Alexander & Baldwin amends credit facility with $200 million term loan
Nobia AB’s third-quarter earnings call revealed a mixed financial performance, with notable strategic shifts in its operations. The company’s stock price fell by 6.93% following the call, reflecting investor concerns over certain financial metrics and strategic decisions. Despite an improvement in gross margins and operating cash flow, the stock’s decline suggests apprehension about the company’s future direction, particularly regarding its U.K. operations.
Key Takeaways
- Gross margin improved to 38.6%, up 1 percentage point year-over-year.
- Operating cash flow increased to SEK 102 million.
- Non-cash impairment of SEK 1.9 billion for U.K. operations.
- Stock price dropped by 6.93% post-earnings call.
- Strategic focus on transitioning to an asset-light model in the U.K.
Company Performance
Nobia AB’s Q3 2025 performance was marked by a 3% organic decline in group net sales. Despite this, the company managed to enhance its gross margin to 38.6%, reflecting improved cost management. The operating cash flow also showed a positive trend, reaching SEK 102 million. However, the financial landscape was marred by a substantial non-cash impairment of SEK 1.9 billion related to its U.K. operations.
Financial Highlights
- Revenue: Not specified
- Earnings per share: Not specified
- Gross margin: 38.6% (up 1 percentage point YoY)
- Operating cash flow: SEK 102 million (improved from previous year)
- Non-cash impairment: SEK 1.9 billion for U.K. operations
- Net debt: Increased to SEK 2,645 million
Market Reaction
Following the earnings call, Nobia AB’s stock experienced a 6.93% decline. This movement suggests investor unease, possibly driven by the significant impairment charge and increased net debt. The stock remains within its 52-week range, indicating no extreme volatility but reflecting cautious sentiment amidst strategic changes.
Outlook & Guidance
Looking ahead, Nobia plans to continue ramping up its Noga Park facility and conduct further strategic reviews of its U.K. business. The company is also focused on additional cost reduction initiatives and maintaining strict working capital and cost discipline. These measures aim to stabilize operations and improve financial health in the coming quarters.
Executive Commentary
CEO Kristoffer Ljungfelt emphasized the company’s efforts to enhance operating performance and strengthen EBIT and cash flow, despite challenging market conditions. "We continue to improve operating performance and strengthen our EBIT and cash flow despite soft product markets," he stated. Ljungfelt also noted ongoing strategic reviews for the U.K. business, highlighting the company’s focus on optimizing its operational model.
Risks and Challenges
- Ongoing market uncertainty in Nordic and U.K. regions.
- High interest rates impacting the housing market.
- Strategic transition risks in U.K. operations.
- Potential challenges in executing cost reduction programs.
- Fluctuations in consumer and professional segments.
Q&A
During the earnings call, analysts inquired about the strategic options for the U.K. business and the timeline for transitioning the Tidaholm factory. Executives also addressed questions regarding inventory reduction strategies and the potential for further margin improvements. These discussions highlighted the company’s focus on strategic realignment and operational efficiency.
Full transcript - Nobia AB (NOBI) Q3 2025:
Kristoffer Ljungfelt, CEO, Nobia: Good day, and thank you for standing by. Welcome to Nobia Q3 Report 2025. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question to join the session, you’ll need to press Star 1 and 1 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star 1 and 1 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Kristoffer Ljungfelt, CEO. Please go ahead.
Good morning, everybody, and thank you all for joining. We start with some key highlights for the quarter, and similar to our last quarter, we continue to improve operating performance and strengthen our EBIT and cash flow despite soft product markets. Even on these historical low levels, we have demonstrated that we can operate above 8% in the Nordic region, also on a rolling 12-month basis. With regards to group net sales in the quarter, it declined organically by 3%, driven by volume decline in the product segment in both regions, and especially in the U.K., which also led to further underabsorption in our supply chain. However, on a positive note, we had growth in Region North for the first quarter since Q3 2022, which concludes a period of 11 consecutive quarters of decline in the Nordics.
