Kalmar Q3'25: Underlying tone still positive

Translation: Original published in Finnish on 11/3/2025 at 8:00 am EET.

We reiterate our Accumulate recommendation and EUR 39 target price for Kalmar. The company's Q3 result slightly exceeded our estimates, driven by a record-high margin, while orders fell short of expectations due to the more cyclical nature of the equipment business. In contrast, service development was stronger than we expected overall. The company's market commentary remained unchanged, and the demand situation has remained stable or good outside the Americas. Considering all this, the forecast changes were minor, and we find the share valuation attractive in light of the favorable long-term earnings growth outlook.

Results exceeded expectations, supported by record margins

The company’s revenue grew slightly year-on-year, which was in line with our and consensus expectations. In Q3, Kalmar's adjusted EBIT amounted to 60 MEUR, exceeding estimates in contrast. The reason for the outperformance was the record-high margin level (adj. EBIT-% 13.8%). Compared to our estimates, development in Services was stronger across the board, while Equipment fell slightly short of our expectations. The earnings beat was also supported in part by lower group administration costs. Kalmar’s order intake settled at 375 MEUR in Q3 (-10% y/y), missing both our (414 MEUR) and the consensus expectation (406 MEUR) by a large margin. This underperformance was due to a sharp decline in more cyclical equipment orders (-20% y/y) affected by market uncertainty resulting in delayed decision-making and timing of larger orders. Indeed, the company noted that there were fewer large orders than usual in Q3 but that underlying demand remained good, except in the Americas, where it remained subdued. In contrast, orders for Services grew by as much as 12%.

Estimates practically unchanged

The market comments were relatively predictable, and the company reported that the situation varies by market area. According to Kalmar, the market environment in Q3 had weakened slightly, especially in the Americas, in line with the company's expectations. Otherwise, the market situation remained stable, with Europe's demand remaining strong and the AMEA region stable. This was also reflected in the activity of the equipment connected to the company's network, which was growing everywhere except in North America. In our view, the tone of the market commentary shifted from previous neutrality to slight positivity, as the external market indicators presented by the company had developed more steadily than before. The guidance for the current year remained unchanged, and the company expects its comparable EBIT margin to exceed 12%.

Based on the report, we only made minor revisions to our near-term estimates. In line with actual developments, we slightly raised our projections for Services, while making slight negative adjustments for Equipment. Along with these adjustments and the revisions we made to group expenses, our operational earnings forecasts for the coming years remained stable. We now expect the adjusted EBIT margin for 2025 to be 13.0% (was 12.9%). However, we expect earnings growth to be relatively good in the coming years (2026e-27e adj. EBIT growth: 5-9% y/y), supported by growth in global container traffic, the company's strong market position, and the Driving Excellence program.

We consider the valuation attractive

Based on our updated estimates, Kalmar's adjusted EV/EBIT figures for 2025 and 2026 are around 10x and 9x, while the P/E ratios are around 14x and 13x. We believe the multiples are quite reasonable, considering the company's good return on capital (cf. previous 12 months ROCE-%: ~21%), despite the prolonged uncertainty related to the market situation. In our view, the current valuation does not reflect significant expectations for earnings growth, despite the favorable long-term growth outlook for the industry, and we believe the share price already considers the possibility of a continued period of subdued demand in the short term. Reflecting this, we consider the risk-adjusted expected return on the share attractive. Our positive view is also supported by our DCF model, which is roughly in line with our target price (~EUR 39/share).