Earnings call transcript: Hiab Q2 2025 sees revenue decline, stock rises

Hiab Oyj reported its financial results for the second quarter of 2025, showcasing a decline in revenue and operating profit, yet its stock surged by 6.05% in pre-market trading. The company posted a total revenue of €412 million, marking a 7% decrease from the same period last year. Despite this, investor sentiment remained positive, driven by strategic investments and a strong order intake. According to InvestingPro data, the company maintains excellent financial health with a "GREAT" overall score, supported by strong cash flows and robust balance sheet metrics. InvestingPro analysis reveals 10+ additional insights about Hiab’s financial strength and growth potential.

Key Takeaways

• Hiab’s Q2 revenue fell by 7% year-over-year to €412 million.
• The company’s stock price increased by 6.05% following the earnings release.
• Order intake rose by 8%, with significant growth in the Americas region.
• Hiab invested €19 million in expanding its MultiLift factory.
• The company’s operating margin remained robust at 15%.

Company Performance

Hiab’s overall performance in Q2 2025 reflected a challenging market environment, with revenue declining by 7% compared to the previous year. However, the company’s operational excellence strategy helped maintain a solid operating margin of 15%. Despite the sales decline, Hiab demonstrated resilience through strategic investments and a strong order intake, particularly in the Americas, which saw a 15% increase.

Financial Highlights

• Revenue: €412 million, down 7% year-over-year
• Operating Profit: €60 million, down 4% from the previous year
• Operating Margin: 15% for the quarter
• Order Intake: €377 million, up 8% year-over-year

Earnings vs. Forecast

Hiab’s earnings results did not meet the revenue forecast of €395.88 million. However, the company’s strategic initiatives and strong order intake helped mitigate the impact of the revenue shortfall.

Market Reaction

Following the earnings announcement, Hiab’s stock price surged by 6.05% in pre-market trading, reaching a new level of investor confidence. The stock’s performance is notable given the company’s revenue decline, suggesting that investors are optimistic about Hiab’s future growth prospects and strategic direction. InvestingPro data shows the stock has delivered impressive returns, with a 22.64% gain over the past year and trading near its 52-week high of $71.18. The company’s attractive PEG ratio of 0.11 suggests it may still offer value despite recent gains. For deeper insights into Hiab’s valuation and growth potential, subscribers can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Outlook & Guidance

Looking ahead, Hiab expects its comparable operating profit to exceed 13.5% in 2025. The company remains cautious due to ongoing market uncertainties, particularly trade tensions. Hiab’s strategic focus includes the anticipated sale of its MacGregor division, expected to bring in approximately €225 million. The company’s strong financial position is evidenced by its healthy current ratio of 1.59 and low debt-to-equity ratio of 0.27, as reported by InvestingPro. Additionally, Hiab has maintained dividend payments for 20 consecutive years, demonstrating consistent shareholder returns despite market cycles.

Executive Commentary

Scott Phillips, CEO, emphasized, "Our first half of the year has been extremely strong," highlighting the company’s resilience amidst market challenges. CFO Mikko Puvalakka added, "The underlying business performance has been very good," reinforcing confidence in Hiab’s strategic direction.

Risks and Challenges

• Trade tensions continue to create market uncertainty, impacting demand.
• The company’s restructuring efforts, including a €5 million asset write-off, present operational challenges.
• Macroeconomic pressures could affect future profitability and growth.
• Supply chain disruptions remain a potential risk, affecting production and delivery timelines.

Hiab’s Q2 2025 earnings call highlights a company navigating through a complex market landscape with strategic foresight and operational resilience. Despite revenue challenges, the company’s robust order intake and strategic investments signal a positive outlook for the future.

Full transcript - Hiab Oyj (HIAB) Q2 2025:

Aki Vesikalle, Investor Relations, Hiab: Welcome to second quarter twenty twenty five earnings call. My name is Aki Vesikalle. I’m from High High F Investor Relations. Our excellent performance continued, resulting in a strong first half of the year. Today’s results will be presented by our CEO, Scott Phillips and with our CFO, Mikko Puvalakka.

