Earnings call transcript: Loomis Q2 2025 sees growth in revenues and margins

Loomis AB reported a solid performance for the second quarter of 2025, with revenues reaching SEK 7.4 billion, marking a 3.8% organic growth and a currency-adjusted growth close to 5%. The company’s operating margin improved to 12.7% from 11.6% the previous year. Earnings per share exceeded SEK 7, reflecting strong operational efficiency and strategic acquisitions. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics, with a PEG ratio of 0.73 indicating attractive valuation relative to growth. The stock has demonstrated remarkable stability, with a beta of 0.69, and has delivered a strong year-to-date return of 20.26%.

Key Takeaways

• Revenue for Q2 2025 reached SEK 7.4 billion, with 3.8% organic growth.
• Operating margin increased to 12.7%, up from 11.6% last year.
• Strategic acquisitions in pharmaceutical logistics and point of sale sectors.
• Stock price saw a slight increase of 0.15% in recent trading.
• Continued focus on value-creating acquisitions and operational efficiencies.

Company Performance

Loomis demonstrated a robust performance in Q2 2025, achieving record revenues and improving its operating margin. The company’s strategic focus on expanding its pharmaceutical logistics and point of sale capabilities has contributed to its growth. Additionally, Loomis continues to benefit from its strong presence in the U.S. market, which has recorded high revenues and operating profits.

Financial Highlights

• Revenue: SEK 7.4 billion, reflecting 3.8% organic growth.
• Operating Margin: 12.7%, up from 11.6% year-over-year.
• Earnings per share: Above SEK 7.
• Rolling 12-month revenue: Over SEK 30 billion.
• Rolling 12-month operating margin: 12.5%.

Outlook & Guidance

Loomis remains committed to prioritizing value-creating acquisitions and operational efficiencies. The company is targeting over 90% cash conversion and expects continued benefits from its restructuring initiatives. Future projections include an EPS forecast of 0.94 USD for Q4 2025 and 0.9 USD for Q1 2026, with revenue forecasts of 835.75 USD and 853.26 USD, respectively. InvestingPro subscribers can access 8 additional key insights about Loomis, including detailed analysis of its growth trajectory and comprehensive financial health assessment through the exclusive Pro Research Report, available for over 1,400 top stocks.

Executive Commentary

"We delivered a solid performance in the second quarter with revenues reaching SEK 7.4 billion and organic growth of 3.8%," said Aritz Larrea, CEO. He emphasized the resilience of Loomis’s business model, stating, "We have a stable and resilient business model that has proven itself over time." Larrea also highlighted the company’s strategic focus, noting, "We will continue to add to our growth by prioritizing value-creating acquisitions and taking a structured approach to gain further operational efficiencies."

Risks and Challenges

• Economic fluctuations impacting currency-adjusted growth.
• Integration risks associated with recent acquisitions.
• Potential regulatory changes in key markets.
• Competitive pressures in the pharmaceutical logistics sector.
• Dependence on successful execution of restructuring initiatives.

The earnings call underscored Loomis’s strategic initiatives and financial health, setting a positive tone for future quarters. With strong cash flow generation, evidenced by a 13% free cash flow yield, and maintaining dividend payments for 17 consecutive years, Loomis demonstrates robust financial fundamentals. For detailed analysis of Loomis’s valuation and growth prospects, including exclusive Fair Value calculations and comprehensive financial metrics, visit InvestingPro.

Full transcript - Loomis AB ser. B (LOOMIS) Q2 2025:

Jota, Conference Call Operator, Chorus Call: Ladies and gentlemen, welcome to the Loomis second quarter 2025 report conference call. I am Jota, the course call operator. I would like to remind you that all participants will be in a listen only mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast at this time. It’s my pleasure to hand over to Aritz Larrea, President and CEO. Please go ahead.

