Earnings call transcript: Loomis Q3 2025 sees revenue growth and stock uptick

Loomis AB reported its Q3 2025 earnings with revenues reaching SEK 7.6 billion, reflecting a currency-adjusted growth of 7.1% and organic growth of 3.9%. The company’s operating margin improved to 13.2% from 12.9% last year. Earnings per share stood at SEK 7.80. Following the announcement, Loomis’s stock price rose by 0.83%, marking a positive market reaction.

Key Takeaways

• Loomis reported a 7.1% currency-adjusted revenue growth.
• Operating margin increased to 13.2%.
• Stock price rose by 0.83% post-earnings announcement.
• Continued focus on M&A strategy and sustainability initiatives.
• Challenges anticipated in the ATM market.

Company Performance

Loomis’s overall performance in Q3 2025 was robust, driven by strategic acquisitions and growth in its payment and logistics segments. The company completed four acquisitions, including Kipfer-Logistik and Keys Hardware Distress, strengthening its position in pharmaceutical logistics and CIT services. Despite challenges in the ATM business in Sweden, France, and the UK, Loomis maintained its headcount and continued to focus on organic growth and market expansion.

Financial Highlights

• Revenue: SEK 7.6 billion, representing a 7.1% currency-adjusted growth.
• Earnings per share: SEK 7.80.
• Operating margin: 13.2%, up from 12.9% last year.
• Cash conversion: 95%.
• Return on capital employed: Above 16%.

Market Reaction

Following the earnings release, Loomis’s stock experienced a 0.83% increase, reflecting investor confidence in the company’s financial health and strategic direction. The stock’s movement positions it within its 52-week range, with a last close value of SEK 384.6.

Outlook & Guidance

Loomis remains focused on its M&A strategy and organic growth, particularly in the SME market. The company anticipates continued challenges in the ATM market but is committed to sustainability and emissions reduction. Future EPS forecasts for FY2025 and FY2026 are projected at USD 3.63 and USD 4.05, respectively.

Executive Commentary

CEO Aritz Larrea stated, "We delivered a solid and positive performance in the third quarter," emphasizing the company’s commitment to its M&A strategy and exploring new revenue streams. Larrea also highlighted the importance of sustainability in Loomis’s operations.

Risks and Challenges

• ATM market decline in key regions.
• Potential slowdowns in international business lines.
• Integration challenges with recent acquisitions.
• Macroeconomic pressures and currency fluctuations.
• Competitive pressures in the payment and logistics sectors.

Q&A

During the earnings call, analysts inquired about the integration of the Burroughs acquisition and service quality improvements. Loomis’s management reassured stakeholders of their focus on expanding SME and payment services while monitoring the Latin American market, particularly Argentina.

Full transcript - Loomis AB ser. B (LOOMIS) Q3 2025:

Georges, Call Operator: Ladies and gentlemen, welcome to the third quarter 2025 conference call. I am Georges, the call’s co-operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star 1 on your telephone. For operator assistance, please press star 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 AB: Thank you very much. Good morning, everyone, and welcome to the third quarter presentation for Loomis AB. My name is Aritz Larrea, and I’m the CEO of Loomis AB. 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 third quarter performance before taking questions. Let’s start the presentation by turning to slide number two. We delivered a solid and positive performance in the third quarter, with revenues reaching SEK 7.6 billion and currency-adjusted growth of 7.1%. Despite the expected decline in our ATM business, the group achieved a strong organic growth of 3.9%. This was also the first quarter to include the full results of Burroughs, which made a meaningful contribution to our overall growth and further strengthened our position in the U.S. market.

Our efficiency initiatives continue to deliver strong results, with the operating margin rising to 13.2%, up from 12.9% last year. We’ve successfully grown the business without increasing our headcount, further driving margin improvement and demonstrating the impact of our ongoing operational discipline. We delivered another quarter of strong operating cash flow, with a rolling 12-month cash conversion of 95%. This robust cash generation enables us to continue investing in the business while also delivering attractive returns to our shareholders. Our commitment to optimize capital allocation to drive returns is also reflected in the increased return on capital employed, which was above 16% in the quarter. While we have been active in M&A, invested in our business, and continued our share repurchase program, our net debt-to-EBITDA ratio has improved compared to the second quarter. During the third quarter, we completed four acquisitions and signed an agreement for the fifth one.

