Earnings call transcript: Nederman Q2 2025 highlights challenges and innovation

Nederman Holding AB reported its second-quarter 2025 earnings, revealing a mixed performance marked by innovation in product offerings but facing market uncertainties. Despite a decline in earnings per share from the previous year, the company remains optimistic about its future growth prospects, supported by a solid order backlog and strategic expansions. According to InvestingPro data, the company maintains strong fundamentals with liquid assets exceeding short-term obligations and a healthy current ratio of 1.49, though its stock is currently trading near its 52-week low.

Key Takeaways

• Nederman’s total orders increased by 8.4% on a currency-neutral basis.
• Earnings per share fell to 1.97 kroner from 2.77 kroner last year.
• The company launched several new products, including the GOMAX welding fume extractor.
• Market uncertainties and cross-border sales challenges persist.
• Expectations for continued growth in the industrial air filtration market.

Company Performance

Nederman showed resilience amid a challenging economic landscape, with total orders reaching 1,425 million kroner, reflecting an 8.4% currency-neutral growth. However, the earnings per share saw a decline to 1.97 kroner compared to 2.77 kroner in the previous year. The company’s strategic focus on innovation and expansion into new markets like food and energy aims to counterbalance the hesitancy in large capital investments and global market uncertainties.

Financial Highlights

• Revenue: 1,439 million kroner (up 5.3% currency neutral, 0.7% organic growth)
• Earnings per share: 1.97 kroner (down from 2.77 kroner last year)
• Adjusted EBITDA: 159 million kroner (11% margin, down from 12.8%)
• Profit after tax: 69 million kroner
• Net debt increased to over 2,000 million kroner

Outlook & Guidance

Nederman anticipates continued market uncertainty but remains optimistic due to its robust order backlog. The company is focusing on expanding its digital offerings and service business, which are expected to drive future performance. With the next interim report scheduled for October 23, 2025, and the year-end report on February 12, 2026, the company is preparing for potential growth in the industrial air filtration market. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, which includes detailed analysis of Nederman’s competitive position and growth prospects among 1,400+ covered companies.

Executive Commentary

CEO Sven Kristensen highlighted the company’s resilience, stating, "Demand continues to be slightly slower, but our solid base business, growing service business, and strong digital range enable us to assert ourselves well in the current market." He emphasized the importance of Nederman’s role in industrial air filtration, noting, "In a world with growing insight into the damage that poor air quality does to people, Nederman has a key role to play and good possibilities for continued growth."

Risks and Challenges

• Global market uncertainties and hesitancy in large capital investments.
• Challenges in cross-border sales, particularly due to tariffs.
• Increasing net debt levels.
• Competition in the industrial air filtration market.
• Potential impacts from geopolitical tensions affecting supply chains.

Q&A

During the earnings call, analysts inquired about the merger and acquisition market, with CFO Matthew Cusick noting, "We will still not be paying more than the companies are worth," indicating a cautious approach to future acquisitions. Additionally, questions about demand trends revealed some improvement in June compared to earlier months, suggesting a potential positive shift in market conditions.

Full transcript - Nederman Holding AB (NMAN) Q2 2025:

Conference Moderator: Welcome to the Nederman Holding Q2 twenty twenty five Report Presentation. Session. Now I will hand the conference over to speakers’ CEO, Sven Kristensen and CFO, Matthew Cusick.

Sven Kristensen, CEO, Nederman Group: Good morning, and welcome to Nederland Group’s q two twenty twenty five report. We start with some headlines, and we can say that we have continued good orders received. We have growth and strengthened market leadership in a number of areas. Q two, in short, we have a very uncertain world. We all know that.

We continue to advance our positions. We have shown organic and currency neutral growth in orders received and sales. Particularly strong has the development been in extraction and filtration technology division. We have a focused investment in innovation and in operational efficiency, and we have also strengthened the position as a leading player in industrial air filtration. Over to some key financials.

Matthew Cusick, CFO, Nederman Group: Exactly. So if we look at orders received for the quarter, as Sven mentioned, currency neutral growth, organic growth as well in orders received in the quarter. Currency neutral 8.4%, of which 3.7% was organically. That took us to 1,425,000,000.000 in order received for the quarter. The charts at the bottom of the slide that you can see right now do demonstrate there is obviously a significant negative currency impact that’s almost exclusively down to the depreciation in the value of the US dollar.

