Earnings call transcript: Robit Q2 2025 shows sales decline, innovation focus

Robit Oyj reported a notable decline in net sales for Q2 2025, reflecting challenging market conditions. The company saw a 20.4% decrease in net sales, amounting to €19.6 million. Despite the downturn, Robit introduced innovative products and launched a change program aimed at cost savings. Trading at €1.35, the stock sits near its 52-week low of €1.33, having declined over 22% in the past year. InvestingPro analysis suggests the stock is currently undervalued, presenting a potential opportunity for value investors.

Key Takeaways

• Robit reported a 20.4% decline in net sales for Q2 2025.
• The company launched the Robit Enbit series, emphasizing innovation.
• A change program aims to achieve €2 million in annual savings.
• Market reactions were muted, with the stock price unchanged.
• Guidance indicates potential further sales decline for 2025.

Company Performance

Robit Oyj experienced a significant decline in net sales during Q2 2025, with a 20.4% drop compared to the same quarter last year. This decline was attributed to weak performance in the construction sector and sales decreases in the EMEA and Americas regions. The company reported negative EBIT of €600,000, a stark contrast to the €700,000 positive EBIT from the previous period. Despite these challenges, Robit has focused on innovation, launching new products such as the Robit Enbit series and the Marathon version of the 8 Series Hammer family. InvestingPro data shows the company maintains strong liquidity with a current ratio of 2.76, while trading at an attractive price-to-book ratio of 0.55.

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Financial Highlights

• Revenue: €19.6 million (20.4% decrease YoY)
• EBIT: Negative €600,000 (compared to positive €700,000 in the previous period)
• Currency exchange losses: €900,000 in Q2, €1.4 million in H1

Outlook & Guidance

Robit’s guidance for 2025 indicates that net sales are expected to decline compared to 2024, with comparable EBIT projected to remain the same or decline. The company is targeting significant cost savings through a change program, which is expected to contribute €800,000 positively in 2025. Robit remains committed to its "Back to Growth" strategy and aims to halve its emission intensity by 2030.

Executive Commentary

Arthur Hallan, CEO of Robit, emphasized the company’s strategic focus, stating, "Back to Growth track is clearly the number one theme." He also highlighted the cost-saving initiatives, saying, "We are targeting through this program €2,000,000 annual savings." Hallan reiterated the company’s environmental goals, noting, "Emission intensity where we are now 44.8 below the benchmark year."

Risks and Challenges

• Continued sales decline in key regions such as EMEA and Americas.
• Uncertainty in the construction market recovery.
• Potential impact of currency exchange losses on financial results.
• Execution risks associated with the change program.
• Pressure to maintain innovation while balancing cost savings.

Q&A

During the earnings call, analysts questioned the timeline for recovery in the construction market and the impact of lower distributor inventory levels. The management acknowledged the uncertainty in market recovery and highlighted the progress made in implementing the change program. Analysts also inquired about balancing cost savings with strategic investments, to which the company responded with confidence in its strategic direction.

Full transcript - Robit Oyj (ROBIT) Q2 2025:

Arthur Hallan, CEO, Robit: Welcome to Robit’s quarter two and H1 twenty twenty five results webcast. My name is Arthur Hallan. I’m CEO of Robit. I’m here with Ari Suerkas, our CFO. We are using a chat functionality in this webcast, so throughout the presentation, free to post questions through the chat, and we will then have a Q and A session at the end of the presentation where we will cover the questions that we have received.

Here’s a standard disclaimer about the forward looking statements. Second quarter was a challenging one for us. Orders decreased by 18%. The decline was driven by in the DTH segment through the major supply contract that ended mid last year and was still impacting the comparison period numbers. On the other hand, in the geotechnical segment, the demand, the project activity was still weak and also the timing of the project was such that we did not see major orders for quarter two.

