call hosted by Marco Rulefeld, CEO and Ono Grag, CFO. For the first part of this call, all participants will be in listen only mode. And afterwards, there will be a question and answer session. I would now like to hand the call over to Marco Ruehlefeld, Mr.

Ruehlefeld. Please go ahead.

Marco Ruehlefeld, CEO, Alphen: Thank you, and good morning, and welcome to this webcast regarding the twenty twenty five first half year trading update of Alphen. We appreciate the fact that you have taken the effort to participate. As indicated by the moderator, these webcast and the questions that may come forward are handled by the management board of Alphen, being Onno Grab’s CFO and myself, Marco Rulevelt, CEO. In this webcast, we will start with the highlights of the 2025, followed by a short review per business line. Next, we will go in more detail regarding our financials and outlook.

We continue with Slide four with the highlights of the 2025. In the first half year, we realized €211,500,000 in revenue. This represents a 13.9% reduction compared to the 2024. This was mainly driven by low revenues in Energy Storage Systems and EV charging. The overall gross margins was 29.1 of revenue compared to 22.3% of revenue percentage of revenue in the 2024.

Please note that 2024 gross margin was impacted by moisture issue provisions. As a percentage of revenue, the adjusted EBITDA improved from 5.5% to 6.2% as a result of cost saving measures. Personnel costs decreased by 9.8% and order OpEx decreased with 18.3%, showing that the cost reduction measures have been effective. We reiterate our 2025 guidance as communicated at the Q1 trading update. For our midterm ambition, we are considered as the continued challenge in market conditions that we experience in 2025 are expected to persist in 2026.

Onno will go into more detail on the financials and outlook later on in this presentation. As last point in this highlight and further detailed in the next slide, I would like to draw your attention to the appointment of Michael Kolain as per the October 1. We are convinced that he has the right background and personality to guide the company forward in the coming years. With appointment of Michael Coolein, we are assuring a careful and timely succession following my decision to retire early. Michael brings a strong background in leadership within the energy and technology sector with extensive relevant experience as former CEO of Heliox, a market leader in smart energy energy management solutions and fast charging systems for public transport, e trucks and port equipment.

Next, we will go in more detail regarding our three business lines, starting with the next slide with Smart Grid Solutions. Smart Grid Solutions revenue in the 2025 was €97,100,000 which is 33.9% more than last year. Grid operators drove 65% of the revenue and the private domain clients accounted for 35% of our revenue. We produced sixteen twenty eight subsages in the first half year compared to fifteen forty eight in the same period last year. In The Netherlands, that were twelve seventy three stations and in Finland, three fifty five.

The gross margin increased from 31.1% to 22.4%. Adjusted for one off costs, the gross margin decreased from 26.5% last year to 22.4% in the first half of this year. This decline is primarily related to the increased component cost in response to the moisture issue and a relatively higher share of revenue coming from grid operators. A nice commercial win to mention is the electric acre porter, where we carry out medium voltage installation activities for the 200 megawatt peak solar power. Regarding the technical innovations, we have certified our Pacto, the Ebola and Ultra stations with SF6 free components.

The usage of SF6 as there isn’t gas is prohibited by the European environmental regulation in greenhouse gases and the new equipment and that new government is not allowed anymore as per the January 2026. On the next slide, we elaborate on the weakness we see in the markets of smart grid solutions. Our client in The Netherlands are hampered in scaling by several aspects. Those aspects are firstly, obtaining permits, Next to that is available transmission grid capacity. Thirdly, available land to place the required extra substations.

Fourth, the availability of main components for partly related to the SF6 translation. And lastly, the fifth point, available human labor capacity for site installations. For our business with the grid operation also in the private domain, we do not see short term improvements due to the mentioned aspects and we expect this situation to continue into 2026. A positive note is the rollout is the acceleration of the rollout of the connection between stations the connection station between the DSO grid and the DSO grid. It is good to note that the margin profile of this revenue is in line with other business with the grid operators.

Onno will now continue with the next slide regarding EV charging business line review. Thank you, Marco.

Onno Grag, CFO, Alphen: AP charging revenue decreased by 22.8% from €80,100,000 in H1 twenty twenty four to €61,800,000 in H1 twenty twenty five. As communicated during the Q1 earnings release, we currently do see increased competition in our core markets, which we are counting with selective pricing programs and new product introductions and innovations. A total of 61,245 charge points were produced in H1 twenty twenty five, which is a twenty three point seven percent decrease compared to H1 twenty twenty four. Although these lower volumes do not affect our gross margin percentage, for the product line in total, we do see an absolute gross margin effect of around €7,000,000 due to lower volumes. Gross margin increased by 41.3 and this is a slight change versus our press release, which stated 42.9% compared to 32.9% in H1 twenty twenty four.

Adjusted gross margin stands at 44.1% compared to 38.4% in H1 twenty twenty four. These higher margin high adjusted gross margins are mainly due to lower component cost prices and to a certain extent to the higher margins on Fins in comparison to H1 twenty twenty four. Together with the Belgium wholesaler CBO, we will roll out five twenty charge points in parking garage and semi public space in Belgium. These type of wins are important for us since it’s our expectation that parking garage and company parking lots will be important growth segments in the years to come. We also announced our plus models, which are fully compliant with new AVA requirements that will come into effect in the 2026.

