This article first appeared on GuruFocus .
Release Date: August 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Systemair AB ( STU:52SA ) reported an adjusted operating margin of 9.9%, up 0.6 percentage points year-over-year, bringing its long-term 10% target well within reach.
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The company achieved its eighth consecutive quarter of organic growth, with strong double-digit growth of 15% in North America and 11% in Eastern Europe.
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The acquisition of Temspec in Canada, with an EBIT margin above the Systemair Group average, is expected to strengthen its presence in the North American market.
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The launch of the new Geniox air handling unit with an integrated heat pump using a natural refrigerant (R290) positions the company as a future-proof and sustainable solution provider.
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Systemair AB ( STU:52SA ) secured a significant data center project order in Finland, demonstrating its ability to win business with global, demanding customers and diversify its revenue streams.
Negative Points
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The company faces ongoing cost inflation for commodities and freight, which has led to increased input costs and required price increases to mitigate margin pressure.
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Supply chain challenges persist, with longer lead times for key components and the need to build higher safety stock, negatively impacting working capital and free cash flow.
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Free cash flow declined to 69 million from 108 million in the prior year, driven by significant increases in trade receivables and inventory.
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The geopolitical situation, particularly the war in the region, is causing logistics challenges and delivery disruptions in the Middle East, affecting operations in Saudi Arabia.
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The German market remains slow and volatile, with no major shift in market dynamics, although the company does not see it as a major concern.
Q & A Highlights
Q: Robert mentioned receiving signals that may lead to improved market demand. Could you be more concrete about what these signals are, such as quotation activity or project pipelines, and in which regions or segments? A: Robert Larsson (President and CEO) explained that while he doesn't want to quantify it, in markets with very low activity, early value-chain actors like consultants and architects seem to be working more organized and firmly on projects than before. He noted this will take time to materialize in actual orders.
Q: You seem confident about reaching the 10% operating margin target. If supply chain inflation and tariffs don't materialize as expected, is there upside to that target? A: Robert Larsson (President and CEO) stated that discussing a new financial target is a board decision. He firmly believes the 10% target is well within reach, but emphasized the need to deliver on it for a full year first. Anders Ulf (CFO) added that while the math suggests 10% is achievable, it hasn't been delivered for a full year yet.
Q: Can you provide more detail on the component situation and safety stock buildup, and whether this is a one-off or a continuing strategy? A: Anders Ulf (CFO) noted that the trade receivables increase was due to sales volatility at the end of the quarter. Regarding inventory, he said it's hard to predict as freight and product prices are volatile. Lead times for important components like fans are very long, so they will continue monitoring and building safety stock as needed. Robert Larsson (President and CEO) added that component supply issues are causing irritation but are not yet damaging, and the organization is managing well.
Q: Regarding the data center order in Finland, how comprehensive is your current product offering, and can you dive into liquid cooling? A: Robert Larsson (President and CEO) clarified that liquid cooling is not a ventilation product and is outside their focus. He reiterated that they have a broad ventilation product portfolio useful for data centers, with some derivative products, but they have deliberately chosen not to develop specific technologies for data centers. The EUR60 million order is significant but does not represent a strategic shift.
Q: Can you remind us of your production footprint in North America given the tariff situation between the US and Canada? A: Anders Ulf (CFO) confirmed they now have three factories in Canada (including Temspec) and one in Kansas City, US. They had already planned to move smaller production volumes to the US before tariffs were implemented. They are considering moving more but won't make hasty decisions, as the situation is changing quickly. The factory is there and they have the ability to do it.
Q: What is your view on the potential impact of EBM Papst being acquired by Madison Air on supplier availability and the market? A: Robert Larsson (President and CEO) acknowledged EBM as a competent, long-term, and important supplier. They have heard from EBM that they will continue operating and serving customers as before. With almost six months until the deal closes, a lot can happen, but for now, they are happy with the situation.
Q: Can you provide more color on the German market, which was flattish in previous quarters, and your outlook for the next quarter? A: Robert Larsson (President and CEO) said he doesn't see any major shift in market dynamics in Germany. It remains a fairly slow market with some ups and downs, but he is confident in the sales team's ability to operate. He has no concerns and noted that restructuring has not impacted the numbers.
Q: How do you view the Middle East market currently, given the turbulent spring and ongoing challenges? A: Robert Larsson (President and CEO) noted that business is continuing in the Gulf region, but there are significant delivery challenges due to shipping disruptions. Expanding manufacturing in Saudi Arabia has been beneficial, helping win business due to "made in Saudi" status. He hopes for normalization in freight and shipping, and looks forward to the official inauguration of the Saudi facility once the regional situation improves.
Q: Can you elaborate on the strong organic growth in the Nordics, particularly in Sweden, and what has driven the positive numbers? A: Robert Larsson (President and CEO) attributed the strong performance to their own activities, including changes in how they operate and leadership in Sweden. He described it as a "very ball-based recovery" driven by internal improvements rather than external market shifts.
Q: Regarding the Temspec acquisition, can you provide the acquisition multiples and whether they export to the US? A: Robert Larsson (President and CEO) declined to disclose the transaction price or multipliers, though Anders Ulf (CFO) indicated the multiple is under 10. Robert confirmed that Temspec does have exports into the US.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