Also, our continued growth in the consumer segment is promising, and we are encouraged by the growth in store visits and kitchen design appointments. We also continue our mix-up to higher value products and therefore improved average order values, which also strengthen gross margins. Gross margin of 38.6% in the quarter is one percentage point above last year, primarily driven by improvements in the U.K., but also supported by improved average order values in the Nordics. Gross margin was then negatively impacted by the underabsorption in supply chain across both regions. We continue to generate savings from our cost-out programs, including the store closure programs in the U.K. We recorded another quarter with large improvements, and the total savings from the programs now exceeds SEK 650 million.
Having said that, the year-on-year effects will taper off from here, and we do not rule out that we have to introduce further cost initiatives as long as the market remains soft. Operating cash flow came in at SEK 102 million. We are pleased with that improvement versus last year, and this is something we have worked very consistently with over the past 12 months, so it’s good to see that we get solid traction on our initiatives. On October 21, we inaugurated Noga Park in Jönköping, and it was really a pleasure to see the huge interest in this new facility. We had over 1,000 customers visiting us over two days, and on the day, we also launched two new important trademarks, which I will come back to. These trademarks also underline our commitment to product innovation and design for the future through this site.
As we pre-announced last week, we made a SEK 1.9 billion non-cash impairment of our U.K. operations, which mainly refers to intangible assets. We are continuing our efforts to transition to a more asset-light operating model in the U.K., but we will also look for further strategic options for the U.K. operations. Robert will come back here a little bit later on the impairment. Let’s move to the next slide. Slide number three, which is the kitchen market development in the Nordic region. The gradual recovery in consumer sales continues, and we are encouraged by the latest stats of housing transactions, growing consumer confidence in general, and government grants that support home renovation, especially in Sweden. However, the consumer market only represents about 20% of our volume. With regards to the product market, where we have about 80% of our volume, we experienced another soft quarter in Q3.
It is clearly so that housing starts have not yet increased materially. We are, however, seeing higher levels of activity in areas such as meetings with architects and quote revisions, etc., but it will take some time before this materializes into firm kitchen sales. In addition, we believe there is starting to be a significant demand across many parts of the Nordics, which should eventually translate into growth in this segment. Next slide, please. Slide number four. The kitchen market in the U.K. In the U.K., we have a similar pattern to the Nordics, where we’re seeing some signs of optimism in the consumer segment. However, the product segment remains particularly soft in the U.K.
We believe that high interest rates continue to burden housing starts and home renovation, as many homeowners choose to delay products until financing conditions improve. There is also an ongoing uncertainty around government-backed initiatives, particularly for higher value purchases and for residential property developers. Overall, we believe this has led to a more cautious market in Q3, even though we believe the underlying demand remains. Let’s move over to strategic updates. Slide number five. We start on the top. Again, we have had very good return on our cost-out programs carried out the last couple of years, which together have rendered savings north of SEK 650 million. Given where the market is and our commitment to deleverage, we will continue to rationalize from where we are today with strong cost discipline.
Again, we do not rule out that we need to take some larger steps also in the coming quarters to reduce cost. As stated earlier, already, we have had good improvements in working capital, and we are very pleased that our initiatives from the last 12 months have started to pay off. With regards to realizing Nordic potential, we need to streamline our supply chain, which is well underway. We successfully closed our Finnish factory in the quarter, well ahead of long-term planning, which will start to generate savings already in Q4. We are looking to close down processes in Tidaholm as we are transferring volume gradually to the new factory in Jönköping. We also expect to start to generate savings from the new optimized K2020 platform as we go live in Noga Park.
With regards to transforming U.K., we continue to transition to an asset-light model by closing the large non-performing stores, consolidating supply chain, and signing up partners to distribute our magnetic products. It is absolutely critical to get into this new operating model, and we believe that the team has done a really good job over the course of the last year, although there is still a lot more to be done. Foremost, it has been challenging to exit parts of the store network, and it has been taking longer than we were expecting. We have now exited roughly one-third of the store space, but we still need to do more to get into the desired model. Given these challenges, coupled with soft market conditions and therefore a prolonged financial recovery, we are impairing SEK 1.9 billion related to the U.K. business.