Since the plus models are built upon a new hardware platform, we had to take an inventory provision of €1,800,000 for certain components that will not be used anymore on the new platform. This provision has been booked in Q2 as the European Commission provided clarity on the timelines for the implementation of the Alternative Fuel Infrastructure Regulation also known as AFIER. The new regrounds will come into effect on the 01/08/2026. With the launch of new plus models, we will also be launching a new tool tool for installers. Time to install is an important KPI for our installers.

Alphen has been working on the development on the EVE install app, which will help installers to significantly reduce time required for installation and configuration. This app will be available at the 2026. Next slide, please. Better electric vehicles and plug in hybrids electrical vehicle registration growth across Europe has been strong in a number of countries. However, we do not see additional growth since the relaxation of c o two regulations in March 2025.

For Alpham for The Netherlands, we are faced with increased competition in markets where we have been traditionally very strong. As mentioned before, we see increasing competition in the Home segment. Alpham continues to maintain strong position in the public market with its slim products although the overall number of installation in the public market has slowed down. Despite relatively high battery electric vehicle growth rate in Germany, we currently do not see a similar order intake increase in our order books. For Belgium, the growth the market growth rates for battery electric vehicles have been high, but it was offset by a sharp decline in plug in hybrid cars.

Even though overall battery equipped vehicles and plug in hybrid electric vehicles registration in France are weak, often have seen quite robust growth performance in these markets as we have gained a strong position with a number of larger clients. Denmark, we have developed a strong partnership with Nordsleaf, which has been very successful during 2025. As mentioned earlier, after the introduction of our personal in Q4, this year our full product portfolio is compliant with A3 requirements effective next January beginning of this next year. Revenue for our Energy Storage product line declined by 27.1%. 2025 revenue performance is in line with our expectation as during Q2 last year, we had an unusual high revenue due to simultaneous delivery of materials on-site for several projects, leading to higher revenue recognition in Q2 last year.

Gross margins at 27.4% were higher than usual on the back of relatively high margins in Q1. In the 2025, we expect the margin to normalize. Together with eConnexion, we will deliver 20,000,000 watts, 40 megawatt hour battery energy storage systems. This system will be co located with a wind hub at Milti Joms in the Southwest Of The Netherlands. This project will help to maximize the use of wind energy and maintain electricity grid stability, expected to be operational in Q1 twenty twenty six.

Furthermore, we have introduced a new 20 foot containerized solution for our elements battery storage system. This innovation is important as it increases the energy density, reducing the length and reducing the length required for battery energy storage project. The backlog for battery systems is sufficient to cover the 2025 revenue guidance. In addition to the stationary systems that we are realizing and taking revenue for during 02/2025, we also sold a number of mobile units that we are delivering in 02/2025. Backlog for 2026 is developing in a positive way.

Over during the year, we have €72,000,000 of backlog for 2026 revenue and our pipeline has sufficient prospect to further fill the backlog for 2026. As battery prices continue to decline by about 10% to 20% in 2025, our kilowatt hour volume growth is quite significant. Prices decline are driven by several factors. Firstly, there is a consistent oversupply of battery energy systems in the market. Secondly, prices of raw materials used for batteries are dropping.

And lastly, battery technology continues to improve. In January, Aufen announced the signature of the agreement with FlavorBest to build one of The Netherlands’ first large scale four hour best based on a containerized solution. Construction has started and completion date of this project expected to be Q4 twenty twenty five. And I would like to move to the financials. Revenues for Q2 amounted to 107,700,000.0 which is 3.8% higher than Q1 twenty twenty five.

However, the year on year quarterly decline was minus €0.16 mainly driven by EV charging and battery systems. Q2 adjusted gross margin year on year improved from 26.1% to 30.1%. This was mainly driven by the impact of lower component costs for EV charging as we did see a major as we did not see a major shift in mix and sales prices for this product line. For battery systems, we have also seen an improvement in margins for Q2, but not as significant as we had seen in Q1. Adjusted EBITDA was 7%, which is better than the same period as last year at 3% as we significantly decreased our cost base during the reorganization at the 2024.

Also during 2025, we have continued our focus on spend and FTE reduction. For the 2025, revenue declined by 13.9% from 245.7 percent to 211.5 This is due to lower revenues in EBIT charging and Energy Shore Assistance. Gross margin increased from 22.3% in H1 twenty twenty four towards 29.1% in H1 twenty twenty five. The 2024 numbers were impacted by the moisture provision and to a lesser extent by an inventory provision that we took for EV charging components. It was €3,600,000 last year versus €1,800,000 this year.

Adjusted gross margin increased slightly as we had lower component costs in EV charging and a positive price effect on twins. On top of this, we had somewhat better margins for Battery Systems mainly driven by the Q1 performance. Smart Grid Solutions had slightly lower adjusted margins due to increased component costs due to product change in response to the Monster issue and a relatively higher share of revenue coming from grid companies versus private company customers in H1 twenty twenty five compared to H1 twenty twenty four. Personnel costs decreased by 9.8% year on year as a result of the rightsizing program we executed at the 2024. In addition, we put stringent cost control measures in place during 2025 to further reduce our cost base.