Nevertheless, the growth that we’ve generated ourselves, by our acquisitions and organically did compensate for that on an orders received perspective. On to sales for the quarter, particularly strong development. The largest division, extraction and filtration technology, had the best development of the four divisions in the quarter. We were for the group as a whole, we were at 1,439,000,000.000 kroner. That is slightly behind the 1,467,000,000.000 that we saw in quarter two last year.

That is in in its entirety, that reduction is in down to currency. The currency neutral growth, we were 5.3 up and organically, naught point 7% up. Not much more to say on sales. It it is a it is a particularly pleasing with extraction and filtration technology, which we’ll come back to there. Profitability, adjusted EBITDA was a 159,000,000 kroner.

That was down from an extremely high at 188,000,000 kroner in the same quarter last year. That gave us a margin of 11% for the quarter this year, 12.8% last year. There are a couple of items that we need to highlight when trying to help you analyze that decrease. If those of you who will who were following us last year will remember we, we actually made a profit on the sale of a premises down in Germany of, between 6 and 7,000,000 kroner. That was reported and included in the profit of a 188 that you saw Q2 last year.

The second factor is the rapid depreciation in the value of the U. S. Dollar has impacted us negatively by $18,000,000 on an EBITDA level in the quarter. That is rather extreme, particularly considering our flows into The US from abroad are relatively limited. Profit after tax was DKK 69,000,097 million last year, and that means earnings per share 1.97 versus 2.77 last year.

Adjusted EBITDA up a little bit from quarter one, as you can see in the chart at the bottom there. Moving on to the cash flow and net debt, we had a good cash flow from operations in the quarter. Q1 was relatively slow from a cash flow perspective. When looking at cash flow, you must of course remember it depends on where the starting point is. Your cash flow in any year is based on the working capital position at the end of the previous year.

So on a rolling forward basis, we’re still over SEK 500,000,000 kroner in cash flow, positive cash flow from operations. The quarter was 59,000,000 positive. When we’re looking at net debt, it looks like we can see there’s quite an increase there. 1,589,000,000.000 was where we were at the end of q two last year. Now we’re over 2,000,000,000.

The acquisition of Euro equip, obviously, that was approximately a 135,000,000 kroner, and we paid a dividend of a 140,000,000 plus in the quarter as well. Then the final element of the increase in net debt is our favorite international, financial reporting standard, IFRS 16 relating to leasing, which the growth in the turquoise bar on the bottom part of the bar on the bottom right of this slide, that’s versus quarter two last year, that’s related to the new lease for the premises here in Helsingborg where we are now sitting. Nevertheless, net debt has increased somewhat. We’ll come back to some of the investments that we have been making that obviously are connected to that debt. If you go division by divisions, and then extraction and filtration technology.

Sven Kristensen, CEO, Nederman Group: Yes. Extraction and filtration technology, we have some shortcomings on the development during the quarter. It’s, the second consecutive quarter with record order intake, which is quite pleasing. We are taking a good position in the market. We had a strong base business.

There were some larger orders roughly in line with the q two last year. There has been a significant growth of mid sized solutions orders and increased sales has, of course, followed by the good order intake in the first quarter of the year. We have had a good EBITA despite the very negative currency effect we’ve seen. We have also seen growing order backlog and that support the sales for the coming quarter here. We start with the different regions.

In Europe, EMEA, we saw orders received and sales grow, highest orders mainly from a solid base business, not not a lot of large orders. There was one in Holland, a major European defense order. Americas saw record high orders received. There was a number of major orders booked and a strong base business continue. What is interesting here is that we have been able to direct some of our sales sources and our activities to, call it, new industries.

It’s not completely new. It’s the same technology. It’s the same, but we have entered more into food related energy, etcetera, with the same technology as we have thereby, compensated for the very slow demand, for instance, in the automotive industry, welding, etcetera. In Asia, we had a slight decrease, but Australia continued to develop well with the order secure in, for example, defense. But also here, we go outside in the normal path, welding, wood, etcetera, and been able to use our knowledge as a cleaner company.

The key activities has been partner royal event in Helsingborg. We are now using the facility here showing the innovation center, showing the experience center. We had 90 global partners present here in Helsingborg in our own premises, and I would say it was a very good event boding well for the future and their enthusiasm that we could beat up with these, some new, but very many, traditional old partners for us. We also launched the fume eliminate eliminator GOMAX. It’s a new highly effective welding fume extractor, and we also presented the, the flow of new products that are in the pipeline.

