Revenue for the quarter amounted to SEK 807 million (760). Organically, this corresponds to a decrease of 33%. In the same period last year, we still delivered from a large order book, and now we are back to a more normal order book. It is also worth noting that during the quarter we have a book-to-bill of 1.07 excluding currency effects, and we are thus building an order book for the first time in over two years.
We continue to deliver a stable gross margin, 62.6% (65.3) where the organic development is at the same level as the previous year, despite lower volumes. The lower reported gross margin is attributable to Red Lion and PEAK, which both have a margin slightly lower than the rest of the group – although Red Lion’s gross margin continues to develop well.
The good cost control continues and operating expenses are approximately 20% lower organically, both for the year and the quarter. The restructuring program from the second quarter, and the changes made during the fourth quarter in connection with the reorganization, have turned out well. The reorganization and restructuring program are described in more detail below.
The adjusted operating profit amounts to SEK 163 million (196), corresponding to a margin of 20.2%, which can be seen as very good, given that net sales are decreasing 33% organically. Cash flow continues to be good, and we delivered SEK 177 million (119) in cash flow from operations, strengthened by continued inventory reductions of SEK 35 million in the quarter.
RED LION AND NORTH AMERICA DRIVE GROWTH
In North America, we see a clear recovery during the quarter, primarily driven by Red Lion and several good project wins. One example is a large order of N-Tron Ethernet switches for monitoring power supply systems at data centers, which was a nice Christmas present. The rest of North America also sees sequential improvement.
We see a slight improvement in order intake in Europe, but also see that the German market will most likely be challenging also in 2025. There is still a lot of uncertainty about how the German economy and the important automotive sector will develop.
In Asia, the Japanese market is still hesitant, partly due to continued high inventory levels at some of our main customers. China continues to show good development and delivers the strongest quarter of the year.
NEW DIVISIONAL STRUCTURE AS OF 2025
During the fourth quarter, we announced that the group will be organized into three divisions as of January 1, 2025 – to create an even better customer focus. The divisions are Industrial Data Solutions (IDS), Industrial Network Technology (INT) and New Industries (NI).
The organizational change has gone according to plan and the business is now run in accordance with this divisional structure.
In connection with the organizational change, we previously announced that we estimated a reduction of 40 staff which would also result in full-year savings of SEK 40 million, and a restructuring cost of SEK 25 million. Now that the reorganization is complete, we can conclude that
we save a run rate of SEK 44 million, at a restructuring cost of
SEK 16 million.
LAUNCH OF EWON EDGE AND EWON CLOUD
During December, we launched the new products Ewon Cloud and Ewon Edge. Ewon Cloud offers a robust platform for advanced remote management and data insights, while Ewon Edge connects industrial devices in a user-friendly and easy way. Together, these solutions enable our customers to optimize their operations, increase productivity and accelerate their digital transformation journeys.
ACQUISITION OF PEAK COMPLETED
PEAK-System Technik, a German industrial communications company which produces hardware and software for industrial and vehicle communications, became part of HMS on November 1, 2024, and has developed as expected in its first two months with HMS.
The integration of PEAK, which is part of the New Industries division, has begun and is expected to continue throughout 2025.
STABLE INCREASE OF NEW DESIGN-WINS
For our Design-Win business model, which corresponds to approximately one third of HMS’s turnover, we see an increased inflow in 2024. In total, we received 152 (139) new Design-Wins during the year, and the total number of active Design-Wins now amounts to 1,820 (1,842), corresponding to a decrease of 1% compared to 2023, which is explained by the fact that a number of older Design-Wins have been phased out during the year.
OUTLOOK
We believe that our customer’s inventory adjustments, which we have reported over the past two years, are essentially over. At the same time, several markets continue to be characterized by uncertainty due to the macroeconomic situation, especially in Europe. We expect order intake and sales to improve during the second half of 2025.
We continue to focus on long-term growth based on a balanced view of our costs. In the long term, we continue to believe that the market for Industrial ICT (Information & Communication Technology) will be an interesting area, both in terms of organic growth and acquisitions.
Halmstad January 28, 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 69 83
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 January 28, 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.
This information is of the type that HMS Networks AB is obliged to make public pursuant to the EU Market Abuse Regulation, the Swedish Securities Markets Act and the Swedish Financial Instruments Trading Act. The information was submitted for publication through the agency of the contact persons set out above, on 28-01-2025 at 07:30 CET/CEST.
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