FTEs decreased from ten fifty three as of the 12/31/2024 to nine forty six as of 06/30/2025 in addition and in addition, we reduced our standard personnel expenses. Other operating expenses decreased by 18.3% driven by cost saving initiatives. The net loss of Forolfen decreased from €11,100,000 in H1 two thousand twenty four to €1,300,000 in H1 two thousand twenty five. On an adjusted basis, we have a we reported €1,400,000 positive net result. Non current assets decreased by €600,000 driven by depreciation and amortization of €9,100,000 and partly offset by capitalized development costs, new lease and indexations and other CapEx of respect to €4,800,000 €2,200,000 and €1,500,000 Current assets decreased by €33,500,000 of which €9,800,000 was driven by inventory position and related stock down payments as well as other working capital movements.

Non current liabilities decreased slightly due to redemptions on our loans and lease payments. Current liabilities decreased by €19,900,000 as a result of working capital movements partly offset by an increase in short term leases and our factoring position. Cash flow from operating activities was €10,800,000 positive as compared to €1,600,000 in the first half year of twenty twenty four, partly driven by significant lower income tax paid. Our continuous focus on working capital and specifically inventory is yielding results. Our inventories are decreasing, both as down payments as well as in the on hand inventories.

Total inventories were brought down by 9,800,000.0, driven mainly by reduction EV charging inventory. Energy storage showed a slight increase for our batteries because we always buy batteries once the deal is signed, limit the risk of obsolete inventory. For 2025, we reiterate our guidance as provided during our Q1 earnings release of revenues between $430,000,000 and €480,000,000 and EBITDA margin between 5% to 8%. In H1 twenty twenty five, continued H1 twenty twenty continued to present challenging market conditions. Often expects these challenging market conditions to continue with competitive pressure in EV charging, labor shortages and permitting delays for grid operators and price declines per euro megawatt hour for battery systems to carry over into 2026.

Therefore, often adjusts its 2026 revenue ambition from between 510% year on year growth to between 05% revenue growth. This also impacts adjusted EBITDA margin, which often expects to be between 58% of revenue in 2026. We continue to focus on margin by driving continued improvement in cost and pricing. Due to the continued uncertainty in our markets, Open has decided to refrain from providing guidance on 2007 and beyond. I would like to hand over to back to the moderator.

Moderator: Thank you. Ladies and gentlemen, we are now ready to take your questions. Our first question comes from Nikita Papacho from Deutsche Bank. Please go ahead.

Nikita Papacho, Analyst, Deutsche Bank: Yes, good morning and thank you for taking my questions. I would have three, if I may. So the first one is on the one offs of obsolete components in the charging segment. Is this done now? Or should we expect further one offs coming in the upcoming quarters?

Then thinking about your H2 adjusted EBITDA margin, I would assume that the margin will be lower than in H1 with similar revenues and lower gross margin in charging and storage. Is this the right way of thinking? Or are there any impacts to keep in mind for H2? And the third question is on your smart grid business. You invested EUR 7,000,000 for a new plant to capture the forecasted demand from grid operators, which is now not materializing.

So how do you tackle the situation of overall capacity besides workforce reduction? Thank you.

Onno Grag, CFO, Alphen: Let me take the first question on EV charging. I I think I explained on the fact that we are moving to a new platform. And based on the users that we will still see from for components on the old platform towards a new version, we have to basically come to the conclusion that we were not going to use all the remaining components for the old for the old platform. So from that perspective, after careful analysis, this is the decision that we have taken. Can I promise you kind of that that we will not take any write off anywhere in the future?

I cannot. If you but if I would have known about it, we would have taken this provision. From a margin, the the the the question that you were asking, was it about EBITDA margin or about gross margin?

Nikita Papacho, Analyst, Deutsche Bank: EBITDA margin, please.

Onno Grag, CFO, Alphen: Yeah. We there are various factors that are influencing EBITDA margin. And from that perspective, I would like to basically stick with the guidance that we have given between 58%. We’re currently at 7%, so right in the middle. But the guidance that we have given was between 58%, and I think for now, I would like to stick to that one.

Marco Ruehlefeld, CEO, Alphen: And regarding the overcapacity, you’re right that we say we anticipated on the growth of revenue due to a number of substations with the grid operators due to the fact that that is not there. We have more or less overcapacity, but that overcapacity cannot directly be yielded towards other areas. That means also this pressures our EBITDA number because the costs related to the building are still there. And we’re now, of course, debating in which direction we should have discussions, whether it is with the grid operators, whether it’s to to find alternative directions. But, say, due to the, say, rather big difference in and also a short time frame where those difference were there, we are not on the short term, and they’re also not in the ’26 fully able to recover on those elements.

Nikita Papacho, Analyst, Deutsche Bank: Okay. Thank you.

Moderator: Our next question comes from Luc Van Beek from Degrohe’s Datacom. Please go ahead.

Luc Van Beek, Analyst, Degrohe’s Datacom: Yes, good morning. Thank you for taking my questions. First of all, a question on your cost levels. Are they now fully aligned with revenue outlook as you see it? And do you expect a further decline in h ’2?