Common for all of these is that that it’s a focus not only on efficiency, etcetera, it is very much better energy usage, which is important in this stage. We have also launched a streamlined modular hood system for containment capture, well fumes, and dust. We also participated in the Ligna trade fair in Hannover. We had a full range of dust collection systems and energy saving technology, and especially the digital system, Netanyahu Save, got appreciation and headlines for our ability to save energy in our systems.

Matthew Cusick, CFO, Nederman Group: So financials for extraction and filtration technology, orders received up to 706,000,000 kroner from 06/2002 last year. That’s currency neutral growth of 12%. The division are 11.3% positive currency neutral for the year to date as well. So, 1,390,000,000.00 kroner versus 1.29 is, is is is very pleasing. Sales for the quarter, 673,000,000, versus 652 last year.

That’s, that’s up 9.8% and, that gave us an EBITDA of 101,000,000 kroner, 15% adjusted EBITDA margin. That is, like Sven mentioned, despite, some negative currency effects. This division is the one division that has the, right now, the biggest individual exposure to, to US dollar. Year to date, division up to 175,000,000 kroner now, which is 13.4%. Obviously, now with this good order intake for two quarters in a row, the backlog has increased and, like you mentioned, so that bodes well for the upcoming quarter’s sales figures.

Moving on then to process technology.

Sven Kristensen, CEO, Nederman Group: Yes. For process technology, we have short common comments on the development during the quarter. There is a continued hesitancy in customers committing to major capital investments. And for this division, we are very much linked to larger investments, where we are significantly smaller portion of the investment compared to the rest of furnace, etcetera, in a foundry or a smelter or whatever. Orders and sales positively impacted by the acquisition of Uroquip.

We continue to get new orders, in the South America where they’re active and mainly on the Iberian Peninsula. We had one major order in green steel. New steel has been an important part before, but there was a new technology here. Strong service business and good efficiency in project implementation gave a solid EBITDA, exceeding 8%, which is in this type of project business okay. If we go to the different parts of the division, textile and fibers, orders of sales growth was negative there.

The textile segment is still characterized by continued overcapacity in spinning mills, and we do not see a quick turn here. However, positive is that we are selling a lot of upgrades. We have sold close to a thousand, fans, the special fan that reduce the energy use in these mills. So we continue to develop the aftermarket waiting for the large new orders to come, keeping good relation with our customers with new innovation and helping them be more efficient. If we look into fiber and smelters, orders received increased during the quarter.

Acquisition of EuroKeep boosted this group growth. Green steel order secured and strong underlying recycling trend is positive. We have one more major aluminum recycling order booked. There’s a large pipeline, but again, as we’ve said, there are turbulence in the market, the questioning. So when they will be signed, that we don’t know, but we have a very strong pipeline.

In customized solutions, we had growth in both orders received and sales, and, we will continue. The key activities for the division has been, of course, integration of Eurocop, and it, goes according to plan. We have also increased focus on r and d and sales of new energy efficient solutions.

Matthew Cusick, CFO, Nederman Group: Financials of process technology then, 388,000,000 in order intake for the quarter was 18.4% growth versus the the same quarter last year. Year to date, still 9.5% lower, currency neutral. Sales for the quarter are just over the 400,000,000 mark, $4.00 1,000,000 versus $4.10 last year. Growth again, 4.7% currency neutral. A beta, 33,500,000.0 kroner versus 54.4 last quarter same quarter last year.

8.4% of beta margin for this quarter, which Sven mentioned was was actually reasonably pleasing. It must be pointed out that you’re comparing to an extreme quarter last year for profitability. There was DKK 6,500,000.0 of pure, we could say, free profit from the sale of the building down in Germany. The margin after that was actually 11%. And there were some projects finished with in the same quarter last year.

We concluded a couple of projects with very favorable margins there. But that 8.4% is where they end up for the quarter, 7.6% year to date, 7,600,000.0 is below where we were last year. And it’s largely down to this top line, the sales figures, Sven, as you mentioned, with this hesitancy on committing to customers committing to large capital investments. The chart you see on the top right side of slide here, it does demonstrate the backlog for the division. And those of you who have got your Excel files, you’ve probably seen this work this out already.

But the is the order backlog is approximately in line with where we were twelve months ago despite this rather turbulent macroeconomic environment. Duct and filter technology then.