Will be making forward looking statements presentation, so please pay attention to the disclaimer. With that, I would like to hand over to you, Scott.

Scott Phillips, CEO, Hiab: Thank you, Aki. And good morning, everyone, from my side, and welcome to our second quarter earnings call. For the quarter, I’d say we had several highlights in the quarter, a couple of which I’d like to point out here on the opening slide. Our orders received increased versus the comparable period. I’ll give a bit more color on that later in the presentation.

Similarly, our comparable operating profit improved from a margin perspective. I’m really proud of the team for the great execution of our operational excellence pillar, which is the key driver behind the improved profitability despite the decline in sales. However, the good performance internally is a bit offset with the continued elevated market uncertainty due to the ongoing trade tensions and changes in trade policy. We will specify our outlook today for the remainder of the year and proud to report that with excellent work of colleagues that are current and former colleagues within CargoTech and Hyatt. We’ve announced the closing of the sale of MacGregor, which is expected on thirty first of this month.

All right. Let’s see if I can get the technology to work here. Apologies for that everybody. So I’d like to start off the group presentation by highlighting a few of the key investments we have made in the quarter as we continue to execute on our strategy. First, moving from left to right, we are making a we announced we’re making EUR19 million investment in our multi lift factory in Raizio, which will help to deliver on our promise to be more scalable and flexible throughout all cycles as well as delivering an excellent customer and employee experience.

The investment will also enable our division to be much more efficient as well as more sustainable. Concurrently, we continue to execute nicely on our operational excellence roadmap, so I’d like to highlight one of the elements to help us in our operations across our footprint. As our truck mounted forklift and our information management team successfully piloted a new manufacturing executions system solution, which will enable improved material management and process efficiency. And then finally, we launched new solutions in our MultiLift and Golf app brands to better serve our on road load handling customers in both Europe and The U. S.

At the same time, our Dell brand, Tail Lifts, launched a new heavy duty solution for The U. K. And Ireland markets geared towards serving customers who have more operationally intensive fleets carrying heavier loads. So a key new penetration for us in that incredibly important market. So now I’d like to turn your attention to Group financial results, starting with order intake.

The orders received for the quarter were €377,000,000 versus $348,000,000 for the comparison period, representing an 8% positive variance. And for the first half, orders were €755,000,000 up 3% year over year. In terms of demand trends, we remain on a similar level as we have for the prior ten quarters, with demand coming more from larger key account customers, which is the explanation for the positive variance compared to the second quarter last year. And currencies had a negative impact in the quarter compared to a slightly positive impact in the first quarter of approximately 200 basis points. So in constant currencies, we had a 10% variance versus the comparison period.

So all in all, we are pleased with the results, but at the same time, we do not see the trends overall changing in either direction. So let’s look a bit more in detail to order intake by region. For the quarter, we were positive relative to the comparison period, but I would point out that we were coming from a relatively low base in The Americas, so starting with The Americas. EMEA delivered €188,000,000 of orders, representing 50% of the group results, which is up 2% year over year and €391,000,000 for the first half, up 8% versus last year. The Americas delivered €159,000,000 in the quarter, representing a 15% positive variance and for the first half, $3.00 €3,000,000 which is actually down 5% year over year, representing 42 of orders at the group level.

But as I mentioned earlier, we come off a relatively low comparison period or base from last year and the positive variance was largely driven by a large order that we’ve recently reported on. In the Asia Pacific region, we continue to deliver stable results, representing 8% of orders for the group in the quarter and up nicely year over year by 15%. So we continue to see positive momentum in defense logistics together with robust replacement demand, but at the same time, we continue to see demand impacted by the uncertainty stemming from the trade policies, which we see as causing our target customers in The U. S. To remain cautious.

