Kalmar Q2'25: Strong performance despite uncertainty

Translation: Original published in Finnish on 07/28/2025 at08:00 am EEST

Kalmar's Q2 figures broadly exceeded our estimates, and order intake, in particular, was significantly more active than both our and consensus expectations. By contrast, market comments on the outlook for the rest of the year turned cautious. However, the company did not highlight concrete signs of a softening demand situation, with the exception of the Americas, where the situation has been somewhat similar for some time. Thus, we interpret the comments as more indicative of a cautious approach to elevated uncertainty. Therefore, we raised our estimates slightly to reflect the stronger-than-expected report and revised our target price to EUR 39 (was 37). Similarly, reflecting the neutral pricing of the stock, we reiterate our Reduce recommendation.

Source: Inderes & Vara Research (07/22/2025, 8 estimates), (consensus)

The Q2 report broadly exceeded our expectations

Kalmar’s revenue remained unchanged year-on-year, which slightly exceeded our forecast but was in line with market expectations. In Q2, Kalmar's adjusted EBIT amounted to 54.9 MEUR, which exceeded both our and consensus estimates. Of the segments, the margin level of equipment was very good at 13.9% (Q2’24: 13.1%) and far higher than our expectations (Inderes estimate 12.4%). Instead, the margin level of services was slightly weighed down by a small lag in tariff-related price increases (~half of the quarter), as well as measures taken to transfer and outsource inventory in the US and the transfer of the European distribution center. As a result, the profitability of services also fell short of our forecasts. Based on the earnings call, expenses were temporary and directed at Q2. The positive momentum in orders continued as in previous quarters, as the Q2 order intake (450 MEUR, +20% y/y) beat both our and the market's forecasts (+2-3% y/y) clearly. The increase in orders was particularly strong in equipment (+28% y/y), but service orders also grew nicely (+7% y/y). Geographically, growth focused particularly on Europe and the Americas (+24-25% y/y).

Market comments were cautious, forecasts still raised

However, market comments on the outlook for the rest of the year turned cautious in our view (cf. customs policy was highlighted throughout Q2, activity of connected devices grew in Q2 y/y excl. North America). Kalmar commented that due to the prevailing uncertainty, the market environment is expected to be more subdued in H2. Apart from increased caution in the Americas and general slowness in decision-making, it did not indicate any concrete signs of a softening demand situation. With this, we interpret the comments as indicating more of a cautious approach to uncertainty. The company made no changes to its guidance in connection with the report and expects its comparable EBIT margin to be over 12% this year.

Reflecting the recent order flow, we raised our revenue forecasts for the coming years by 2-3%. Together with our raised equipment margins, our earnings forecasts rose relatively more (adj. EBIT 2025e-27e +4-8%). We expect this year's adjusted EBIT margin to settle at 13.1% (was 12.5%). We believe the company has the potential to raise its 2025 guidance as the year progresses, supported by deliveries from a strengthened order book, provided there are no major disruptions in the operating environment.

The stock is sensibly priced

Based on our updated estimates, Kalmar's adjusted EV/EBIT figures for 2025 and 2026 are around 11x and 10x, while the P/E ratios are around 15x and 14x. We believe the multiples are at a reasonable level, considering the company's return on capital (cf. previous 12 months ROCE %: ~21%). However, we believe the multiples are currently driven by elevated forecast risks due to geopolitical tensions, also considering the company's market comments. Our view of the stock's current sensible pricing is also supported by our DCF model, which is around the current share price (EUR ~40 per share).