Onno Grag, CFO, Alphen: First of all, I think we we have put very careful cost measures in place to make sure that that that we stay in control of of our cost measures as well as the FTE numbers, but also from a discretionary spend perspective. And we will continue to do that in the second half of this year, and we will continue to do that towards next year because and the fact to 7% EBITDA margin is not the level that’s not where our ambition is. Our ambition is to increase those margins. And of course, partly you want to do that by increasing your top line, but at the same time, you want to make sure that you keep your cost base under control as much as as possible. So as a company, we are very focused on making sure that we’re reducing costs.

The level the current level of cost, I expect the second half cost base more or less similar to the the first half cost base and up and down a little bit. But but gross motor, I think you you should expect a similar cost base for the second half.

Luc Van Beek, Analyst, Degrohe’s Datacom: And for next year, I’m no longer forecasting improvement in the EBITDA margin range. Is that because you see still further pressure on gross margins due to price competition, or is there another driver for that?

Onno Grag, CFO, Alphen: If recharging, we have actually a number of effects on the margin. We do see some lower components cost prices, and and that’s a little bit technical. But the way we are valuing our inventory is based on on on average cost price. And during the COVID years and and and and the years that that some period be after that, component cost prices were relatively high because of significant shortages. So we had to basically buy it.

It was a it was a seller’s market as you could say could say. Components that we are buying now based on reducing our average cost price of our inventory and they are and when when you then issue them to your P and L, you you basically are issuing them at a lower cost price and therefore that’s increasing your margin. That is an effect that will that will continue in the in the in the periods to come. The other effects, and especially when you compare margins Q2 last year versus Q2 this year, is related to the trends in our public charter. We had extremely low margins in Q2 last year, and they’re they’re now being normalized, and we expect those margins to continue going forward.

So that that that are taking kind of driving up the margin somewhat is something that will stay because there was a was there was a onetime effect last year. At the same time, we also talked about the competitive situation, and and you and we do see a number of competitors that are are relatively aggressive from a pricing perspective, and we have to counteract that. And that’s also what we’re doing. So we do expect downward pressure on our prices in second half of this year and and potentially also also next year. So that’s the counter effect of of the two the two other items that I that I just explained.

Luc Van Beek, Analyst, Degrohe’s Datacom: Okay. That’s very helpful. Thank you.

Moderator: The next question comes from Ruben Dufos from Kepler Cheuvreux. Please go ahead.

Ruben Dufos, Analyst, Kepler Cheuvreux: Yes, good morning. I had a first question on the, ’26 sales outlook. Just thinking about whether you could give directionally some comments on how you expect the trends to be across the division. So on group level, obviously, flat to 5% growth. I think consensus was sort of factoring in quite an even growth rate across the three divisions, 8% up, 10%, 8% across the three.

So, yeah, curious to hear your thoughts where we are directionally for next year.

Marco Ruehlefeld, CEO, Alphen: I think what we try to convey is that we are a little bit careful about, say, the market developments. Our position in the market will develop in the coming year. That’s also why we took away a little bit not a little bit, we took away the forecast for 2027 because there are now so many things coming into play that say to give, say, blunt numbers in that time frame is complicated. Therefore, it’s better not to have a discussion on all those elements together. If you look at 2026, where we already indicated that for Smart Grid Solutions, don’t think there are fundamental improvement based on the, say, the elements we mentioned during the webcast also to the limitations now the five limitations that are being handled now.

And if we look to the practical consideration in how they developed in the past half year, we don’t see a fundamental improvement, and we don’t expect that fundamental improvement, say, in the second half year. And therefore, also, we are thinking that this will also play more or less in the same area next year. At the end, of course, because the the obligation of the grid operators is still there, their plans to to install in the coming five years is around 45,000 subsidies to be able to cope with energy transition and to cope with the with restrictions that now in all kind of areas are there where the energy cannot distribute it in a way more or the users are would like it to be. It would mean there has to be a ramp up, how that will materialize, in which time frame, in which lumps, that is for us at this moment quite difficult to grasp. If you look to battery storage, we see also all kind of different elements coming into play, battery density, lower prices, competitive position.

That’s also why we are, say, looking at that market, and we have, of course, an opinion of how could could develop it. But, say, for 2026, we are expecting some growth, but say also limited due to all kind of circumstances. For EV charging, the outlook is, say, the most difficult one to predict. We have, of course, only a very short lead time between getting the orders and serving them out. And that’s fundamentally different if you compare it to the situation in battery storage, where we have where you have seen already, let’s say, quite a large number is already in our order book.

And with EV charging, it’s quite complicated to fully anticipate on the old elements of, say, us introducing new products, new features, how that will play out in the overall market situation.

Ruben Dufos, Analyst, Kepler Cheuvreux: Okay. Okay. Thank you. And so for smart grids, is it is it fair to say that probably the margins then will likely not come back to the levels where it was maybe, you know, just two years ago? I think in the in 2023, it was the high twenties.

I think now you’re at 22. The range is 20 to 30. Yeah. Is it fair to say, you know, next two years, probably still low twenties is a fair assumption, and just thinking about these higher component costs impacting margins, how much flexibility do you have in in in, let’s say, your contract structure to pass through inflation to the to the grid operators or to the private clients?

