Merus Power H2’25 preview: Focus on the profitability turnaround

Source: Inderes

Translation: Original published in Finnish on 1/30/2026 at 7:00 am EET.

Merus Power will report its financial results for H2 2025 on Thursday, February 5, during the morning. We estimate H2 revenue to decline year-on-year, but for the full year, top line will grow strongly in line with the company's guidance. Key to the investment story would be for the company to be able to improve its profitability. Our EBITDA estimate is at the midpoint of the company's guidance range. Based on announced orders, we expect the company to guide for continued revenue growth and improved profitability for 2026 as well.

Revenue to be recognized less in H2 than in previous half-years

We forecast H2 revenue to be 20.9 MEUR, which is a decrease against the strong comparison period. The company's H1 revenue was many times higher than in the comparison period, but we estimate that less revenue was recognized in H2, as the order backlog at the end of H1 was 37% lower than in the comparison period.  Overall, the estimated revenue for 2025 is 46 MEUR, representing a growth of up to 28% from the previous year (the company has guided "strong growth").  We believe our estimate is in line with the company's guidance.  More than half of the H2 revenue forecast is likely to have come from energy storage, but it also includes deliveries of active filters that improve power quality to Egypt.  The Egypt order totaled 6 MEUR, of which we estimate the majority was recognized in H2/2025.

Good sales distribution supports H2 margin level

We estimate H2 EBITDA at 1.6 MEUR (H2’24: 2.6 MEUR) and EBIT at 0.8 MEUR (H2’24: 2.0 MEUR). Thus, we forecast earnings to have deteriorated from the comparison period, which is mainly explained by decreased revenue. We estimate the material margin to have improved to 38% (H2’24: 30%), as the share of power quality solutions is higher than in the comparison period. We estimate that the sales of active filters have particularly good margins, and a large number of these deliveries were made in H2 due to the Egyptian order. We estimate other operational expenses to have remained fairly stable, although depreciation has, in our view, continued to grow as a result of investments in recent years.

Estimated profitability in line with guidance

For the full year 2025, EBITDA is estimated to increase to 2.0 MEUR, which is the midpoint of the company's guidance range (1-3 MEUR). The estimated EBIT for the full year is also moderately positive (0.3 MEUR), but net income is at a loss of 0.8 MEUR due to financing costs.

We do not expect the company to pay dividends, as funds will be concentrated on growth. In June, the company completed a 2 MEUR share issue and in November, it signed a 5 MEUR loan agreement, both of which support growth financing in the short term. We forecast net debt at year-end to be 0.8 MEUR and the equity ratio to be 32%.

The guidance will likely indicate continued growth and an earnings turnaround

We estimate Merus Power's order backlog at the end of 2025 to have been around 30 MEUR, roughly at the same level as the comparison period. In addition, the company booked a 13 MEUR energy storage order in January, which is expected to be recognized as revenue, possibly in its entirety, during 2026. On the back of this, we believe the company has good opportunities to continue pursuing growth in the current year. Our current estimate for 2026 is 6% revenue growth, which we believe is fully achievable with the current order backlog. The direction of growth, however, depends on how much of the order book was recognized in H2 and how much was left for 2026. Further, new orders could increase the slope of growth. We also estimate the company's profitability turnaround to continue during 2026 as delivery processes become more efficient with repetition. Our EBITDA estimate for 2026 is 2.5 MEUR, representing an improvement of around 100 bps in the EBITDA margin (2025-26e: 4.3-5.2%).