Again, we have initiated further strategic reviews to strengthen profitability. Take slide number six, please. The successful consolidation is ongoing in the Nordics. As I referred to earlier, we closed the Finnish factory in Nastola in the quarter and took another important step on this consolidation journey. Apart from the cost benefits by doing this, we also introduced a more competitive product range by using the HDH range, which the Finnish consumers have appreciated a lot, and it has also been important to our B2B customers. These products will be delivered from Denmark. Some of the B2B customers in Finland also have Nordic presence, so it makes a lot of sense for HDH to provide the same products and service levels across the entire Nordics to these customers. We believe this transition will generate savings of about SEK 40 million annually.
If we move into the next slide, please, the ramp-up of Noga Park, the new Nordic manufacturing facility in Jönköping. First of all, I’d like to thank our customers and suppliers that participated in the inauguration of the new site. It was a very important day for Nobia, where we had the chance to showcase the latest manufacturing capabilities in the kitchen industry, but also showcase our new products with outstanding quality, fit, feel, and finish, and also world-class sustainability credentials, which you know is with really incredible performance and sustainability credentials. Prime Shell is the latest technology for sealing products against moist and breakage. We have already begun to distribute these product features across the entire Nordic network and will continue to do so on a larger scale the coming year.
As we currently have Noga Park to manufacture and distribute components to about 30% of the network, we have, in a way, already established this site as a central hub for Nobia. With regards to full kitchen assembly and distribution for Marbodal, we are in the midst of ramping up production, with the first assembled kitchen being manufactured and distributed in August. There is, of course, a great deal of training and fine-tuning underway as we work toward industrial scale in this process over autumn so that we can. Noga Park can effectively offload production from Tidaholm, which is the current site for Marbodal. With that, I kindly ask you, Robert, new on the job, to update us on the regions.
Robert, CFO, Nobia: Yes. Thank you, Kristoffer. Moving on then to page eight, starting with the Nordic region in the third quarter. As highlighted by Kristoffer, we are pleased to see a positive, although small, organic sales growth in the quarter of 1% versus -11% the corresponding quarter last year. In the quarter, the average order value increased, supported by the continued shift in the sales mix between consumer and professional products, which helped offset some of the pressure on overall volumes. Looking at the individual countries in the Nordic region, we saw continued strong performance in Denmark, supported by a strong and profitable mix across B2C, trade, and social housing. In Norway, we saw a modest sales growth of 1%, while Sweden saw a northward margin improvement, supported by higher average order values, operational efficiencies, and lower SG&A costs.
Looking at the gross margin then, it improved a bit, 36.7% versus 36.6%, explained by the positive segment mix and also the cost-out activities despite underabsorption and higher depreciation in the supply chain network. Looking at the SG&A, it came in roughly flat at SEK 219 million versus SEK 288 million the corresponding quarter last year, where inflationary pressures were mitigated by cost-out activities. Adjusted EBIT came in a bit lower than last year, SEK 99 million versus SEK 104 million, primarily related to lower gross profit caused by lower nominal sales levels. On a current adjusted basis, though, EBIT in the Nordics came in flat compared to last year. A final remark on this slide, during the quarter, we recorded SEK 39 million as items affecting comparability, primarily related to the Nordic supply chain and particularly the transition to our new factory in Jönköping.
If we then move to the next slide, slide number nine, looking at the U.K. region. The U.K. market continues to reflect the same underlying dynamics as we have seen in the Nordics, i.e., growth in the consumer segment offset by declines in the professional segment. Organic sales in the U.K. declined by 7% in the quarter. If we adjust for the store closures, sales decline was actually 4% year over year. The consumer segment continued to show growth, but this was more than offset by double-digit declines in both the trade and project segments. Despite the supply chain underabsorption caused by the professional volume decline, gross margin actually improved by 280 basis points to 40.8%. This was driven by a favorable sales mix and continued impact of our cost-out initiatives. If we look then at the SG&A, on a current adjusted basis, it decreased by approximately SEK 41 million.