Aritz Larrea, President and CEO, Loomis: Thank you very much. Good morning everyone and welcome to the second quarter presentation for Loomis. My name is Aritz Larrea and I’m the CEO of Loomis. With me here today I have our CFO, Johan Wilsby, and Jenny Boström, our Head of Sustainability and Investor Relations. I’ll start by providing a quick summary of our second quarter performance before taking questions. Let’s start the presentation by turning to slide number two. We delivered a solid performance in the second quarter with revenues reaching SEK 7.4 billion and organic growth of 3.8%. Acquisitions supported growth while a stronger Swedish krona had a notable negative impact across all segments. Adjusted for currency effects, growth was close to 5%. A favorable business mix and improved efficiency led to an operating margin of 12.7%, up from 11.6% last year, making our highest second quarter margin to date.

We’ve grown the business while reducing headcount, contributing to this margin improvement. Quarterly cash flow was affected by timing and working capital movements. However, on a rolling 12-month basis, cash conversion exceeded 100%. We encourage you to focus on the rolling figures for a clear review unaffected by quarterly volatility. Our strong cash flow continues to support both investment in the business and shareholder returns. Despite the acquisition of Burroughs, a record high dividend payout, and share repurchases during the quarter, our net debt to EBITDA ratio improved year over year. Our capital allocation priorities remain unchanged. We keep committed to deploying capital to maximize returns. As announced yesterday, the board has approved a new share repurchase program of SEK 200 million for the third quarter. Let’s now turn to our reporting segments starting with Europe and Latin America.

Our Europe and Latin America segment delivered a solid performance in the quarter with revenues reaching SEK 3.6 billion despite a significant negative currency impact of 5.5%. Organic growth exceeded 4%. We saw strong results in several key markets and we keep addressing performance in those currently under review. During the quarter, we saw continued strong demand for our cross-border valuable transportation and storage solutions within the International business line. At the same time, revenue in our CIT and CMS segments was affected by fewer working days. These developments further reinforce our strategic focus on growing our adjacent business lines. Restructuring efforts are progressing as we continue to optimize our operations across Europe and Latin America. These initiatives are driving improved profitability and enabling us to grow while reducing our workforce. Since the second quarter of 2024, we’ve reduced headcount in the region by approximately 600 employees.

Our operating margin increased to 12.3%, our highest second quarter margin for this segment to date. Yesterday we signed an agreement to acquire Kipfer-Logistik, a leading pharmaceutical logistics provider based in Switzerland. Since 2024, Loomis has operated in this space on a smaller scale under the Loomis Pharma brand. This acquisition significantly accelerates the growth of Loomis Pharma by integrating a well-established company specializing in high-security temperature controlled. Together we will offer a broader range of services to customers and further strengthen our market position. This is a natural extension of our International Business line where we already manage cross-border high-security logistics for banknotes, precious metals, and jewels including customs clearance. Let’s now turn the page to our performance in the United States. The U.S. segment delivered another strong quarter if we adjust for the currency impacts which was negative 10%. The U.S. achieved record high revenues and operating profit.

Organic growth was 4.2% and the acquisition of Burroughs contributed positively to the overall growth. Notably, Automated Solutions delivered another quarter of double-digit organic growth. Our implemented staffing planning measures have enabled a more efficient way of working, allowing us to grow the business while reducing the number of employees. At the same time, we have secured high service quality and maintained customer satisfaction. The volume growth in Automated Solutions and international business lines combined with improved efficiency contributed to the operating margin improvement. The operating margin increased to 16.4%, up from 15.2% in the prior year. Let’s turn to the next page and talk about the SME Pay segment. Revenue for the quarter reached SEK 43 million, reflecting strong growth driven by higher transaction volumes in the Loomis Pay business line compared to the second quarter of 2024. Operating income also improved year over year.

While we’re still in early stages, digital payments account for the majority of revenue within the SME Pay segment. That said, I remain confident that our cash related offerings will also contribute to future growth as we continue developing our bundled solutions. Following the end of the quarter, we acquired two point of sale companies in Spain, CentralCast and Sigore. These acquisitions significantly strengthen Loomis Pay’s presence in the Catalonia region, enhance our POS capabilities, and expand our customer base. Let’s now move to the next slide where I will share a few updates on the progress we’ve made in sustainability. Our sustainability initiatives continue to progress well. A key focus remains on reducing emissions from our vehicle fleet, and we saw a continued year over year decline in emissions this quarter.