In terms of sales execution, which is quite strong in the quarter, which resulted in $4.00 €2,000,000 of revenue and €814,000,000 for the first half, representing a 7% and a 4% negative variance, respectively, year over year. In constant currencies, we were down 5% versus the comparison period. And in terms of services sales, we were up 2% year over year. Now looking at the sales mix by region, the mix for the quarter was similar to our order profile as EMEA represented 50%, Americas up slightly in sales versus orders 43% and Asia Pacific at 7% of sales. EMEA declined by 4% to $2.00 €3,000,000 The Americas delivered 173,000,000 representing a 12% decline and Asia Pacific remained flat at €27,000,000 for the quarter, but down 10% for the first half.

So I’m really pleased with the development of the percent of sales of our Echo portfolio as we improved to 38% of sales or €155,000,000 for the quarter compared to €126,000,000 for the comparison period. And for the first half, sales from Echo portfolio represented €279,000,000 of our eight fourteen million euros of sales or 37%. So nice execution by the team in that regard. And perhaps this will work better if I pick up the remote. Although we had a 7% decline in sales, we were able to deliver a good level of operating profit in the period and for the first half of the year coming from excellent execution, in particular in our operational excellence pillar of our strategy.

In terms in absolute terms, profit was €60,000,000 versus €63,000,000 so a decline of 4%. And for the first half, the result was €126,000,000 versus 124,000,000 so a nice year over year increase by 1% despite decline in sales. In relative terms, the group delivered 15% for the quarter and 15.5% for the first half, so a strong performance overall, and then Mika will provide additional insights with regards to the profit bridge just a bit later. So the good level of profitability supported a nice improvement in return on capital employed from 27.1% last year to 30.4 this year. So I’d like to close this section with an update as to how we are tracking towards our strategy targets.

If you look back to the prior quarter, we’re down slightly in our rolling ten year average of our compounded annual growth rate. Similarly, we’re slightly down sequentially on our last twelve months of operating profit due to the fact that we lost a strong quarter last year in Q2, so slightly down from 13.7% to 13.6%. And our return on capital employed, as I talked about in the prior slide, is up to 30.4%. So we feel that we’re nicely on track to achieving our long range strategy targets that we communicated last year. So with that, I’d like to hand over to Mikko Polakka to take you through the segment results.

Mikko Puvalakka, CFO, Hiab: Thank you, Scott, and good morning also from my side. Let’s first have a look on the Equipment segment’s performance during the second quarter. The equipment order intake grew. However, profitability was impacted by lower volumes. Order intake grew 8% to €256,000,000 This growth came from the lifting equipment, especially in EMEA and in APAC.

The delivery equipment order intake declined in EMEA. We had quite sizable defense order in the comparison period. And it’s also good to remember that this kind of orders, defense orders, do not necessarily come every quarter. So overall, we still see that the defense activity is on a good level and hope to also book some orders in the future. The order book decline is attributable to delivery equipment due to the lower market activity, especially in The U.

S. During the first quarter and now in the second quarter. Sales declined 11% to €284,000,000 The lifting equipment sales grew, but this was not enough to fully offset the delivery equipment sales decline, which is very much stemming from the low order intake, what you saw in quarter one. Our comparable operating profit declined due to lower sales as well as due to a €5,000,000 asset write off, which we took in quarter two. Without this asset write off, the equipment comparable operating profit margin is 15.5% in quarter two despite the 11% sales decline.

So really strong performance, underlying performance. And I will describe this write off a bit more in detail on the next page. So let’s have a look on the Equipment segment profitability bridge. The €33,000,000 sales decline, what you saw on the previous page, was the biggest adverse impact on Equipment segment profitability. The Equipment gross profit margin declined.

It was impacted by this previously mentioned €5,000,000 asset write off that diluted comparable operating profit margin and also gross profit margin by 1.6% units. As a part of ongoing restructuring in our Italian operations, which we announced late last year, we have identified certain assets, which we have decided to write off now in quarter two. Currencies, like lower U. S. Dollar, caused also some headwind in quarter two.

