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 ambition to return to an operating margin level within the historical range of each business area in 2025. However, the strengthening of the Swedish currency, together with political turbulence, are areas for concern.
The Group’s sales in the first quarter amounted to
Operating profit in the quarter rose by
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 announcements, 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
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
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 consumer-related 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
The lower interest rate level and expectations of further interest rate cuts in
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, continent-based, 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 continent-based network of sub-suppliers. 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 ambition 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 profitability 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.
Gerteric Lindquist
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