In May, we announced an agreement with BP for the supply of BP Bioenergy HVO by the end of 2030. We aim to use approximately 10 million liters of this biofuel across 10 European countries. This solution will significantly reduce the carbon footprint of our European transport operations without requiring replacement of our existing armored vehicle fleet. As I’ve emphasized before, ensuring the health and safety of our employees is one of our highest priorities. I’m pleased to report that workplace injuries continue to decline, supported by our safety awareness campaigns and targeted training initiatives. Additionally, the Board of Directors has adopted two new sustainability policies, an environmental policy and a human rights policy, further reinforcing our commitment in these critical areas.

Let’s turn now to the income statement slide where I’ll begin by noting that despite the significant negative impact from exchange rate fluctuations, we achieved strong currency adjusted growth in the context of the current macroeconomic environment. This quarter includes costs classified as items affecting comparability, primarily related to the ongoing restructuring efforts in Europe and Latin America, as well as net positive effects from M&A activities. Our financial net declined slightly compared to the previous year, mainly due to lower financial expenses driven by declining interest rates. Despite the considerable currency headwinds, earnings per share rose to above SEK 7 per share. As mentioned earlier, our net debt to EBITDA ratio improved even after paying a record high dividend, continuing share repurchases, and completing the acquisition of Burroughs during the quarter.

Now let’s move on to the next slide where I will provide a longer term view of our performance. As we can see, we have a stable and resilient business model that has proven itself over time. On a rolling 12-month basis, we generated over SEK 30 billion in revenue and achieved an operating margin of 12.5%. Our currency-adjusted growth was 6.3% on a rolling 12-month basis, and we are thus in line with both our financial targets for the strategic period. We had a very strong second quarter, and I’m confident about our journey ahead. We have already started to see the impact of our restructuring initiatives in Europe and Latin America, and I’m pleased to see our margin improvements over the recent quarters. Looking ahead, we will continue to add to our growth by prioritizing value-creating acquisitions and taking a structured approach to gain further operational efficiencies.

With that, I’m done with my summary of the second quarter, so let’s turn to Q&A. Operator, please. We are now open to questions.

Jota, Conference Call Operator, Chorus Call: We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press Star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press Star and one at this time. The first question comes from the line of Simon Jönsson with ABG Sundal Collier. Please go ahead.

Good morning all and thanks for taking my questions. First of all, on the margins, you increased the margins in both U.S. and Europe, which was very nice to see, of course. In the U.S. it seems to be the same story, more efficient, better sales mix, etc. In Europe it has been a bit more back and forth. How should we view that or the gains here? Is there any kind of effect from you saving ahead of volume losses down the road in France or Sweden, for example? Can you maybe share a bit more specifically on where you have seen improvements and what we can expect from that coming quarters as well? Thanks.

Aritz Larrea, President and CEO, Loomis: Good morning Simon. As you stated, I mean the U.S. it looks like the same story. It is the same story with the same trend. When we look at the European margins, you do need to consider that the third quarter has always been the strongest quarter for the Europe/Latin segment due to seasonality. Now the increases that we’ve seen in the international business line, which we consider margin accretive moves with a different seasonal pattern, we are seeing the benefits already of the restructuring and the efficiency initiatives. Remember that we have, as you were stating, ATM losses both in Sweden and France, which will both have an impact on organic growth and the operating margin in the remaining of 2025.

All right, got it. On the cash flow, which was a bit weaker, you said that LTM is a better way to track it. Does that mean you think the current LTM conversion is at the level we should expect going forward, or was there still any kind of one off in the working capital here in Q2, you think?

Jota, Conference Call Operator, Chorus Call: Ladies and gentlemen, please hold the line. We have lost connection with the speaker line. We will resume the call shortly. Just a second please. Ladies and gentlemen, the speaker line is back with us. Give me a few seconds to resume our question and answer session. Just a second please. Mr. Johnson, your line is on. You can repeat your question please.