Sven Kristensen, CEO, Nederman Group: Yes. For duct and filter, we have some short comments on the development during the quarter. That was negative. We have reduced the orders received in all three regions. Unfortunately, that has been an increased market uncertainty with the fewer large orders received across various industries, and that has been the negative impact.

The normal base business have been conducted in a more normal way. It’s the lack of large investment orders. We have got new orders in the EV battery production, but fewer than previous quarters. And as mentioned here later, we have not been able to compensate that with the other larger installation for foundries, smelters, large textile, etcetera. So we will continue work on that.

Again, we have one in Northup EV batteries orders, although lower level, Fuel, large orders. Base business, very solid. Problems, cross border sales to Canada from US diminished due to tariffs and also to Mexico, but that has been a smaller market. US production efficiency is boosting profitability. We have a a fully automated warehouse.

We have Nordfab now. We have the AGVs in full operation. So we have a very efficient manufacturing. EMEA order intake declined after a strong q one. Northrop, Denmark, and UK coordination continued to give positive profitability impact.

New Thai reseller made a positive contribution to orders while sales in Australia remain remained at improved level. Menardos orders retrieved decreased in US, but, two new orders was freed from steel manufacturers that are coming back and investing in USA, probably because of the, tariffs making more profitable in in US. Sales increased in EMEA mainly due to operation only comprising service and off market with customers in non cyclical segments. What key activities have we had in this division? Well, we have launched the LISO well deducting system in Australia from plant in Thailand.

We are adding the 2,500 square meters of production and warehouse space on Norbright US, and that will be completed in q four. And this is to be able to also conduct the NordFab Now concept for larger sized ductworks. We have continued to roll out the beam object at trade fast and then part of training sessions. They have what they call lunch and learn where they invite users for lunch, and they train them to use this. Everything to do, easier to do business with Neriman and Nordfab here.

And we see a large interest in continuing developing the relation with us. We are now just waiting for the large project to come.

Matthew Cusick, CFO, Nederman Group: Financials for Duct and Filter. External orders received a 166,000,000 in the quarter versus $2.00 5,000,000. Currency neutral were down 10% there. Year to date, it must be pointed out, still 3.8 positive, currency neutral slash organic growth. Sales, $2.00 5,000,000 in the quarter versus $2.36 last year.

There is a is a currency impact there, but, currency neutral, it is, however, still down 4.3%. Year to date, positive 4.3 still. Adjusted EBITDA, 37,400,000.0, down from NOK 49,400,000.0. The margin, 18.2%. It might be lower than 20.9% in the quarter last year, but we’re still above 20 we’re at 20.3% for the year to date, and that is very strong historically for this, this division still.

Moving on to monitoring and control technology, Sven.

Sven Kristensen, CEO, Nederman Group: Yes. Monitor and control, development during the quarters. Orders received slowed with the exception of Americas. Profitability negatively affected by lower sales volumes and unfavorable product mix. Increased market uncertainty leading to some delays on large investment decision.

If we go to the European scene, Neomans had particularly strong sales. Gasped saw a reduction in order intake. Olisem that we acquired in November is collaborating with Gasped to build up a pipeline of potential project in emission analysis. If you remember the acquisition of Olysame or part of the Olysame is to make a more complete statement of the cleaner company. We are now helping customers doing analyzing of the emissions that they are creating, both for internal r and d, but also for, reporting to legislative authorities.

In Americas, Neomonta had very good growth in orders. Energy sector was particularly strong with Neomonta’s booking two large orders. The higher tariffs at the start of q two between US and China essentially resulted in a sales to China coming to a complete halt. It has a negative effect for the division. In APAC, Gasmet saw order intake growth in the quarter while Neomata had a slight decline.

Focus on leveraging the technology center in Shanghai and Singapore sales office is going on. What we have is the key activities. We continued investments and activities to strengthen production capacity and above all efficiency in the Neomonitor’s Norwegian hub. Continued development of and preparation for the launch of the next generation of Insight products. Urban FilterSense have been rebranded Urban, and we have shortened it, making it easier, and that is the original name.

The expansion of Urban’s production has commenced, and it’s not only the the capabilities, it’s also a matter of efficiency. They’ve been extremely crowded, which is not generating enough efficiency in the small factory.

