NIBE Industrier AB (publ)

Group revenue was SEK 9.650 billion, with organic growth just north of 7% on a fixed-exchange-rate basis. Operating margin was 9%, up from 8.1% last year, and profit after financial items improved, helped by lower borrowing and lower interest rates. Climate Solutions delivered 10.3% organic growth, with operating profit up almost 16%; Element had 6.7% underlying growth and 6.6% operating margin; Stoves reported 10.1% lower sales and a 4.4% operating margin, with operating profit of SEK 37 million. Operating cash flow was SEK 324 million versus minus SEK 376 million a year ago, net debt/EBITDA was 2.7x, depreciation was SEK 391 million, and return on capital employed was 8.7% while return on equity was 9%. For the full year, management reiterated Climate Solutions margin guidance of 13% to 15%, Element margin guidance of 8% to 11%, and reduced Stoves margin guidance to 6% to 8% after noting SEK 150 million of tariff impact.

Gerteric Lindquist said the quarter showed the business is ‘in the right way,’ emphasizing the fifth consecutive quarter of positive sales, margins, and results. He pointed to solid demand in Climate Solutions and Element, recurring seasonality returning to normal, and a belief that heat pump demand is being supported by a broader shift away from fossil fuels, not just subsidies. His tone was confident but cautious, especially on the macro backdrop, tariffs, and Stoves, where he said the company will fight through with pricing, rationalization, and volume over time.

Hans Backman said Climate Solutions benefited from decent demand in Europe and the U.S., with underlying growth of around 10% translating into almost 16% higher operating profit as gross margin improved with volume. On Element, he highlighted 6.7% underlying growth, a 6.6% margin, contributions from Selmo, and support from cost control and the 2024 savings program. On cash and capital, he noted operating cash flow of SEK 324 million, lower investments as the major capex program winds down, a stable balance sheet, improving equity ratio, and a working-capital target of 20% over time; he also said SEK 391 million of depreciation is a reasonable run rate.

Analysts pressed management on how much of Climate Solutions’ margin expansion should come from volume recovery versus mix, pricing and productivity, and why Q1 leverage looked softer than recent quarters. Management said the main driver is growth plus more rational production after heavy investment, while also noting some transaction FX effects that are hard to measure in a decentralized group. On Stoves, questions focused on the SEK 150 million tariff hit and how the company gets to a 6% to 8% margin; management said the new U.S. tariffs do not affect Q1 yet, will hit fully from Q2 onward, and can only be partly offset by price increases, cost actions and higher sales. Analysts also asked about Middle East-driven demand and market share; management said geopolitical tension is reinforcing the move away from fossil fuels, and that NIBE is defending hydronic market share well while planning to enter air-to-air in France later this year.