Marco Ruehlefeld, CEO, Alphen: Also here, we have many elements coming into play at the

Onno Grag, CFO, Alphen: same

Marco Ruehlefeld, CEO, Alphen: time in order to, for instance, say normal inflation percentages are part of the contract with the with the grid operators. They are included. But for example, the extra reinforcement we had to add after the most issue of last year, those elements are not, of course, powers of an inflation correction. And so therefore, we also wanna say that for second half of next year, we are more discounting with the percentage we have now. On the other hand, of course, we are not happy with this percentage, so we will try to, to bring it to motion all kind of elements to be able to improve that.

But, there is also, of course, a time delay, between more or less coming to the conclusion how we can resolve this and the timing we can show that in our results.

Ruben Dufos, Analyst, Kepler Cheuvreux: Okay. And then a final question on on energy storage. I think you mentioned that that that division will have to adjust rapidly to changing battery technology. Yeah. What is the compatibility of your platform today maybe?

You know, would you need to requalify, yeah, inverters or battery management systems, or, you know, what is sort of the risk of a of a write down on on existing designs if if the battery technologies are changing that fast?

Marco Ruehlefeld, CEO, Alphen: I think, say, fundamentally, if you look to the way not only how we approach the market, but also you’ve seen it also in our stock levels on batteries. We tried to we already anticipate to say so several years ago on a charging market market conditions to to that we offer more or less the latest technology without having all kind of stock problem and those type of things. That means, of course, it is not always problem to have every day something else. But, fundamentally, we we should be able to to directly tap into the latest technologies available. That is also in the outgrowth of the customers where we, more or less, at the moment, projects are being awarded.

At that time, we directly connect it to, say, supply of the main components. And we’re ready some years ago, made a fundamental change in our platform. So at this moment, we don’t have an expectation that let’s say, the basic approach we have to do the market with our art electronics hardware and software, we have to talk about write offs. Okay. Great.

Ruben Dufos, Analyst, Kepler Cheuvreux: Thank you very much. Yep.

Onno Grag, CFO, Alphen: Yep. Communicate before also that the the only orders that or or only inventory that we have in stock for which we don’t always have kind of a direct client is automobiles, and that also allows us to when we get an order in that we will to to deliver those relatively quickly. And we have we still have inventory on stock from one larger client. But apart from that, every order is when it comes in, it more or less directly goes to to location. The inventory that we do have on stock is when when when these batteries are coming and put being put on the on the boat in in in China, then according to our income terms, they’re our inventory, and then they then come in to Rotterdam and being delivered on-site, then they’re basically passing back to the to the to the customer.

So that’s kind of delivered the mechanism that that that Marco was talking about that this is wanted to have all all that inventory is fresh.

Moderator: Our next question comes from Jeremy Kinseth from Pondlandscott Kemper. Please go ahead.

Jeremy Kinseth, Analyst, Pondlandscott Kemper: Good morning, everyone. I have two questions. The first one is just on the EV charging EV chargers and competition. Obviously, some of your competitors are growing at a faster rate than you are. And if I compare your products to theirs, there’s obviously a difference when it comes to price, functionality, and design.

And so I was just wondering if the Plus charger, which comes out in the fourth quarter, which of those factors the plus will address, if any, and if you think it’s gonna be competitive or result in a step change in your sales? And then the second question for me is just on your decision to downgrade FY ’twenty six guidance. Obviously, you’re going to have a new CEO coming in a couple of months’ time, and sometimes that’s a trigger for management to reassess the outlook and look at guidance again then. And so I suppose there could be a risk that there could be another reassessment of guidance at a future date. So my question is why, did you take a look at the guidance, now, and why did you, reassess it and change it at this earnings update?

Marco Ruehlefeld, CEO, Alphen: Maybe to start with your last question first. I think as a company, we have always, have a straightforward approach. That means that if we know something, we bring it to the market. So there is no, say, political element into play that we wait until the new series is is there, and then it can bring the bad message. But, of course, everything was wrong, of course, in the situation that it was not there.

So fundamentally, whether it is, say, our calculations on stock components, where between the first quarter and now in the moment of the results of the first quarter, there was no exact date of implementation of the new requirements. In the second quarter, the date was clear. And with a little bit lower numbers than anticipated, we had to recalculate, and we have recalculated and we just are transparent in that calculation and and also presented more or as a part of our results to the market. And if you look at the downgrade, it’s also a straightforward translation of the the market situation we experience now with, and we communicate it as it is. And there is no, for us, no political play where we more or less want to give the new city the opportunity, say say, to think, there should be a reset and to come to the next step in the future.

I think in this situation, I think we give the opportunity to the new CEO to bring, whether it is direction or elements into play to further grow the company in a way he thinks it has to be. But, say, now, I think this is a straightforward translation of the results of Alphen at this moment. And for EUV competition, as always, in these markets and elements of the the the first mover is always, at some point, also hampered by the elements of these first mover elements as often we have been first mover in EV charging. And we have seen that, say, with introduction of AV, we were AV with price transparency, we’re one of the first in the markets where some competitors are a little bit earlier on the Avery elements that come into play coming January. I think for those elements, we will be on par, but also there are elements in our development cycle that will bring us also step forwards in the coming year.