Non-currently adjusted, it decreased by SEK 66 million. Our cost reduction efforts implemented last year are delivering planned savings. Looking at EBIT then, EBIT for the quarter came in at SEK 2 million compared to -SEK 49 million last year. Despite the uplift in gross margin, the gross profit value declined on the back of the sales decline, which, however, was mitigated by the lower SG&A in the quarter. As previously announced and as Kristoffer mentioned in his opening slide, in the quarter, we recorded a non-cash impairment of the U.K. operation amounting to SEK 1.9 billion, largely related to intangible assets, which are then included. This item is included in the items affecting comparability. SEK 0.3 billion is recorded in region U.K., and SEK 1.6 billion is recorded in. With that, we move to the next slide, slide number 10, looking at our financial position.
In the quarter, we’re pleased with the strengthening cash flow. Cash flow from operating activities was positive, SEK 182 million, compared to negative SEK 20 million last year. This was then supported by an increased EBITDA of SEK 53 million and then reduced seasonal impact from working capital. As previously communicated, a key component of our focus on operational excellence is our ongoing initiative to reduce inventory balances. These efforts positively impacted cash flow, primarily driven by the U.K., but also in the Nordics, offsetting the planned inventory increase in Jönköping during the ramp-up phase of the new factory. Overall, our inventory levels have decreased by 11% year over year or SEK 128 million. If we look at the operating cash flow, including investments, it amounted to SEK 102 million compared to negative SEK 154 million last year.
Of this, investments in the quarter, mainly related to machinery for the factory in Jönköping, totaled SEK 83 million, which is down from SEK 138 million last year. Finally, if we look at net debt, excluding leasing and pension obligations, it increased year over year by approximately SEK 325 million to SEK 2,645 million. Compared to the end of the second quarter, net debt increased by SEK 146 million. As mentioned in the second quarter call, in July, we received an additional SEK 70 million from the buyer of the factory building in Jönköping. As Kristoffer said, there is approximately SEK 40 million outstanding before we have received full payment for the building we divested last year. With that, I hand over. I return to you, Kristoffer, for going through slide number 11.
Kristoffer Ljungfelt, CEO, Nobia: Thank you, Robert. The priorities going forward are to continue to advance on our strategic agenda, obviously, where the ramp-up of Noga Park in Jönköping is critical to us. We will also continue with the turnaround of U.K. operations, where we will include further strategic reviews. We need to continue to deliver on our cost-out programs. We will also leverage on our strong brands, as communicated before, to strengthen the operational leverage and EBIT, capture growth in consumer sales with the proven model, where we also have shown that we can increase average order values. We will continue with our finance and activities, discipline, cost control, and of course, the strict working capital governance. With that, thank you, and we open up for any Q&A.
Conference Moderator: Thank you, Kristoffer. As a reminder, to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by as we compile the Q&A roster. Our first question comes from the line of Adrian Almond from Nordea. Please go ahead.
Hi guys, good morning. Odin here from Nordea. A couple of questions from my side, please. Firstly, regarding the strategic review here of the U.K. business, are there any additional cost savings programs that you can and believe that you can benefit from? If so, what numbers are we talking about here? What more could you do to reduce the cost base in the U.K.? Also, in regards to the strategic review, is there any possibility of just spinning off the U.K. business?
Kristoffer Ljungfelt, CEO, Nobia: Okay, so if I start and then you fill in, Robert, if you may. When we are in the midst of the strategic review, obviously, it’s very difficult, or if not impossible, to answer on that right now. What I need to say is that we continue with the efforts towards this asset-light model, and that’s hugely important for us and also to come out of more cost, which we certainly believe is possible. Again, we are conducting at the moment further strategic reviews for the U.K. business.
Robert, CFO, Nobia: Okay. Thanks. Second question here then. Could you give us sort of an updated timeline here on completing the transition from Tidaholm to Jönköping and kind of what efficiency gains are we expecting here? Are those still the same as previously expected? Kind of when do you expect to have sort of filled the production capacity in the new factory?
Kristoffer Ljungfelt, CEO, Nobia: Yeah, so with regards to the return for this manufacturing facility, we still believe that we will achieve the desired returns. They are obviously based on the scale. We are now wrapping up the Marbodal production. The next one to go live is the parts of the HTH brand in Sweden, Norway, and Finland. We have started gradually to look into exactly how that transition will be done. I have to return with more details of that. On a positive note, we believe that we can manufacture more of the components from Jönköping than what we previously have said. Also, in the beginning of this program, we did not have really in the plans or in the calculations to close the Finnish factory. From that, there will also be some benefits coming through in Jönköping, not at least on the component side.
