Press release
NIBE Industrier’s (publ) CEO and MD, Gerteric Lindquist, comments on first quarter, 2025
Continued signs of recovery despite a slightly cautious market and political turbulence
The first quarter of the year reinforced our assumptions about an ongoing recovery in our largest product categories. We saw a return to a more traditional seasonal pattern within the whole Group, at the same time as our improved margins strengthened our aim to return to an operating margin level within the historical range of each business area in 2025. However, the strengthening of the Swedish cur-rency, together with political turbulence, are clear areas for concern.
The Group’s sales in the first quarter amounted to SEK 9,673 million, up by 1.9% compared with the corresponding period in the previous year. This meant that the long downward trend in demand has come to an end and the cautious growth we could already see towards the end of the fourth quarter of 2024 has continued.
Operating profit in the quarter rose by SEK 266 million to SEK 782 million, which corresponds to an improvement of 51.6% compared with the first quarter of the previous year. The operating margin improved from 5.4% in the first quarter of 2024 to 8.1% in the first quarter of this year.
A slight increase in sales together with the action plan implemented during 2024, as well as continued good cost control, were the main reasons for the positive earnings growth in the quarter.
We are well aware that the slightly unexpected strengthening of the Swedish currency and the political turbulence, including all the ongoing and equally unexpected tariff moves, will not help us realize our ambition, but, as always, we will do everything in our power to achieve our goals.
Continued improvement in heat pumps for NIBE Climate Solutions
In the first quarter of the year we saw, in line with previous assumptions, a continued relative improvement in demand for heat pumps in the manufacturing supply chain in Europe.
The reduction in inventories that has been taking place in the European distribution chains in the past six quarters has now brought inventories back to a level where we see a clearer correlation between order intake and billing in the manufacturing supply chain and actual deliveries to end customers.
In Germany, too, where inventory reductions in the distribution chains have taken longer to implement compared with most other European markets, the mood about the future appears to be slightly more optimistic. This is particularly noticeable in the steadily growing number of applications for government subsidies for heat pump installations.
The North American heat pump market remained stable during the quarter.
Following the all too familiar turbulence in the heat pump market in the past five years, where the first four years, 2020–2023, were dominated by very strong demand while in the last year, 2024, demand came to an almost complete halt, a more traditional seasonal pattern seems to have emerged. This means that demand is lower in the first half of the year and higher in the second half of the year.
Stable but variations in NIBE Element’s various market segments
The business area NIBE Element saw continued relatively stable demand in the majority of the business area’s market segments. However, there were still significant variations between the different segments. The continued weak performance of new property construction and consumerrelated products had a negative impact on the business area.
The performance of the semiconductor industry and products associated with electrification in several industry sectors raised hopes of a continued gradual improvement in demand.
Marketing activities and adaptation of production in NIBE Stoves
The business area NIBE Stoves is seeing weaker growth in Europe while the North American market is showing an improvement in underlying demand. However, in line with the return to a more traditional seasonal pattern, marketing activities and the adjustment of production ahead of the expected increase in sales in the second half of the year dominated the business area’s operations. Cost reductions from the action plan ensured that the operating margin was maintained despite lower sales.
The lower interest rate level and expectations of further interest rate cuts in Europe provided a welcome shot in the arm for end consumers, which had a positive effect on all three business areas.
As part of the action plan, all of our three business areas have adjusted their costs to what we believe to be a lower but gradually improving rate of growth in demand in the future. Furthermore, alongside the cost reductions in production and administration, the business areas continued their investments of development resources to strengthen and update their respective product programs. Similarly, the sales organizations were allowed to remain intact in order to maintain a good market presence.
The very ambitious investment program implemented in recent years is also creating good conditions for flexible and streamlined production, which will have a positive impact on margins as demand increases.
Continent-based component supply and production
Yet another factor worth mentioning is that we have been working for a long time to ensure that our business areas are, as far as possible, continentbased, that is, their production of products should take place on the same continent where they are sold. At the same time, we aim to have a corresponding continentbased network of subsuppliers. This creates shorter, more secure supply chains, while also reducing vulnerabilities related to trade barriers.
Our ambition remains unchanged
Together, all of the above form the basis of our aim to return to an operating margin within the historical range of each business area during 2025. We are, as already mentioned, well aware that the slightly unexpected strengthening of the Swedish currency and the political turbulence, including all the ongoing and equally unexpected tariff moves, will not help us realize our ambition, but, as always, we will do everything in our power to fulfill our commitment. Our long-term growth and prof-itability targets are also rooted in the certainty that our products are right for the times, with our whole society needing to transition to a more sustainable way of living.
Outlook for 2025
- Our corporate philosophy and our strong range of products, with their focus on sustainability and energy efficiency, are in tune with the times in which we are living.
- We are well prepared to continue being proactive on acquisitions.
- Our internal efforts to enhance efficiency, combined with our rigorous cost-control measures, will ensure consistently healthy margins.
- All three business areas have a good geographical spread, which makes us less vulnerable to local downturns in demand. Our decentralized organization, based on independent units, is well proven and creates the conditions for greater motivation and flexibility.
- The more acceptable inventory levels in the distribution chains will promote demand at the manufacturing level, while the already lover interest rates and hopes of one or more cuts will act as a stimulus for general consumption and thus the economy.
- The effects of the current security situation around the world, a political development that is difficult to assess in both Europe and North America as well as in Asia, and the price volatility in relation to different types of energy, are difficult to predict.
- However, as is our habit, and based on experience, we remain optimistic about our long-term performance, even though, in view of the above, it is difficult to assess the situation.
Markaryd, Sweden, May 15, 2025
Gerteric Lindquist
Managing Director and CEO
For any questions, please contact:
Fredrik Erlandsson Head of Corporate Communication and Investor relations +46 70 486 63 90
Hans Backman, CFO; +46 433-27 30 00