So whether it is already, but directly on the January 1, we don’t know yet for sure, but we think we will be competitive in our main markets in the coming time in the coming period.

Jeremy Kinseth, Analyst, Pondlandscott Kemper: And will the price point of the plus be different to your current offerings?

Marco Ruehlefeld, CEO, Alphen: I think that’s a little bit too early to comment on. We have not formally introduced our product, but it will happen in, say, the end of the third quarter or in beginning of the fourth quarter. But fundamentally, we think, let’s say, price point wise, we’ll be targeting that in such a way that will be price for I don’t know what you also you you use your words, price for value or value for price. Of course, we try to evaluate that point of into the market area. And I think

Onno Grag, CFO, Alphen: on on top of that, I mean, price is not just about functionality and design. And, of course, they’re important, but there’s there are other factors all that our customers like. We have been around for ten more than ten years. You take a look in the in the streets of our charts, they’re still there, and they’re still working. So they are robust.

That’s what our customers appreciate also in kind of the the the the work that we do. So it’s it’s too simple to just look at price. But, I mean, at the same time, we are we are not blind. We see what’s happening around us. And at a certain moment, price is important to to make sure that that that we realize our volumes, then we will not hesitate to to make sure that we adjust our pricing.

Jeremy Kinseth, Analyst, Pondlandscott Kemper: Understood. Thank you very much.

Moderator: The next question comes from David Kersten from Jefferies. Please go ahead.

David Kersten, Analyst, Jefferies: Good morning, I’ve got two questions, please. First, a follow-up on the EV charging business where you talk about the increasing competition, but at the same time, realize a record high gross margin of 48.5%. Can you please explain once more why you expect gross margins to come down in the second half of the year? And do you see the increased competition so far mainly on volume, but you expect it to impact pricing in the second half of the year? And then the second question is more the general comments you make on improving pricing.

It sounds like that is less likely to be in EV charging. And also in energy storage, you’re seeing the lower impact from the impact from lower battery prices. So what areas can you improve pricing going forward? And maybe finally, also the other comments around additional cost savings. I think we’re now seeing the benefit of €13,000,000 from the 15% headcount reduction last year.

And you have talked about additional cost savings measures. Can you please quantify that impact for 2025 and 2026, please? Thank you.

Onno Grag, CFO, Alphen: You the the charging margins, there there are a number of I think I tried to explain that there are a number of components kind of working against each other. One is component cost prices are helping margins and basically what the what the driver for the improved margins in Q1 and Q2. I also talked about the twins having a better margin than they used to have last year. But at the same time, what we also see and said, we were not blind for competition. In certain competitive situations, we we have to make sure that that that we are also competitively priced, and we do expect a downward pressure on margins in the in the second half of this year due to due to the competitive situation.

So and so that’s the reason that we expect that that margin for the second half of the year for EV charging are not going up and and probably going to have a downward spread downward trend. I mean, that I think that’s more a lot more I cannot say about it. Then that similar trend will probably be in 2026 where if you have increased competition, you have to counteract that with great products, great service, and to a certain extent also the right pricing. And and that’s what we that that’s what we will be facing in in also in 02/1926. You talked about lower battery prices.

Yeah. Lower battery, but that’s in itself not a main driver for our margin, to be honest. We we buy margins for batteries from from an external supplier. A significant part of the overall project cost are battery prices. We do have a certain up uplift on when we buy these batteries and we do all the handling and baking and importing them in in Europe and bringing them into location.

We do have a certain uplift over the battery the over the battery price. But the main part of our margin that we are realizing in battery project is actually, I call it EPC type of work, system integration type of work, so project work. And that that drives our margin. And so not and it’s not so much driven by the by the battery battery prices in itself.

Thijs Berkelder, Analyst, ABN AMRO ODDO BHF: Yeah. And

Onno Grag, CFO, Alphen: the cost savings are out. Yeah. Go ahead. And on the on the cost savings, now we will continue to to be extremely careful with cost, and that that that is that is important. That will be important.

And we wanna make sure also when when we will see revenue growth that we will start to see a leveraging effect on of that. So revenue growth doesn’t automatically mean a corresponding increase in cost for us. And so and there’s a lot of cost discipline in the organization at the at this moment in time. If you take a look at our cost base first half of the year, I I my expectation is that that it is that the second half of the year will be approximately similar. So I I don’t expect that cost base will go down significantly by the fact that we will continue to to to to watch that carefully.

For next year, the only thing I can say at this moment in time that that that that cost will be very much a focus and and make sure that they that they don’t increase to an extent that they are getting out of record revenue.

David Kersten, Analyst, Jefferies: Okay. Thank you very much.

Moderator: The next question comes from Thijs Berkelder from ABN AMRO ODDO BHF. Please go ahead.

Thijs Berkelder, Analyst, ABN AMRO ODDO BHF: Yeah. Morning, gentlemen. I first want to start with a big thanks, to Marco Rulefeld for, having led this company for so many years very successfully for for many years until, let’s say, Ukraine started to invade Russia, and Europe changed its climate plans. Let’s put it that way. Then, let’s start with the questions.