In TopHammer also, the major orders were not received in quarter two despite the fact that the running basic business is doing okay on the TopHammer side. Market demand as such remained at a good level in the mining market, but the construction market was still weak. And the, let’s say, anticipated recovery in the construction market is still on an, let’s say, uncertain uncertain grounds. Net sales dropped by 20.4%, in constant currencies 17.8%. All in all, currencies played a major role in the results for the quarter.

Our EBIT declined to negative 600,000 from positive 700,000 on a comparison period, and this was largely coming from exchange rate losses which accounted for the quarter €900,000. For first half of the year, the losses from currencies accounts to €1,400,000, so they have really played a major role in the profitability development during this year. Positive development we saw in improved gross margin. The many initiatives we have had to improve our product competitiveness also to control pricing, they are paying dividend and showing an improved gross margin. We are seeing in the first half of the year the improvement on gross margin both in money terms as well as naturally then in a relative basis.

Also, the reduced freight costs have had a positive impact on the gross margin development for the quarter and for the first half of the year. Due to the challenging situation in the market and declining sales, we also initiated a change program to renew operating model and target savings. We are targeting through this program €2,000,000 annual savings basically from employee related costs. Majority of the actions related to this change program have already been implemented and the final actions will be implemented by the ’3 and we expect roughly an 800,000 positive impact through to this change program for 2025. Cash flow from operations remained relatively stable during the quarter resulting to €1,800,000 positive.

We were able to turn during the quarter the development in inventories. Still at the end of the first quarter, we had too high inventory levels, but the trend was clearly turned then during the second quarter of the year. There is still a lot of work remaining on that front, but we already took good steps forward in that front during the second quarter. On the sustainability targets, there’s steady progress towards our targets and one key highlight is this emission intensity where we are now 44.8 below the benchmark year which is 2020 for us. We saw further five percentage point decline and progress towards the target during the first half of the year.

Our target is to halve the emission intensity by year 02/1930. We look a bit closer to the first half and development there. In constant currencies, our net sales have dropped 12.2%. In TopHammer, declined 3.6%. TopHammer also had a weaker second quarter.

As mentioned, no major orders or delivery were tied to second quarter. All in all all in all, the basic business in TopHammer is doing is running running well, and and there are also some new customers that are then being ramped up during the third quarter of the year. Down the hall, we have seen a large decline in sales first half of the year, it’s 40.1% coming from this largely coming or you could say more or less all coming from this one major contract that has ended the down the whole segment. On a positive note, we were able to secure new customers in down the whole segment also including one one major supply agreement in Africa where then deliveries are being ramped ramped up towards the ’3 and then full impact in quarter four. Geotechnical net sales have decreased by 16.7% during the first half of the year.

The construction market has still been weak and that has impacted heavily on the geotechnical market and the competition in the projects as there are fewer out there remains quite tight. EBIT year to date, we are pretty much at zero. The decrease is €1,700,000 to 2024. Out of this €1,400,000 comes again from the exchange rate losses. We have the change program ongoing as mentioned, most of the actions implemented that will then impact positively the profitability during the second half of the year and full impact then 2026.

And also what gives us good foundation is the improved gross margin levels and that is then supporting our profitability development for the second half of the year. Cash flow from operations is negative €300,000 But as mentioned, we saw clear improvement in the second quarter, so sequentially there’s a good improvement as a result of turning the trend in the inventory development. We look at sales development by market area. Asia has been the best performing market area for us this year. There we have delivered a small growth, which is a good result as Asia is very construction driven market.

We’ve won a lot of tunneling projects especially in Korea during the year. For some of those deliveries have started already, for many of them deliveries will then start second quarter or second half of the year. Australasia remains to be challenging for us and we are working hard to recover the sales from the lost accounts. EMEA sales have declined 7%. The mining market and the mining segment demand and sales have been developing better in the area, but obviously the construction market remains weak and there is also fairly construction heavy.

Heavy sales area for us is EMEA and that has impacted their sales for this year. Americas, we’ve seen 6% decline this year. On a positive note, down the whole segment, we’ve seen growth in Americas and Americas, especially North America, is one of the focus areas we have for the down the whole segment and good to see that some results are coming from the strong sales actions we have put there, especially on the quarry and construction segment. The tariff situation has always obviously created uncertainty in the market, but in quarter two, it did not have a major impact on the net sales. Good thing is that the situation has been now clarified at least for the time being.