I will address each later on in the presentation. As announced yesterday, the board has also approved a new share repurchase program of SEK 200 million for the fourth quarter. Let’s now turn to our reporting segments, starting with Europe and Latin America. Our European and Latin America segment delivered a solid performance in the quarter, with revenues reaching close to SEK 3.7 billion, and the organic growth was 2.3%. We have seen a different mix of performance across our business lines during the quarter. While we continue to experience strong demand for our cross-border valuables, transportation, and storage solutions within the international business line, and the Automated Solutions business delivered solid results, the ATM business declined due to previously announced losses in Sweden and France. In addition, there was a negative impact due to the ATM consolidation market in the UK.

While these developments have led to short-term volume headwinds, we expect the long-term industry trends to continue to favor specialized providers. In addition, revenue in Europe was also affected by the ongoing restructuring activities in Germany, where we continue to discontinue unprofitable contracts as part of our efforts to strengthen profitability. These developments have temporarily affected growth in the region, but our initiatives are consistent with our strategy to focus on efficiency, scalability, and long-term profitability. We can also see that the restructuring initiatives implemented in recent quarters are having a positive effect on profitability, with the operating margin increasing to 12.9% versus 12.4% in prior years. In September, we completed the acquisition of Kipfer-Logistik, announced in July. Kipfer-Logistik is a leading pharmaceutical logistics provider based in Switzerland, and this acquisition significantly accelerates the growth of Loomis Pharma.

By integrating a well-established company specialized in high-security, temperature-controlled road freight, we are further strengthening our international business line, where Loomis already provides cross-border high-security logistics for banknotes, precious metals, and jewels, including customs clearance. With our long-standing expertise in secure logistics, we continue to explore opportunities to expand and enhance our services in this area. Let’s turn to the next page and talk about the performance in the US. The US segment delivered another strong quarter. If we adjust for currency impacts, which was negative 9%, the US achieved record-high revenues and operating profit. Organic growth was 5.4%, and the acquisition of Burroughs contributed to the overall growth. The international and Automated Solutions lines of business had notably strong performance in the quarter. Our implemented staffing planning measures have enabled a more efficient way of working, allowing us to grow the business without adding employees.

At the same time, we have secured a high service quality and maintained customer satisfaction. The volume growth, combined with improved efficiency, contributed to the improvement of operating margin. The operating margin increased to 16.3%, up from 16.1% in prior years. This is the first full quarter with Burroughs, and we continue working on integrating their business into our U.S. operations and our Loomis culture. We are still early in the integration process, but while the business is adjacent to our existing operations, it represents a new line of work for us, one that is highly technology-driven and involves technical service teams we previously did not manage. We are seeing great progress and are already observing how it complements our current business. Burroughs is a strong strategic fit as it allows us to provide a fully integrated ATM and Automated Solutions service offering to our customers.

In August, we acquired Keys Hardware Distress, a CIT service provider operating in the Florida Keys area. We’ve also signed an agreement to acquire a precious metals vault and storage facility in Toronto. This acquisition will strengthen our local presence in Canada and increase our depository service and storage capacity within the international business line. Let’s turn to the next page and talk about SME Pay. Revenues in the SME Pay segment increased to SEK 65 million in the quarter. Nearly 40% of this revenue now comes from new small and medium-sized customers, demonstrating that our strategic focus on SMEs is delivering both growth and margin. We’re also making strong progress on the digital side. Loomis Pay continues to scale, broadening our payments offering and strengthening customer loyalty. Transaction volumes through our payment gateway surpassed SEK 2.5 billion in the quarter, representing a 23% increase compared to last year.

In addition, in July, we took an important step in Spain with the acquisition of two POS companies in Catalonia. This significantly strengthens Loomis Pay’s presence in the region, enhances our POS capabilities, and expands our customer base among SMEs. Let’s now move to the next slide, where I’ll share a few updates on our sustainability progress. This quarter, we adopted two new sustainability policies: an environmental policy and a human rights policy, further reinforcing our commitment in these critical areas. Our environmental policy includes our emissions reduction targets to 2030, with the actions being taken to reach these. The key focus here remains on reducing emissions from our vehicle fleet. For the first nine months, we have reduced our scope 1 and 2 emissions by approximately 2% compared to prior year.

I want to highlight that the increase you can see in emissions in the graph here compared to the second quarter is largely related to the acquisition of Burroughs. Initiatives are ongoing to align Burroughs to our carbon emissions reduction plan. Continuing to decrease emissions while growing the business is, of course, challenging, especially due to difficulties with charging infrastructure for an electrified fleet, but something that we’re fully committed to. As a global employer with an important role in society, it is crucial to uphold fundamental human rights across our operations and value chain. Our new human rights policy reinforces our dedication to safeguarding the rights of our workers and how we intend to uphold our efforts in addressing actual and potential human rights.