First, on, inventory per segment going forward and and the inventory valuation use that that that current component prices for the non sold part are clearly lower than they used to be. Why they not now decide to impair, the inventory, which is still there of components at, let’s say, too high prices? And and what would be the financial impact for for such a decision? Because if you would do that now from an accounting perspective, it it would, make your margin outlook for for next year’s better is my impression.

Onno Grag, CFO, Alphen: Yeah. Yeah. First of all, Thij, thanks for the question because I think you’re asking it every every quarter. So I have the the the list in front of me by by segment. Overall, inventory is 100 and and 104,000,000.

That is including the what we call the down payments. And so about the stuff that we have physically on stock and the stuff that we have the components that we have reserved at our suppliers, the suppliers that’s the down payments. So the total of that is 104,100,000.0 Market solution, we currently have 22,900,000.0 on stock. Energy storage system, have 50,400,000.0 on stock. And EV charging equipment, have 30,800,000.0 in stock.

And you see the quarter on quarter reduction in inventories is mainly in EV charging. It’s also where we wanted to be. That’s also where we still have inventory that is, I want to call it, slow moving and not more than that because if it would have it would be obsolete, we would take the provision, but it is slow moving. So we bought too much in the years for a number of years. The the battery inventory is I I think I already explained that most most of the the the the battery inventory is just timing and the the period that is on the boat to to to Rotterdam.

And and the moment that we basically bring it to sites, that that’s more or less a flow, and and and and a certain portion of that is on our books, but that’s more or less it except for the mobiles and except for this the the number of batteries for one specific customer. And the smart grid solutions is also inventory that and if you look at it carefully, been coming down over the over the quarter by quarter by quarter and and and another. Quarter down a little bit again from March to June. Your suggestion of taking a write off, yeah, that’s not in our hands. We do have the right margins for for for products.

We’re making a profit on these inventories, and you cannot just write down inventory if if you feel that that that could improve your outlook for for next year. That and there are are for us rules how to do that. If we would have inventory in stock that we wouldn’t be able to sell at a profit anymore, we would have to take a write down. No. I mean, conclusion is that we don’t have inventory on stock, that we don’t sell at a margin, and therefore, we cannot take a write down.

Thijs Berkelder, Analyst, ABN AMRO ODDO BHF: Yeah. Okay. And then a follow-up on personnel. You brought personnel base down to to around nine fifty. Can you tell me what what roughly the normal attrition rate is in in the personnel base?

And and should we expect you to land at around 900 at year end, something like that?

Onno Grag, CFO, Alphen: No. That’s not the way we’re working at this moment. I mean, you cannot just kind of let people go and then expect that work still still is being done. So but if somebody leaves or when somebody leaves, we we take a careful look at whether we wanna replace or not replace, and that’s actually, at this moment of time, a board decision to to replace people. So that that’s the type of gate that we have put in place to make sure that that we that we keep our headcount under control.

But that doesn’t mean that we’re not hiring at all. We we’re still hiring talent. We still some people leave us and and and we’ll try to to replace people on key position. There is an areas where if it’s necessary, we we we might even increase headcount a little bit and then reduce it somewhere else. But that’s that’s that’s a fact of life.

If you have around 1,000 people in your company and you basically will just say, I don’t hire anymore, that that that would not be a wise decision. But we are extremely careful and and, yeah, and and and we’re bracing relatively slowly and relatively carefully.

Thijs Berkelder, Analyst, ABN AMRO ODDO BHF: Okay. Thank you then. For now, my final question is on energy storage business. In the other sector, you provide, let’s say, a breakdown between an EV charging between Netherlands and abroad and in, substation business to in Finland, Netherlands and, between private clients and, and grid operators. In battery storage, you provide large systems to grid operators, but also many smaller kind of containerized batteries to maybe also the private sector.

Can you maybe describe what’s happening there in the private sector? The event sector, which was your your first big sector, is stagnating. It it seems it may be coming down. Is construction sector still growing, fast charging sector still growing, and batteries for onshore wind and solar systems to me also seems to be in quite substantial line. So can you give an update there?

Marco Ruehlefeld, CEO, Alphen: If you look at, say, the split of revenue, we have not that we don’t keep track of all those different segments. But given the answer, you mentioned that we supply battery storage to grid operators, I think we should say energy providers, because grid operators almost nowhere are allowed to to integrate the battery storage. They are mostly related to, what you call it, the energy suppliers. So the the company maintaining the grid is another one then supplying the energy. Companies like Fattonfall are supplying energy, and they are also in a situation to include battery storage development.

But we see also a lot of, say, what’s called project developers that are specifically aiming for the segment. And the order we we got from Semper Power, there’s now part of return. That’s a pure project developer in in battery storage, like also other players in that market. But sometimes we see smaller initiatives. FlavorBest is a somewhat smaller initiative of a group of people that have been active in the wind in Flavland and now also see the opportunity to include battery storage in this ecosystem.

So, fundamentally, we see, let’s say, where initially the energy provider while doing that, we see now different project developers take coming to place where we have two fundamental approaches, where it is to say with, say, the connections to the high voltage grid is more oriented to project special product developers, but we also see several colocation sites with wind and solar. And then they are mostly related also to the owner of the the solar park or the the wind park. But at this moment, we have no we’ll to think about it whether we can give more insight in our in the direction why we supply the unit, but that we don’t have available on hand now.