We are confident in the long-term kind of achievement of the targets with Jönköping.
Robert, CFO, Nobia: Okay, thank you. Last question here. Could we also have an update kind of on the cash position here? You have some, what, SEK 750 million left in the credit facility. You’re guided for some SEK 150 million in cash outflow in the remaining of the year, but also some gain to be withheld of some SEK 40 million from the sale inspector section, right? When heading into next year, kind of what CapEx needs or cash outflows are you expecting?
Kristoffer Ljungfelt, CEO, Nobia: Again, we do not give any guidance as such, but we feel comfortable with the cash position we have now. Also, for the remainder of the year, I mean, you can look at the past years as well. I think we are in a good place for that, even if we have some outlays for the Jönköping factory, which is about SEK 60 million more for CapEx and about SEK 150 million from a liquidity perspective.
Robert, CFO, Nobia: Okay, perfect. That was all for me. Thank you.
Kristoffer Ljungfelt, CEO, Nobia: Thank you.
Conference Moderator: Thank you. Just a moment for our next question, please. Next, we have Sofia Soling from DNB. Please go ahead.
Hi, thank you. Thanks for taking my question. Perhaps maybe a first question about this SEK 70 million that you received from the buyer of the Jönköping property. Complete in the capital statement, where is it recognized? Is it in the net working capital, or if you can just give some details on that?
Kristoffer Ljungfelt, CEO, Nobia: I think, Sofia, we have to come back to you on that specific question. I will, together with Robert, look into exactly how it’s been recorded.
Okay, but just to confirm, it’s through the balance sheet and not through the operating profit?
Yeah, yeah. It’s through the balance sheet. Absolutely.
Yes. Okay, great. Just another question on items affecting comparability. You mentioned that a major part is non-cash impact, but how much is cash impact by this item affecting comparability?
You mean the SEK 1.9 billion impairment we did?
No, I mean like the total.
You mean the.
Items affecting comparability. You mentioned that the major part is non-cash impact, but I would assume that perhaps the transition cost to Noga Park may be cash impact, or should we view that about SEK 40 million or SEK 50 million is impacting cash flow?
Yeah, regarding the rest of the items affecting comparability that is not the impairment, then about SEK 30 million of that is cash.
Okay, yes. Okay, great. I have a follow-up question on Adrian’s question, actually, on the transition from Tidaholm to Jönköping. Maybe I put it in another way, the question. When do you expect to close down Tidaholm fully? Is it into 2026 in Q2 or perhaps later? I know it’s difficult to say when you get full capacity or speed in Jönköping, but do you have a timeline when you expect to not have this cost related to Tidaholm?
Yeah, but we’re doing everything we can now to ramp up as fast as absolutely possible. I think that we’re doing good progression with that. There is a gradual kind of movement between Tidaholm already today to offload Tidaholm on processes, which we believe from an assembly point of view that we will finalize early next year, definitely. There’s also an ongoing progress of moving over components from Jönköping into Tidaholm. We are well underway on that transition. There will be, in Tidaholm, we will continue to have very few but high-value processes for the part of the range that will not be transferred to Jönköping. For example, the very high-value hand-painted products, etc. There will still be a little bit of operations in Tidaholm during 2026. That’s the one we refer to, Tidaholm Träcenter, to be clear.
Okay. Yeah, just a follow-up question on the margin in the Nordics. You did a good presentation there, but just to understand, you have 1% organic growth. You see positive mix here, consumer sales versus project sales. Adjusted gross margin improved year over year, and you mentioned successful selling and admin cost reductions. Year over year, the adjusted EBIT margin is down 30 basis points. Do I understand it correctly that this is more related then to FX impact, or what are we missing here?