Now, let’s turn to the income statement slide, where I’ll begin by noting that despite the significant negative impact from exchange rate fluctuations, we achieved a strong currency-adjusted growth. This quarter includes costs classified as items affecting comparability, primarily related to the ongoing restructuring efforts in Europe and Latin America. Our financial net has declined compared to previous years, following lower financial expenses driven by declining interest rates. I would also like to highlight that the effective tax rate has gone up to 30% for year-to-date 2025 due to changes in our assumptions for the third tax asset. This year-to-date adjustment impacts the effective rate in the quarter. Additionally, the tax rate in 2024 was also lower due to the U.S. green tax credits, which have now been removed. For the full year, we expect an effective tax rate of about 30%.

Despite the considerable currency headwinds and higher effective taxes, earnings per share rose to SEK 7.80 per share. I would also like to highlight that also our net debt-to-EBITDA ratio is about the same level as prior year, and we also see an improvement compared to the second quarter, even after several M&A and continued share repurchases. Now, let’s move on to the next slide, where I’ll provide a longer-term view of our performance. As we can see, we have a stable and resilient business model that continues to deliver. We delivered a strong third quarter, and I’m confident in our journey ahead. Our restructuring initiatives in Europe and Latin America are showing results, and we’ve seen clear margin improvements over recent quarters. On a rolling 12-month basis, we generated over SEK 30 billion in revenue and reached an operating margin of 12.6%.

Currency-adjusted growth was 6.1%, fully in line with our financial targets for the strategic period. A major focus in this strategy is accelerating growth within the SME customer segment. This is already contributing to our performance. We have seen healthy revenue momentum and solid margin contribution from SMEs across all our key markets. As we look ahead, it’s important to recognize that we are up against a very strong fourth quarter last year, which benefited from favorable movements with U.S. tariff uncertainties. We’re also managing the impact from ATM business losses in Sweden and the consolidation of ATM networks in France, both impacting our European operations. In addition, there’s a negative impact due to ATM market consolidation in the UK compared to Q4 last year. That said, we still see solid opportunities for organic growth, both with our actual customers as well as with SMEs.

As we outlined at our capital markets today, value-creating M&A will continue to be a key lever in our strategy going forward. This concludes my summary of the quarter. Operator, we are now ready for questions. Thank you very much. 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. Our first question comes from Simon Jönsson with ABG. Please go ahead. Thank you for taking my questions. I want to start off with the M&A track.

I think it’s nice to see that you are more active again, as you have been talking about, of course. I wonder specifically about Burroughs. You mentioned it a bit, and you have had some time now to digest it. My question is, what you are seeing in terms of the turnaround on margins in Burroughs, if that is something that you have already started to see a positive impact on? I mean, the margins in the U.S. were quite good despite the full integration of Burroughs. I guess I wonder if you have seen any margin impact already in Burroughs. Thanks for the question, Simon. I would say that it’s still early stages with Burroughs, but our immediate focus is just on resolving some existing quality issues to ensure service excellence.

Once this is achieved, we will shift our efforts to improving operational efficiency and margins with the objective of making the business margin equilibrium over time, as we promised when we announced the acquisition. All right. Thanks. I’m guessing that it’s fair to assume that it remains quite margin diluted here as of right now, at least. You’re right. Yes. I wonder about the SME and Pay segment, just specifically on the organic growth acceleration we saw here in Q3. If there are any specifics you could point to here, like bigger customers or something that drove the organic growth acceleration here in Q3. As we explained at the Capital Market Day, we’ve been always focused on big retailers and big banks. SMEs were never our focus, and we shifted that. That has been a shift that our sales teams have made. We’ve seen important progress there.

Consider that Q3 also has the seasonality, the normal seasonality that we have in Europe, but it was a great quarter from that perspective, and we expect the following quarters to continue the same way. All right. Great. Lastly, maybe a bit more general reflections, but on Latin America, and maybe specifically on Argentina. I mean, it continues to look like the business environment is improving, more politically stable, and so forth. Do you have any general reflections right now, what’s going on, and if that’s positive or negative for you? I mean, when you look at Argentina, it’s really small when you look at our group. I think that progress is being made there from the countryside. We keep investing there, and we’re looking into growing in that market organically. It keeps being an interest market for us. All right. Thanks. That’s all for me.

Our next question comes from Dan Johansson from ACB. Please go ahead. Hi. Thanks for taking my questions. A couple from my side. Maybe firstly, I was curious to hear how we should think about the revenue mix right now. I noticed you continue to have very good momentum in both Automated Solutions and also International, which is, of course, good for margins. CIT is down like 5% versus last year. I mean, long-term, your mix shift will, of course, continue, but it will be interesting to hear how you think about business mix more near-term for coming quarters. Do you see sort of a near-term recovery in CIT, or should we expect these trends to continue and revenue mix to continue to be supportive ahead here? Thank you. Yeah. Thanks for the question, Dan.