When it comes to the sustainability goals, I already mentioned this CO2 emission intensity reduction, that’s a great highlight on this front. Another highlight is the improved safety performance, the consistent work on proactive safety work is now also visible on the LTIF development. LTIF was 2.7 for the first half of the year. 2.7 in our numbers means basically one incident that resulted into lost time. But good progress there.

There and it’s obviously constant work that needs to continue. We have also continued on the innovation and offering renewal front. Now the recent product launches we have had is Robit Enbit series. It’s a really revolutionary drilling concept especially to the surface drilling market and it’s providing our customers straighter holes, safer operations, longer lifetime of the drilling gears. And all these results, all in all, to CO2 reductions and more sustainable drilling operations.

We’ve also launched a Marathon version of our eight Series Hammer family. With that Marathon Series, our customers are able to get even longer lifetime out of their eight series hammers providing another great alternative and option for our customer base. Now I’ll hand it over to Ari. Ari will cover the financials more in detail.

Ari Suerkas, CFO, Robit: Thank you, Arto. Let’s start with Q2 figures. As mentioned by Arto, our net sales in Q2 decreased by 20.4% to EUR 11,000,000 to EUR 19,600,000.0. And the decrease came mainly from EMEA, but also from Australia with the lost customer there last year. In Q2 twenty twenty five, EBITDA decreased to 1.9%, and our EBIT percentage in Q2 twenty five decreased to 3.1 percentage.

Our Q2 twenty five result of the period decreased and was EUR 1,200,000.0. Extra terrestrial losses were significant during the review period, weakening our profitability. And here, the major impact has been the falling U. S. Dollar.

Q2 twenty twenty five net working capital development. As Artem mentioned, our net working capital improved in Q2 twenty twenty five compared to Q1. When we look at comparison to last year Q2, we see that the net working capital increased by EUR 3,000,000 and totaled EUR 41,800,000.0. Our inventories remained flat at EUR36.4 million. Receivables decreased to EUR18.1 million and payables decreased to EUR12.7 million.

And with our receivables, we see our good work with the collections, but also we see the impact of declined sales. Net working capital percentage of last twelve months sales was 49.7 percentage. Q2 twenty five cash flow. Our cash flow before changes in net working capital was €1,000,000. Our operating cash flow was €1,800,000.

Cash flow from investing activities was negative, €300,000, and cash flow from financing activities resulted to EUR 2,500,000.0 negative. Our financial position briefly, cash and cash equivalents at the end of Q2 twenty twenty five were EUR 7,600,000.0. And our total interest bearing loans and utilized credit limits were EUR 28,400,000.0, and this included IFRS 16 lease liabilities of EUR 3,900,000.0. Our capital structure. Net debt increased and was EUR 20,800,000.0.

Net debt to twelve months and earning EBITDA was EUR 4.47 at the end of Q2. And here, we expect to have a level of more close to three at the end of the year. So we are pretty confident that our actions with the operating model changes will have a positive impact here impacting also to this key figure. Our equity ratio remains strong at 50.7 percentage. Loan maturities.

Loans from financial institutions at the end of Q2 twenty twenty five totaled €24,500,000 We renewed our Financian agreement in June, and that new agreement will be ending mid-twenty thirty. The new agreement enables us to support the growth, and we renewed and refinanced the existing loan base, but also create the possibility to invest future growth and support working capital fluctuation. Senior loan amortizations €1,500,000 biannually in June and December, And company has an interest rate swap of €10,000,000, which took effect on July 25 and ends on 06/30/2030. Now back to you, Art.

