Translation: Original published in Finnish on 7/24/2026 at 8:08 am EEST.

The market-driven slowdown in growth is delaying the earnings turnaround, which we believe will significantly impact Kempower's earnings development in the coming years. However, we estimate that the company's market position remained strong, and the gross margin also developed more favorably than expected in Q2. While we anticipate strong market growth in the long term, the more muted growth outlook we expect in the near future make the valuation multiples expensive. We lower our recommendation to Reduce (was Accumulate) and our target price to EUR 11 due to weak orders (was EUR 15).

Slower quarter in terms of orders, but margins showed good development

The market reacted negatively to the Q2 report, with orders down 6% year-on-year (the consensus had expected 14% growth). Revenue grew by 10%, falling short of the consensus estimate (19%). However, the gross margin was higher than in previous quarters (Q2’26: 47.2%, Q1’26: 45.4%, Q2’25: 50.6%), which partially alleviated concerns about competitiveness and the sustainability of the margin. The margin recovery also supported operative EBIT, which was -1.9 MEUR, and thus only slightly below the estimate (consensus: 0.1 MEUR) despite a significant top-line miss. The increase in receivables significantly weakened cash flow year-on-year, as sales have become more concentrated among distribution partners whose payment terms are typically longer than those of direct customers.

Upper limit of growth guidance was lowered

Kempower lowered its revenue growth guidance to 10–25% for 2026 (was 10–30%). The company attributes the weaker-than-expected orders in Q2 to delays in some significant orders in North America and, on the other hand, to charging operators focusing on profitability rather than network expansion. Charging station installations in Europe fell by 19% year-on-year in Q2, despite a 27% increase in registrations of battery electric vehicles. We believe the weakness in orders is due to market volatility and that Kempower’s market position continues to trend favorably. It is difficult to estimate how long the weak demand will persist, but we believe it will be temporary in the big picture. However, we have significantly lowered our order forecasts and now expect order growth of 8% for H2 and 15–18% for 2027–29. The order book at the end of June was 18% higher than a year ago, and over 2/3 of this amount is expected to be recognized as revenue in the current year, which we believe provides a solid foundation for meeting the guidance.

Company seeks further cost savings to improve profitability

The guidance is that operative EBIT will continue to improve significantly compared to the previous year (unchanged). In H1, earnings improved by 4 MEUR, and for the full year, we forecast a total improvement in earnings of 14 MEUR, supported by increased production efficiency and volume growth. Along with its Q2 report, the company announced a new 5 MEUR cost-saving program targeting fixed costs, aimed at calibrating its cost base to slower-than-expected growth. Decelerated order growth had a rather strong impact on our earnings estimates, which decreased by 49% and 32% for 2027–28.

Significant cash flows too far in the future

Kempower operates in a structurally growing market, but demand can fluctuate at times, causing volatility in estimates. In our view, the company has gained market share in the broader context and has the opportunity to establish itself among the top 3 charger manufacturers in Western markets in the medium term. In our valuation, we have typically relied on an earnings-based valuation with a medium-term horizon. Following our downward revisions to forecasts, the 2028 valuation (EV/EBIT 15x) already approaches fair value, meaning clearer upside would only be evident in the 2029–30 forecasts. We consider this to be too distant and uncertain a reference point from the perspective of the stock's valuation, especially given the increased uncertainty surrounding the short-term demand outlook.