The Industrial Frontier

Investor Dispatch: Analyzing the Transformation of KH Group (FY 2024 - FY 2025)

The Trail of Change: A Finalized Transformation

The most prominent narrative in the 2025 report is the completion of the "strategic transformation." For years, management has promised to exit non-core holdings. In 2025, they finally pulled the trigger on the big ones: Logistikas, HTJ, and Indoor Group.

• A New Identity: The company is now purely focused on two pillars: KH-Koneet (earth-moving machinery) and Nordic Rescue Group (NRG) (rescue vehicles). Interestingly, the management changed their tune on NRG; previously destined for the auction block, it is now being kept and developed as a core business.
• The Indoor Group Exit: This was the "messy" part of the trail. The divestment of the furniture chain in late 2025 was essentially a fire sale. KH Group sold its 58.3% stake for a "nominal" price and had to pay down €2.0 million of Indoor's debt just to walk away. While this resulted in a loss for discontinued operations, it cleans the balance sheet of a struggling retail asset.
• Balance Sheet De-leveraging: The numbers show a drastic change. Gearing dropped from a precarious 283.4% in 2024 to 137.5% in 2025. By selling assets, the parent company has wiped its financial institution loans clean, though the operating subsidiaries still carry their own debt.

The Bedrock of Consistency: Core Operations

Despite the chaos of selling off divisions, the core business of selling heavy machinery and building fire trucks showed remarkable resilience, particularly toward the end of the year.

• KH-Koneet’s Market Lead: This segment remains the heavy lifter. Net sales grew by 9% year-on-year to €162.8 million. Even when the market was "sluggish" in the early part of the year, the company maintained its competitive position in both Finland and Sweden. The consistency here is found in their inventory management—ending the year with €55.5 million in stock, almost identical to the previous year, suggesting a very disciplined approach to supply and demand.
• The Rescue Vehicle Order Book: NRG (Saurus and Sala Brand) provides the long-term "ballast" for the company. Despite a weak start that led to layoffs, they ended 2025 with a record-high order book, including a €10 million order from the Finnish Defence Forces. This provides production visibility through 2027—a rare level of stability in the industrial sector.
• Governance and Leadership: While there was a change in CEO (Carl Haglund taking the reins in September 2025), the strategy of moving toward an industrial group has remained the North Star since 2022. The consistency in this vision, despite market headwinds, suggests a Board of Directors that is not easily spooked.

The Analyst's Cold Eye

Investors should be cautious about the "Strong End to the Year" narrative. While Q4 was indeed better than expected, look at the full-year comparable operating profit: it fell from €7.2 million in 2024 to €6.4 million in 2025.

Management blames "increased fixed costs" and "lower relative profitability" in heavy equipment sales. Essentially, they are selling more, but earning less on each unit. Furthermore, the Return on Equity (ROE) of 0.1% is paper-thin. While much better than the -46.6% seen during the height of the restructuring, it shows that the company is not yet generating significant value for its owners. The Board’s proposal to not distribute a dividend for the second year in a row confirms that cash is still being hoarded to protect the balance sheet rather than reward the ranch hands.

The Verdict: 2026 Guidance is Optimistic