Yes, thank you. On the cash flow, you said that LTM is a better way to look at it because it was a bit weaker in Q2. Does that mean that you think the LTM conversion is at the level we should expect going forward as well? Was there still any kind of one-offs in working capital here in Q2, you think?

Aritz Larrea, President and CEO, Loomis: Hi Simon, this is Johan. Sorry about the mishap here around charging of the device. Q2 was impacted mainly around working capital driven by timing effects and higher inventories due to tariffs. To your question, you should really think about the R12 and we’re not going to change our guidance that we gave at the Capital Markets Day where we said we see this over time being at over 90 and consider that as our guidance, although we’re a bit higher than that right now on an R12 basis.

Okay, makes sense then. Just lastly from me here on M&A, and yeah, I think the new acquisition, the pharma acquisition is quite interesting. Can you maybe share a little bit more on margin profile, multiples paid for these kind of companies, and also more generally what you think about that market segment.

I’ll talk more about the rationale of the acquisition, Simon here. With this acquisition we have the great opportunity of accelerating the development of Loomis Pharma, which we started growing organically. It’s a well-established Swiss-based logistics company. We can strengthen the value proposition by further expanding their geographical reach across our footprint and network. As we stated at the Capital Markets Day, we have the possibility of enhancing Kipfer-Logistik’s service offerings also to its existing customers by adding Loomis capabilities when it comes to air freight and custom clearance as well. We also have the opportunity of accessing supplementary services for road transport as well. It’s one of the things that we spoke at the Capital Markets Day. We’ve always been talking about expanding CIT and CMS into adjacent services. We’re doing the same here within the international business, looking into this pharma that we studied, as I said, organically.

The idea is to accelerate the growth.

All right, does it mean that with this we should expect that you could maybe expand this business into more countries, or is that reasonable?

Not only that, Simon, I mean we will expand this to other countries, but at the same time we will keep looking at other areas within the high security valuable. Transportation pharma is just one example, but there are other areas as well, and we will keep exploring those.

Okay, thank you for that. That’s all for me, thank you.

Jota, Conference Call Operator, Chorus Call: The next question comes from the line of Harshita Bhatter with Goldman Sachs. Please go ahead. Hi, good morning, this is Harshita from Goldman Sachs on behalf of Suhasni Varanasi. We had a couple of questions, please. The first one on the cross border valuables, transportation and storage solutions. Can you share more details on how much benefit has that seen on growth and margins?

Aritz Larrea, President and CEO, Loomis: Good morning. As you all know, we’ve commented before, we’ve seen signs that the underlying business is better than prior year, but we also need to consider that all the speculations around tariffs have had a positive impact in the business, but this impact has flattened down in the later part of the second quarter, also in July. I think that going forward, we don’t expect any more impacts from these tariffs coming, but we do have a stable business when it comes to the storage part, especially with a new facility there. We don’t have the visibility we have in the recurring business, as we could talk about CIT and CMS, but we’re highly confident that the business will keep on giving us some margin accretiveness as well.

Jota, Conference Call Operator, Chorus Call: Got it, thank you. The second one was just a follow-up on the Europe and Latin America margins. Should we expect further benefits from restructuring to come through in the second half?

Aritz Larrea, President and CEO, Loomis: As I mentioned before, consider of course we should continue seeing the benefits from the restructuring that we have done in the second half, but we also have on the other side certain things that could impact like the loss of the ATM business in Sweden and in France. You need to consider all of it.

Jota, Conference Call Operator, Chorus Call: Thank you once again. To ask a question, please press star and one on your telephone. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Aritz Larrea for any closing remarks.

Aritz Larrea, President and CEO, Loomis: Thank you very much for listening in. I wish you all a great summer vacation, but please reach out if you have any follow up questions. Thank you. Bye bye.

Jota, Conference Call Operator, Chorus Call: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you.

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