Weak first quarter

Large reductions in inventories at distributors, continued high interest rates and unusually low level of housing production – gradual improvement in demand expected in the second half of the year.  

•  Sales decreased by 18.5% to SEK 9,494 (11,646) million
•  Adjusted operating profit amounted to SEK 516 (1,755) million
•  Adjusted profit after net financial items amounted to SEK 184 (1,654) million
•  Earnings per share adjusted for items affecting comparability amounted to SEK 0.02 (0.63)
•  Review of total costs as a result of weak demand in the European heat pump market at the beginning of 2024 – action plan underway

”Demand remained weak in the first three months of 2024 due to an unfortunate combination of a number of adverse factors. Consequently, we are currently in the process of implementing the action plan initiated on February 16 this year,” says Gerteric Lindquist, Managing Director and CEO of NIBE. 

Clear reasons
In Europe, work has been underway since the end of 2023 to return to more normal inventory levels at distributors, particularly for heat pumps, but also stoves. This means that orders received by manufacturers have been unusually low and do not correspond to the number of products delivered and installed at end customers. For example, the European heat pump manufacturing market has almost halved in the year to date. 

The appreciable and relatively rapid rise in interest rates has resulted in a sharp slowdown in new housing production, which in turn has significantly reduced demand for both heat pumps and stoves. The high interest rate level has also contributed to general restraint in consumer spending.

Unlike in North America, where political decision-making has resulted in a robust, long-term incentive program for transition to fossil-free climate control, political decision-making in Europe on replacing fossil fuels with sustainable alternatives such as heat pumps is not as strong. The subsidy application process is often complicated and the date for ceasing use of fossil fuels in existing properties is up to 20 years in the future in some countries. At the same time, the price difference between gas and electricity in terms of price per kWh is disproportionately large, to the detriment of electricity.