Arthur Hallan, CEO, Robit: Thank you, Ari. So focus areas for ’25 continues to be the same as we have had. The Back to Growth track is clearly the number one theme that the teams are working on in top Hammer Geotechnical driving through product renewal, new product launches, well as channel expansion that we are working on. Then down the whole, as mentioned, really the focus markets we have are North America, Australia, Africa. And good to see that there is some positive results that we expect to see in the figures, especially then on the second half of the year, as mentioned, new customers, one in North America, especially Africa, and we’ll expect some ramp up of the business in the second half of the year.

On the Supply Chain front, we are improving our end to end Supply Chain planning process. That work has been ongoing throughout the year, and target here is that it will improve our profitability through more stable supply chain, less freight cost, and also that will stabilize our cash flow. And again, I think we’ve seen results out of this in the H1 as a result of significantly lower airfreight cost compared to 2024 levels. Product competitiveness, we continue to drive with new products, new innovations that we bring to the market, but also we have focused dedicated programs to also improve the competitiveness of our existing offering so that we were able to do profitable business in all of our target markets. Some of these initiatives on this product competitiveness front is already visible then on the improved gross margin that I mentioned earlier.

We did update our guidance for the year in July. So we estimate for 2025 that our net sales will decline compared to 2024, and also our comparable EBIT profitability in Euros will stay at the same level or decline compared to 2024 levels. Thank you. This was the presentation part and then we will turn to the questions that have come through the chat. And again, feel free to post the questions as we start going through them.

Ari Suerkas, CFO, Robit: I will read the questions out loud, I’ll let you, Arator, to reply to these ones, especially with the first ones. First one coming from the Apeli. In your market outlook, you expect the construction industry to develop positively in the second half twenty twenty five. Do you see any positive indicators that you would confirm this as it’s already August?

Arthur Hallan, CEO, Robit: Yes. So we did mention also in our report that we see kind of risks in this anticipated recovery. I think the market is still in the if you look at construction market, it’s still polarized in that sense that we are still lacking this kind of a constant baseline demand that comes especially from the housing sector. But there are then these kind of a bigger infrastructure projects where we see quotation activity and projects moving forward. Obviously those type of projects are easier than postponed or there’s delays in the projects and that brings uncertainty.

So it is a bit binary in that sense. There’s large infrastructure projects progressing, but on the other hand still the underlying housing driven or building construction driven market is missing and there’s only weak signs of recovery there.

Ari Suerkas, CFO, Robit: Thank you, Arito. A few other questions also from Arthel. You mentioned that decrease in net sales from EMEA came partly due to the distribution’s high stock levels. Did this happen during Q2? And what is the estimate of how long it will take to normalize.

Arthur Hallan, CEO, Robit: Yeah. There is like our distributors also behave a bit differently. Some place fewer but larger stock orders and some couple times after the year. And during quarter two these orders they were you could say lower than typically especially in the EME area. And let’s see, obviously it demands at the final depends on the final end customer demand, how do we see it, but you could say that we don’t expect that this situation is a long lasting and what we are doing is actively working with the specific distributors then obviously to support together winning new customers that will then generate also the consumption of their inventory and eventually orders to to Robert.

Thank you, Arthur. Then then the following questions I will combine since these are related

Ari Suerkas, CFO, Robit: to the same topic. How has the change program developed outside Finland? Could you briefly go through the main points of the program? And how is it possible at the same time to strengthen sales resources and to reduce annual personnel cost by €2,000,000

Arthur Hallan, CEO, Robit: yes. So majority of the actions also outside of Finland have been completed as of today, especially if we look the financial impact, you could say that 90% out of the financial impact, the actions related to those have already been completed. And and and then when it comes to obviously, kind of what we have to do is is that we are have to have these saving initiatives to secure our profitability levels. At the same time, we have to invest into our growth. And then we are doing selected investments through sales resources as an example on that market areas where we see best possibilities for profitable growth.

But these, let’s say, investments have been factored into this program all in all.

Ari Suerkas, CFO, Robit: Are there any more questions? I don’t see any more questions through the chat. That was the last question.

Arthur Hallan, CEO, Robit: All right. If no further questions, we will end this webcast here. Thank you very much for joining. Thank you.

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