On the positive side, the Equipment segment SG and A costs declined, illustrated here on the other bar on the right hand side. So SummaSummarum, without this €5,000,000 write off in quarter two, equipment segment delivered a very solid 15.5% comparable operating profit margin in the second quarter. Services performed extremely well in quarter two. Order intake grew by 9%. This growth came mostly in so called recurring services like spare parts and maintenance services.

We have been successfully growing also the number of connected units as well as the maintenance number of maintenance contracts. The profitability development was really strong, supported by the commercial and sourcing actions. Looking at the Services profitability bridge, there were several positive contributions to the profitability. First of all, 3% sales growth was one of the contributing factors. Then already previously mentioned, commercial and sourcing actions were supporting also the gross profit margin.

We did not have any major impacts from the FX during the second quarter. And then we had slightly higher SG and A costs as we continue to develop services capabilities and technologies in line with our strategy to take the services business to revenues to €700,000,000 by 2028. Next, let’s have a look still quickly on the total higher financials. So as mentioned already earlier, our sales declined 7%. Also, as mentioned earlier, the gross profit margin was impacted by the €5,000,000 Italy related write off.

Without that, our gross profit margin in quarter two was 32%. The same applies to our comparable operating profit. So without the write off, euros 5,000,000 write off, the comparable operating profit was 16.1% on the same level as in quarter one and clearly improving from the comparison period. Thus, I would say that the underlying business performance has been very good despite the 7% sales decline, really highlighting the robustness of High App’s business model. Looking at the cash flow, like in quarter one, most of our quarter two cash flow was generated by the continuing operations, I.

E, High App business. The cash conversion was slightly below 100% in quarter two, mainly due to the incentive payments, which typically take place in the second quarter and VAT payments, which fluctuate from month to month and from quarter to quarter. Thanks to the solid cash flow in the second quarter, we continue to have a very strong balance sheet. Continuing operations, I. E, high ups, gearing was minus 7%.

This is slightly lower than what we had in the first quarter, minus 12%. We paid €77,000,000 of dividends in the second quarter, and this was mostly offset by the strong operative cash flow, as you saw on the previous page. Also, please note that, like I said also earlier, we aim at closing MacGregor sale at the July, and we expect then roughly EUR225 million sales price coming in quarter three. Like Scott mentioned earlier, we have specified the outlook for 2025. This is based on the first six months financial performance and our current visibility to the second half of the year.

So we estimate for the continuing operations, I. E, for high up the comparable operating profit to exceed 13.5%, so to be slightly higher than in 2024. So with those words, then I would hand back to Scott to summarize the key takeaways.

Scott Phillips, CEO, Hiab: Thank you, Mikko. All right. So a couple of key takeaways that I want to summarize the quarter around. One is, is our first half of the year has been extremely strong and due to the excellent execution of the entire team at Hayab, That’s led to our profitability being on a strong level, really proud of that despite the challenging market situation. However, the market uncertainty continues to negatively impact our business, especially in The U.

S. So therefore, we’re still taking a relatively conservative view and providing a bottom scenario as we have been for each of the last several quarters in terms of our outlook. We believe we’re in an excellent position, however, to deal with this market volatility and we like the fact that our strong cash flow and balance sheet position positions us to continue to invest in the business and gear Syed for growth into the future. So with that, Aki, I’ll turn it over to you for Q and A.

Aki Vesikalle, Investor Relations, Hiab: Thank you, Scott. And I would like to welcome Micko Polakka back to the stage. And with that, operator, we are ready for the Q So if we don’t have any questions for the call, so we can conclude the session. But I would still remind you that we have our site visit upcoming on September 18. So please sign up if you’re interested in to participate this one.

Thank you, Scott, and thank you, Mikko, for the presentation.

Scott Phillips, CEO, Hiab: Thank you, Aki.

Mikko Puvalakka, CFO, Hiab: Thank you.

Scott Phillips, CEO, Hiab: Thanks, everyone, and have a safe day.

Mikko Puvalakka, CFO, Hiab: And have a nice summer.

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