Thijs Berkelder, Analyst, ABN AMRO ODDO BHF: Okay. Thank you.

Moderator: The next question comes from Thibault Lennon from KBT Securities. Please go ahead.

Thibault Lennon, Analyst, KBT Securities: Good morning. I have two questions. So with respect to the smart grid solutions during the presentation, you mentioned that you don’t expect any significant changes for the remaining of the year. Your guidance still implies an improvement in the second half. What would drive this improvement?

And then a second question coming back to Ruben’s question, with respect to the Smart Grid, the gross profit margins within Smart Grid Solutions. Do you feel that your competitive position in the long run has changed due to the moisture issues? Or do you expect that then after this time with the issues that towards 27%, the gross profit margins could go back to the historical levels? Or has that competitive position changed a bit? Thank you.

Marco Ruehlefeld, CEO, Alphen: Okay. With regard to the second half year, we indicated already in webcast that say, to transition to different type of switch gear and availability of those components, say, in the transition. There was a delay in in the second quarter, and we will have an I’ll an do it and change of that in the second half year where we expect it to run a little bit more smoothly and that we will have a smaller uplift. And, also, we have seen with implementation of one of the grid grid operators where we’re in installation of the with Stadin. We see also a small plus in in the transport for the decisions where we have already indicated also that that we have supplied more transfers for the decisions.

But what we’re also doing there is what we call the the one stop shop activity where we not only deliver the substation, but also do all site works. And we expect in second half year a strong uplift of the site works of that part of our business. And that’s also then situated in the smart grids business unit. And margin long term, In that competitive situation, long term, I expect that we will be able to overcome that. But because of the design elements and the the lead time we need to be able to redefine it and also be able to implement it, that will not we will not have able to do that in such a way that you can recognize it in the gross margin of this year and probably also only partly in next year.

But in the long term, we are convinced we’re able to to be competitive on those aspects and grow our gross margin the future.

Moderator: The next question comes from Martin Verbeek The Idea. Go ahead.

Luc Van Beek, Analyst, Degrohe’s Datacom: Morning. Martin Verbeek of The Idea. Two questions left from my side. Firstly, your inventory position has come down nicely, a little bit helped by the write down. But if you now look at the ratio of your EV charging, that is more or less at the lower end of the normal level you expect this relationship to revenue.

For both SGS and for EVC, do you expect still an improvement in this respect to manage your inventory even better to get it even a little bit lower?

Onno Grag, CFO, Alphen: For EV charging in itself, I think inventory is still too high, and we still have components on stock that that have a turnover of more than a year, and that is that is too high. So I expect this year and also in 02/2016 to charge it to come down. Market solutions, think, going to be a slower a process that is due to continuous improvements within the organization the pipeline process. I think there’s still room for a certain certain improvement in that in that ratio, but that that there you won’t see the big steps that that we that I’m expecting in easy charging. In energy storage, I expect inventory to come come down where if we’re selling more of our mobiles and if we’re selling the one specific project that I that I mentioned, then most of our projects will be based on this kind of the flow inventory that I I I explained with this.

And and so that and then then more or less you are the lowest inventory that you can get. So those are the dynamics. If I kind of look from a distance to to the inventory, room for improvement, definitely need recharging. Two big events in energy storage systems and smart grid solutions will be a matter of continuous improvement, but there we there you shouldn’t expect huge improvements.

Luc Van Beek, Analyst, Degrohe’s Datacom: Okay. Second question, that’s concerning your provision for the Moisture issue. You said you took a provision last year. You have only used a modest amount of that of that provision. And according to me, there’s still some 12,000,000 on your balance sheet.

When will you attack that issue? And when will we see the cash out of that provision?

Marco Ruehlefeld, CEO, Alphen: Fundamentally speaking, say, all the costs that are now related to l of the substation that it will be have been called and we could repair. And we’re now in discussion when can we do whether it is repair of of locations on-site. But there, we are dependent on, say, the the grid operators that they more or less, one, make an investigation of of the station on-site, and secondly, give us unity to do something with that. And because of the fact that, say, there is no safety issue or no performance issue, which is a station they now prioritize more or less on their side everything to do to create new locations. Therefore, we have well, it takes longer, for us to come into position that we can execute on those repairs.

On other hand, to take in account of that, of course, when we can do that in our factory, it costs us much that we have to do site works. That’s why also we think that the provision is, I call it, balanced at the moment. We still need, say, those the this provision to be able to execute on some repairs on-site.

Luc Van Beek, Analyst, Degrohe’s Datacom: Thank you.

Onno Grag, CFO, Alphen: Timing will be this year, next year, and could even run into 02/1927.

Thijs Berkelder, Analyst, ABN AMRO ODDO BHF: Yep.

Moderator: Thank you. And with that, I would now like to turn the call back to mister Rulefeld for any closing remarks.

Marco Ruehlefeld, CEO, Alphen: Okay. Thank you. And I would like to take the opportunity more or to thank everybody for participating, in this webcast and to thank Thijs Berkelder for his nice words on, on my part. And and hope to say that we speak again sometime in the future. Thank you all.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.