Yeah, primarily, yeah, the EBIT impact that Robert mentioned was just like for like. We’re on par with last year. The main difference from last year is the volume in the product business, which impacts the absorption in our factories, and that has a negative effect on gross margins, really. The true effect we get from mixing up to higher price points in consumer sales has a positive effect, but it doesn’t fully mitigate the drop in product volumes.
Okay. Okay. Yeah, just a final question from my side on the U.K. business, I think Adrian did ask this, or actually two. Did I understand you correctly that you have completed one-third of the stores in U.K., the transformation, or the remaining stores, one-third needed to be transformed to this more light type of model?
Yeah, we came out of about one-third of the store space already. There is more to be done on that side. Yeah. That is why you would also see cost reductions in the U.K. in the quarter.
Yeah. Okay. Yes, I think I stopped there. Thank you for your answer.
Okay. Thank you.
Conference Moderator: Thank you. Just a moment for our next question, please. Next, we have Marcelia Klaun from Handelsbanken. Please go ahead.
Good morning. A couple of questions from my side as well. You mentioned, Kristoffer, that you cannot confirm that you are evaluating potential divestment of the U.K. business. Would you believe that that would be a cash flow transaction if that was the case? What is your view?
Kristoffer Ljungfelt, CEO, Nobia: Marcela, I really can’t answer that question as of now. Again, we’re just looking into various strategic options here. So I can’t comment on that.
Understood. You also mentioned during the presentation larger steps to take out further costs. Can you speak more about that? Are you referring to the footprint or what larger steps you mean?
Yeah, but the way we see the product market, if I refer back to Q3 here now, where it’s been negative again in terms of volume. Of course, we have to lift on all stones, which we are always doing, of course, but there’s more to be done on the cost side. I also don’t want to comment right now exactly the different options we have here, but it’s clearly so that we will need to do more.
A question on a different topic. With the consumer segment now recovering, can you talk more about any activities or campaign that you’re doing to be a preferred partner within the project market as well? What is happening there behind the curtains, within the project market? Are you keeping your market share and making sure that you’re a preferred partner?
Yeah, there’s a lot of things I could say. There’s a lot of activity ongoing for the moment, and we have also seen quite a large increase in activities, which is kind of leading up to potential kitchen sales. We have, as I referred to, a lot more architect meetings. We have revision of a lot of the quotes. I think we have a super strong position with our brands and the intimacy we have with our customer base. Once they are starting up their activities, we’re in a very good place to deliver to that. Again, we got many of the customers over to Noga Park now, regardless of where in the Nordics they sit. I must say that the way they looked at this and the future for Noga and the brands was really, really promising.
I think we’re in a very good shape as the market, when the market will recover, so to say.
Sounds good. A question for Robert. First impressions on the job? How comfortable are you with Nobia’s financial position? Do you see further potential for write-downs?
Yeah, what’s my first impression? Good ones, I would say. Once again, I started with a hard close, Q3 closing. A lot of information to be digested in a short period of time, but I think I’ve had a good start and feeling really comfortable about the situation right now. To your second point, that is, yeah, I can’t comment on that. We have, as part of the strategic reviews we’re doing, we’ll see what comes out of those.
Yeah, that was clear. A final question for me. You mentioned ongoing initiatives to reduce inventory levels now down by some 11%. What target number are you aiming at in terms of inventory levels? Are you almost done with this initiative, or is there more to take out?
We believe we have more to take out from inventory. That is one of the benefits we get with the factory consolidations as well here. I mean, just looking at how it panned out after Nastola closure, where we can really close down inventory without actually adding any inventory in the Jönköping site. The same goes for the different store networks. The very large stores we have now that are non-profitable, they also come at a size where you keep inventory. By consolidating the store footprint and reduced size of it, we can actually get this inventory over to the distribution hubs instead, which has proven quite successful, actually. That is one of the reasons why inventory levels are down quite a lot in the U.K. business.
Thank you so much. That was all for me.
Conference Moderator: Thank you for all the questions. This concludes the Q&A session. I will now hand the call back to Kristoffer.
Kristoffer Ljungfelt, CEO, Nobia: Okay, thank you very much. Thank you all for calling in, and I hope to see you all again at least on February the 4th next year.
Conference Moderator: Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.
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