First quarter
- Order intake for the first quarter increased by 97% to SEK 930 m (473). Organically, order intake increased by 12%, acquired growth was 89% and currency effects impacted by -4%
- Net sales increased by 44% to SEK 890 m (616). Organically, net sales decreased by 17%. Acquired growth was 59% and currency translations impacted by 2%
- Adjusted EBIT reached SEK 218 m (137), equal to a 24.5% (22.2) adjusted operating margin
- EBIT reached SEK 175 m (130), equal to a 19.6% (21.1) operating margin
- Adjusted profit after tax totaled SEK 159 m (113) and adjusted basic earnings per share was SEK 3.17 (2.43)
- Profit after tax totaled SEK 115 m (107) and basic earnings per share was SEK 2.29 (2.28)
- Cash flow from operating activities amounted to SEK 187 m (58)
- New organizational structure from 2025 to strengthen customer focus and cross-selling
Last twelve months
- Order intake for the last twelve months increased by 56% to SEK 3,269 m (2,094). Organically, order intake decreased by 6%, acquired growth was 62% and currency translations did not have any significant impact
- Net sales increased by 16% to SEK 3,333 m (2,868). Organically, net sales decreased by 26%, acquired growth was 42% and currency translations did not have any significant impact
- Adjusted EBIT reached SEK 747 m (713), equal to a 22.4% (24.9) adjusted operating margin
- EBIT reached SEK 548 m (672), equal to a 16.4% (23.4) operating margin
- Adjusted profit after tax totaled SEK 518 m (546) and adjusted basic earnings per share was SEK 10.40 (11.70)
- Profit after tax totaled SEK 319 m (505) and basic earnings per share was SEK 6.43 (10.82)
- Cash flow from operating activities amounted to SEK 721 m (422)
- Two long-term value-adding acquisitions in Red Lion and PEAK-System
CEO comments
GOOD START TO THE YEAR IN A DIFFICULT-TO-NAVIGATE MARKET
During the first quarter of the year, we see a continued positive trend in both order intake and net sales. Order intake amounted to SEK 930 million (473), corresponding to growth of 97%, of which 12% was organic.
Since the beginning of the year, we have been organized into three divisions, Industrial Data Solutions (IDS), Industrial Network Technology (INT) and New Industries (NI). All three divisions have shown good development during the quarter, with the INT division making the largest contributions to the positive development, as customers’ previous inventory reductions are now mostly made. Last year’s two acquisitions, Red Lion Controls and PEAK-System, which are now integrated within IDS division and NI division respectively, also show good momentum during the beginning of the year.
Net sales for the quarter amounted to SEK 890 million (616), corresponding to growth of 44%, organically this corresponds to a decrease of 17%. The large difference in organic development between order intake and net sales is explained by the fact that during the corresponding quarter last year, we had a large order book to deliver from, while order intake was dampened by inventory adjustments at our customers. Now the system is in better balance.
During the quarter, we have built order book and have a book-to-bill of 1.09 excluding currency effects, which we see as very positive for the future.
Geographically, Germany and Central Europe are still relatively weak, while the USA is doing better. We also note that our relatively new business in the Middle East, based in Dubai, is showing strong growth, not least in communication for building automation. After a couple of years characterized by the pandemic and component shortages disturbing the industry’s supply chains, we had foreseen a period of stability in the market. With great uncertainty about upcoming tariffs, we see increasing concern that this could create a delayed recovery. Furthermore, we have seen a rapid and significant strengthening of the Swedish Krona in relation to our two largest trading currencies, USD and EUR, which negatively affects the company’s profitability going forward.
OPERATING MARGIN ON TRACK TOWARDS TARGET
Increased volumes and a good product mix resulted in a gross margin for the Group of 63.0% (62.6). This is a good margin considering last year’s acquisitions which had a dilutive effect. The cost level decreased by 6% organically and is only marginally higher than in the previous quarter, which is largely an effect of the reorganization carried out at the turn of the year and good cost control in the operations.
The adjusted operating profit amounts to pleasing SEK 218 million (137), corresponding to a margin of 24.5%, which is an improvement compared to the previous year and well on track towards the target of 25%. With a relatively high level of debt, cash flow is in focus and amounts to a good SEK 187 million (58), which contributes to reducing the net debt in relation to adjusted operating profit before depreciation to 3.05 excluding IFRS16.
GOOD DEVELOPMENT FOR RED LION AND PEAK-SYSTEM
Last year’s acquisitions, Red Lion and PEAK-System, which are now integrated into HMS’s new organizational structure, have developed well in the quarter. Red Lion has had a continued strong project business in both visualization and Edge platforms as well as network switches.
PEAK-System has had a good start in HMS, where we have also seen some American distributors taking the opportunity to build inventory before the new tariffs come into effect.
NEW DIVISIONAL STRUCTURE LAUNCHED
Our first quarter with the new organizational structure has been successful and most new roles are working well, although some work with system integration is still in progress. The focus has been on ensuring that our customers remain satisfied while we form new teams and ways of collaborating within each division.
During the quarter, a new strategy work has also been initiated to look beyond 2025. The results of this will be presented at the company’s Capital Markets Day on September 9.
TARIFFS
At the time of writing, tariffs of 10% have been imposed on products exported from the EU to the US and very high tariffs between China and the US. About 15% of our sales is exported from the EU to North america, with the majority to the US. There are also certain components that are imported from China to the US that will result in cost increases for our US manufacturing unit. The proportion of products that we manufacture in the US and export to China is small, less than a half percent of the net sales of the Group.
To handle the new tariff situation, management has introduced measures from mid-April to minimize the impact on earnings by reviewing logistics flows and prices. The consequences will likely be seen in the form of slightly higher sales and a slightly lower gross margin.
We expect Red Lion to have a favorable position due to the large portion of its manufacturing in the US, while several of its closest competitors manufacture in Europe or Asia. The Red Lion acquisition has given us local production capacity in the US, which we intend to use over time for more of HMS’s products sold in the US.
OUTLOOK
It is currently difficult to predict how the market will develop in the short term. How the tariff situation will develop will play a large role in the investment willingness of many companies. As before, we are cautiously positive about the development during the year, but with renewed uncertainty regarding the macroeconomic situation.
In the longer term, we believe that incentives to increase companies’ manufacturing in the US will create a greater need for automation, digitalization and communication for industrial applications which is positive for HMS. We continue to work with a focus on long-term growth based on a balanced view of our costs. In the long term, we continue to assess that the market for Industrial ICT (Information & Communication Technology) will constitute an interesting area, both in terms of organic growth and acquisitions.
Halmstad April 23, 2025
Staffan Dahlström
Chief Executive Officer
For more information, please contact:
Staffan Dahlström, CEO HMS, +46 (0)35 17 29 01
Joakim Nideborn, CFO HMS, +46 (0)35 710 6983
This information is such that HMS Networks AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the contact persons set out above, at 07.30 CEST on April 23, 2025.
HMS Networks AB (publ) is a market-leading provider of solutions in Industrial Information and Communication Technology (Industrial ICT) and employs over 1,100 people. Local sales and support are handled through over 20 sales offices all over the world, as well as through a wide network of distributors and partners. HMS reported sales of SEK 3,059 million in 2024 and is listed on the NASDAQ OMX in Stockholm in the Large Cap segment and Telecommunications sector.
Attachment
- HMS Networks Q1 Report 2025
