Second quarter

• Order intake increased by 6% to SEK 816 m (769). Organically, order intake increased by 8%
• Net sales reached SEK 843 m (845). Organically, net sales decreased by 5%
• Adjusted EBIT reached SEK 181 m (172), equal to a 21.4% (20.4) adjusted operating margin
• EBIT reached SEK 138 m (104), equal to a 16.4% (12.3) operating margin
• Adjusted profit after tax totaled SEK 126 m (103) and adjusted basic earnings per share were SEK 2.52 (2.12)
• Profit after tax totaled SEK 84 m (34) and basic earnings per share were SEK 1.67 (0.70)
• Cash flow from operating activities amounted to SEK 201 m (152)
  
  

First six months

• Order intake increased by 41% to SEK 1,746 m (1,242). Organically, order intake increased by 10%
• Net sales increased by 19% to SEK 1,733 m (1,461). Organically, net sales decreased by 10%
• Adjusted EBIT reached SEK 399 m (309), equal to a 23.0% (21.1) adjusted operating margin
• EBIT reached SEK 313 m (233), equal to a 18.1% (16.0) operating margin
• Adjusted profit after tax totaled SEK 285 m (216) and adjusted basic earnings per share were SEK 5.69 (4.55)
• Profit after tax totaled SEK 199 m (140) and basic earnings per share were SEK 3.96 (2.94)
• Cash flow from operating activities amounted to SEK 388 m (210)
• New organizational structure from 2025 to strengthen customer focus and cross-selling

CEO comments

UNCERTAINTY SURROUNDING TARIFFS DELAY INVESTMENTS
The second quarter has been characterized by a market with uncertainty and hesitation, where the global situation with unclear tariff regulations and geopolitical tensions continues to impact on our customers’ investment decisions.

Order intake for the quarter amounted to SEK 816 million (769), representing an organic increase of 8%. The sustained organic growth comes from a modest improvement in the market for our core business, as well as a better alignment between our customers’ inventory levels and demand, although we see a decrease in the volume of large project orders compared to the first quarter of the year.

With the continued strengthening of the Swedish Krona against the US Dollar, the figures for the quarter have been impacted. The effect on order intake has been particularly significant, as revaluation effects on the order book have become substantial.

Net sales for the quarter amounted to SEK 843 million (845), representing an organic decrease of 5%. Revenue was negatively impacted by currency fluctuations and delivery challenges, among other things a temporarily reduction in delivery capacity during June due to the ERP system implementation for Red Lion in the U.S., with an estimated effect of approximately SEK 15 million that will be recouped in the second half of the year.

We have a book-to-bill for the quarter at 1.01, in constant currency.

MARKET AND DIVISIONS
We continue to see improved demand within INT (Industrial Network Technology), with our European customers increasing their order volumes — although still from relatively low levels. China, while a relatively small market for HMS but strategically important for INT, also continues to show a positive development.

IDS (Industrial Data Solutions) continue to report a growth in order intake compared to last year, with the core business developing steadily. However, we are seeing fewer large project orders compared to the past two quarters.

Our operations within NI (New Industries) are facing a more cautious market environment following the announcement of tariffs earlier in the quarter. The European automotive industry also remains hesitant regarding new investments.

STRONG CASH FLOW REDUCES LEVERAGE
The gross margin amounted to 61.8% (61.9), which is unchanged compared to last year but a slightly lower level compared to recent quarters. The main reasons are currency changes and a timing mismatch in tariff effects, as we chose not to increase prices on existing customer orders, while both direct and indirect tariffs on raw materials have impacted on our costs.

We continue to be cautious with our costs. On an organic basis, our operating expenses are slightly lower than the corresponding quarter last year.

Adjusted operating profit amounted to SEK 181 million (172), corresponding to a margin of 21.4%. Operating cash flow remains strong, totaling a solid SEK 201 million (152). The improvement is primarily driven by inventory adjustments and reduced accounts receivable. Net debt in relation to adjusted EBITDA continues to develop favorably and now stands at 2.97.

INTEGRATION OF RED LION PROGRESSING TOWARD COMPLETION
During the quarter, the integration of Red Lion, acquired in April 2024, has made significant progress toward completion. We have implemented HMS’ ERP and CRM systems within the company and finalized the organizational changes related to the acquisition.

We have made a series of investments in our production facility in York, Pennsylvania. Some of these investments are already in place, with the remaining ones scheduled for a rollout during the second half of the year. Collectively, these investments are expected to further improve gross margins within IDS.

TARIFFS
At the time of writing, tariff negotiations are underway between the US and its trading partners. For us, what matters most is the tariffs between the EU and the USA, and how raw materials and input goods from China to our factory in the US are impacted. Our expectation is that we will have approximately 10% tariffs on our finished goods sold from Europe to the US and slightly higher on raw materials from China to the US. To manage the situation, we have already introduced price adjustments on new orders to minimize the impact of tariff costs. We are monitoring developments and are prepared to act if the long-term conditions deviate from our expectations.

OUTLOOK
It is currently difficult to predict how the market will develop in the short term. Uncertainty surrounding tariffs, geopolitics, and regulations has contributed to hesitation, where major decisions and investments are being postponed. 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 U.S. 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 July 11, 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 July 11, 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.