Matthew Cusick, CFO, Nederman Group: So orders received for monitoring and control were 165,000,000 in the quarter, a 100 versus a 185, in q two last year. That’s 3% negative. For the year to date, they are still plus 2.4% currency neutral despite this lacking of larger orders that you referred to, Sven. Sales for the quarter, 190,000,000 versus GBP $2.00 6,000,000 last year. There were there were a couple of delays on, customers just delayed deliveries over the quarter end, which impacted negatively.

It’s it’s up to 10,000,000 kroner that was lost in sales there. That does then have an impact in the EBITDA in any individual quarter. So 28,300,000.0 EBITDA is 14.9%. That’s not as high as we would like to be. GBP 38,900,000.0 was last year, 18.9%.

For the year to date now, the, EBITDA is 64,000,000 kroner versus 67, the same point last year, 16.5% EBITDA, slightly down from the 17% for the year to date 2024. Talk a little bit about the outlook, Sven.

Sven Kristensen, CEO, Nederman Group: Yep. Demand continues to be slightly slower, but our solid base business, growing service business, and strong digital range enable us to assert ourselves well in the current market. Our performance is largely positive, though there is a risk that the very uncertain market environment will continue to impact customers’ investment decisions in the quarters ahead. Our orders received are healthy. Our order backlog remains solid, and we are investing continuously improving our range, all of which means that we will be able to continue advancing our positions even in this challenging macro environment.

In a world with growing insight into the damage that poor does to people, Nirman with its leading industrial air filtration rate has a key role to play and good possibilities for continued growth.

Matthew Cusick, CFO, Nederman Group: Just a quick look at the financial calendar then. Interim report for quarter three will be released on October 23 year, and then the year end report for 2025 will be released on the 02/12/2026. And with that, I think we can open up for any questions that listeners might have.

Conference Moderator: The next question comes from Hannah Grimborg from Handelsbanken. Please go ahead.

Hannah Grimborg, Analyst, Handelsbanken: Yeah. Hi. Hannah here. So I have two questions. To start with, on M and A, maybe you can tell us a bit more about how the M and A market has been impacted by the increased uncertainty.

I mean, is it only processes becoming longer, or, has something changed when it comes to price expectations and so on? So I can start there.

Sven Kristensen, CEO, Nederman Group: Okay. Let’s say there’s a flood of people running for the door at the moment. So that is in a long list of potential m and a candidates. However, I think there’s still a discrepancy between what is a reasonable reasonable multiple for a number of them considering the capabilities going forward. Having said that, we are continuously analyzing all the time here.

But as you have seen, we have tried to be quite picky when we go in and not spend shareholders’ money on something that we do not believe that we can turn into meeting our profitability goals within every year period.

Matthew Cusick, CFO, Nederman Group: I think I think you could say as well, Sven, that compared to twelve months ago, the price expectations are a little bit more realistic. But we we will still not be paying more than the companies are worth, of course, but it it it is looking slightly more favorable from a buyer perspective than than twelve months ago.

Sven Kristensen, CEO, Nederman Group: That’s a fair comment.

Hannah Grimborg, Analyst, Handelsbanken: Alright. Alright. Clear. And then just I think that maybe you mentioned this a bit, but then maybe you can repeat it. But if you look at the different divisions, did you notice any shifts in demand during the quarter for any of them, either positive or negative towards the end of the quarter?

Sven Kristensen, CEO, Nederman Group: I think that most of them were doing better in the late latter part of I I would say that June was better than April and May in all divisions. So what that means in reality, it’s hard to say. What we’ve seen is a number of issues like we mentioned, especially MCT has been hit by the fact that you cannot sell from US to China or to Canada for that sake, which has been so the mining industry, and that has hampered some of the the sales. And we have also had some other issues, that very much related to the hesitancy that not lost any large project, but they are postponed week by week, and we don’t know when they will come. But we have a very healthy pipeline.

We see that we have a strong position in the market at the moment.

Hannah Grimborg, Analyst, Handelsbanken: Right. Okay then. Thank you for taking my questions.

Matthew Cusick, CFO, Nederman Group: Thank you, Hannah.

Sven Kristensen, CEO, Nederman Group: Thank you for having taken your time, listening to our presentation. We can summarize that we have an interesting and challenging environment where we see that we have moved forward, and we are reasonably confident that the coming quarters will have more positive signs since we see that there are some clearance in some of the macroeconomic issues going forward. So looking forward to the coming quarters, and thank you for once again for having taking the time. Have a good summer vacation for those who are into that.

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