Translation: Original published in Finnish on 04/22/2026 at 08:59 am EEST

Source: Inderes

Norrhydro released its Q1 earnings this morning, which were significantly better than our expectations in terms of profitability. Good cash flow also supported the company’s financial position. In terms of outlook, the tightening geopolitical situation has also negatively impacted Norrhydro's demand and costs in recent weeks, but the company reiterated its guidance for the current year, in line with our expectations. At first glance, the report did not offer significant new information on the commercialization of NorrDig.

Strong growth continued in Q1

Norrhydro only recently started quarterly reporting, so comparison figures were not available before the report. This made forecasting difficult, and relative changes in particular should therefore be assessed with caution. Norrhydro's Q1 revenue increased by 21% to 7.2 MEUR, roughly in line with our estimate. Discord in customer segments continued, as demand in the forest industry weakened and construction remained subdued. We estimate that growth came especially from the mining, marine, and defense segments, even though the company stated that the strong growth in the former had already slowed down last year.

Profitability rose significantly higher than the comparison period and our expectations

Norrhydro managed to almost quadruple its EBITDA from the weak comparison period to 0.9 MEUR, significantly exceeding our estimate. Revenue growth typically supported EBITDA accumulation, in line with industry logic, but the outperformance against our estimates was mainly due to improved production efficiency in terms of material and service costs. However, there were no surprises in the fixed cost structure or depreciation. Financial costs were also slightly lower than our estimates. Consequently, Norrhydro's clearly positive EPS, which rose to EUR 0.035, improved significantly from the comparison period and substantially exceeded our estimate.

The strong result was also reflected in cash flow, as the company avoided working capital commitment early in the year. Healthy cash flow slightly reduced the high net debt, and the company was also able to repay over 1 MEUR of its loans during Q1.

Guidance reiterated as expected, even though the geopolitical situation causes some problems for the company in the near future

Norrhydro reiterated its guidance according to which the company's revenue for this year is 30-32 MEUR and EBITDA 3-4 MEUR. This was in line with our expectations. However, the outlook comments were cautious, as Norrhydro stated that the tightening geopolitical situation has been reflected in demand in recent weeks and has caused inflationary pressures in the supply chain. The company expects this to be reflected in Q2 orders and deliveries. Norrhydro believes that the overall market will continue to recover this year, but due to the geopolitical situation, the pace may be slower than previously estimated. However, our preliminary assessment is that the good start to the year and new customer accounts commencing at the end of the year, based on comments, support reaching the guidance and achieving a clear earnings improvement this year.