My first comment there would be I was surprised on your comment around CIT because we should look at the business lines currency-adjusted, and I don’t see that decrease happening in CIT. Looking forward, as I said in the call, we’re up against a very strong fourth quarter that we had last year. We had the favorability of the U.S. tariffs uncertainty there, and we are having a negative impact on the ATM business due to the losses in Sweden, France, and the UK, and that will impact our European operations. We keep working on finding alternatives. As you’ve seen, for example, our international business, despite the slowdown due to tariff uncertainty, the business has also kept growing. We keep looking at other revenue streams as well. Yeah. Fair point on the currency factor. Also interesting on international.

As you say, is the performance and the momentum in international sort of even throughout the quarter? Was there any notable difference in growth rates July versus September and beginning of October? Before it was tariffs, but now it seems to be other factors driving the performance. A little bit on momentum throughout the quarter, and also is there anything particular driving the very strong performance you have in international still now? The thing we have with international, Dan, is that it’s not a recurrent business. We can’t see it as we see our domestic business there. We do expect the international business lines to slow down a little bit versus what we’ve had in Q3.

Again, as I told you, we’re looking into how can we keep growing this business and keep expanding, as we did with pharma, keep expanding to other verticals and other areas of interest as well. Yeah. Makes sense. Interesting follow-up. Maybe a final one, just a small comment there on the ATM market concentration in the UK, just so I get it right there. Did you experience an impact already this quarter, or is that more gradually ahead as we move into Q4 and further on here? Thank you. Sorry, I didn’t catch that question. Can you repeat again, please, Dan? No, it was just, did you see the ATM slowdown in the UK already this quarter? Did it impact the numbers in Q3, or is that more for Q4 and going forward here? Yeah.

You should expect more or less the same trend, rather trending in Q4 and first half of next year. Okay. Perfect. That was all from my side now. Thank you so much for answering my questions. Thank you. The next question, Councilor Victor Lindenberg with DNB. Please go ahead. Thank you. Maybe following up on Dan’s question on UK. As a start, can you quantify the amount of the contracts that you’ve lost so we can pin down the magnitude of this? We don’t disclose those numbers, Victor. Okay. But it’s fair to say that it was already in the full quarter of Q3? Yeah. It’s been in the whole Q3 quarter. That’s correct. Okay. You mentioned the tax rate, and it’s come up to about 30%, and you guide for that for the full year as well. Is that a good ballpark proxy going into next year as well?

Yeah. I would say so for now. On the tax rate from a cash tax perspective, the cash tax has come up quite a lot this year. Are there any one-off items, if you will, in that amount, or should we pencil in similar, call it cash tax rates going into next year as well, do you think? No, that’s going to come down because we had a delay of U.S. tax payments from 2024 that came into 2025. They are artificially lowered this year, and that piece will wash out when you get into 2026. Super. That’s very helpful. Two final points. One very small on your Loomis Pay and SME. I noted you have about SEK 9 million of revenue now in Automated Solutions in this segment, and that’s quite an astonishing number for the small size of that segment.

Curious to understand, is this Automated Solutions revenue a product sale similar to CIMA, or is it actually more installed-based type of revenue, more recurring in that sense? No, it’s exactly the same. The only thing is that when you look at CIMA, you have a huge portfolio of solutions, and we’re talking about the smaller range of those solutions. Yes, that was my question. If it is more the actual product installed generating SEK 9 million in the quarter, in that sense that we maybe can expect SEK 9 million also in the coming quarters, or is it just more product sales, additional product sales and recurring revenues? Okay. Super. Final question on the U.S. and Automated Solutions growth accelerated quite dramatically. My numbers tell me 31% in organic terms. That begs the question if you have added revenues from Burroughs or something else into that segment.

Yes, you have revenue coming from Burroughs as well. All right. Can you give us an indication on the underlying save point or Automated Solutions organic trend? Is it similar to what we’ve seen in the mid-teens or so, or has it started to deviate? Yes, I think you’re right. It’s more the same. All right. Super. That’s all from me. Thank you. Thank you very much. As a reminder, if you wish to register for a question, you may press star and one. There are no more questions at this time. I would now like to turn the conference back over to Mr. Larrea for any closing remarks. Thank you very much all for listening in. Please reach out if you have any follow-up questions. Thank you. Bye-bye. Ladies and gentlemen, the conference is now over. Thank you for choosing Corusco, and thank you for participating in the conference.

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