NIBE, the giant of ground source heat pumps and energy-efficient solutions from Sweden

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Hey, that’s a very interesting and broad question! To understand why the company has underperformed, I think it’s important to understand how the market has developed in recent years. I’ll try to walk us through it as concisely as possible.

The European heat pump market, which is a very important market for NIBE, has shown very strong and stable growth historically, averaging 10–15% between 2012–2022, driven by increased climate awareness at both government and consumer levels. However, this growth trend reversed in 2023, decreasing by approximately 5%, followed by an even sharper decline in 2024 of over 20%. This downturn is due to several factors, but overall, it was primarily related to a sluggish economy with lower consumer purchasing power, uncertainty regarding future subsidy systems, and falling gas prices, which make heat pumps a less attractive alternative. The most important questions since then have been when we will see a recovery, at what pace, and what the sustainable level of end-consumer demand will be. We have previously communicated and still believe that the expectations for market growth have been unrealistic. The EU has a goal of 60 million installed heat pumps in the Union by 2030 (currently about 26 million), which are very high ambitions considering that these are products that require installation, service, and are currently expensive for consumers to invest in (although subsidies can help to some extent). As a result of the strong growth we have seen in the market historically and these high ambition levels for future growth, manufacturers have adapted to this, which has led to overcapacity in the market, just as you say, but it has also resulted in many competitors entering the market. Over the past year, we have seen interest rates come down and consumer purchasing power starting to return; several manufacturers in the market have initiated cost savings and paused plans to expand capacity. Both market data and NIBE’s reports during H1 signal that the market is beginning to recover, but it is happening gradually and at a slow pace.

To summarize an answer to your question, I would say that the company’s performance has largely to do with the strong headwinds we have seen in the market recently. It’s not just NIBE that is struggling, but also competitors such as Carrier, Ariston, Bosch, Daikin, to name a few. It is also clear that NIBE, like many other players in the market, has overestimated market growth. My perception is also that large parts of NIBE’s revenues come from private households, which have had a tough time, compared to the commercial/industrial side.

I hope you feel I gave a good answer to your question. Very interesting discussion :slight_smile:

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A very comprehensive answer, thank you very much! NIBE has just released inverter-controlled ground source heat pumps, so product development continues even in difficult years. Perhaps my biggest criticism of NIBE is directed at their consumer marketing and marketing channels. The company is not visible at trade fairs, their websites could be improved, and their YouTube and other social media channels are used quite weakly, making it difficult for consumers to get information about NIBE’s excellent products. One would think that during challenging times, they would invest in visibility and marketing, but if such an investment has been made, I have at least missed it.

I myself acquired a NIBE 1245 ground source heat pump for our detached house almost two years ago as a replacement investment. The difference from a twenty-year-old, so-called underpowered ground source heat pump was downright dramatic and came as a complete surprise to me. In the same context, I noticed that the domestic hot water was even warmer than before, and later also that the pump could be retrofitted with passive cooling. So I am very satisfied with the product and invested in NIBE based on the Peter Lynch principle, relying on my own product knowledge. My investment has not gone particularly well.

The issue that bothers me is that since these positive aspects of NIBE’s heat pump came as a surprise to me, it is possible that there are many ignorant consumers like me in the market. For this reason, I wonder if NIBE has succeeded in communicating to consumers what a great product it ultimately is. Is it possible that during the booming corona years, the company lost its ability to communicate with its potential customers?

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Lucas has given his comments, as NIBE acquired 70 percent of the Italian company Selmo S.r.l. :slight_smile:

We believe that the acquisition is in line with the company’s strategy and strengthens the Element business area. However, the transaction is very small relative to NIBE’s size and does not have an immediate significant impact on our forecasts or our view of the company. We will update the acquisition into our forecasts no later than in connection with the company’s Q3 report.

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Lucas has prepared a pre-company report on Nibe, which will publish its Q3 results on Friday, November 14. :slight_smile:

NIBE’s valuation has continued to moderate, while data from the European heat pump market still shows positive signs of recovery, supporting our forecasts. The medium-term valuation multiples (2026: P/E 21x and EV/EBIT: 17x) are clearly below the company’s long-term medians and appear attractive in our opinion. Therefore, we believe that the company’s interesting long-term investment story can be accessed with a good risk/reward ratio at the current valuation, and we upgrade our recommendation to Add (previously Reduce), but reiterate the target price of SEK 40.0.

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Hello!

We are approaching the end of the reporting season, but we still have some exciting reports left – including Nibe. Several of Nibe’s competitors have already presented their Q3 reports, and I thought it might be interesting to compile some reflections on these.

Based on competitors’ Q3 reports, a clear common trend emerges: the European heat pump market continues to recover, with Germany particularly highlighted as strong. Carrier (owner of Viessmann, one of the leading heat pump manufacturers in Germany) reported a 15% sales increase for heat pumps in Europe within the residential segment during Q3. In Germany, sales increased by a significant 45%, and the company expects the trend to continue.

Italian Ariston, another competitor to Nibe, also reported organic sales growth of just over 4%, primarily driven by strong development in Germany. The German market accounts for approximately 20% of Ariston’s total sales. Given the positive development during the first nine months of the year and the trends the company sees at the beginning of Q4, Ariston chose to raise its full-year forecast to approximately 3% organic growth (from a previous 1–3%). Competitor Daikin describes the market climate for heat pumps in Europe as still challenging but also emphasizes that demand in Germany is strong.

This development is in line with the market data we have been following during the year. Underlying heat pump sales in Germany increased by 55% during the first half of 2025. The country also offers financial support for private individuals who install heat pumps, with the aim of reducing gas dependency and accelerating the transition from fossil-fueled heating systems. The subsidies are, of course, an important driving force behind the strong sales development. One can also follow the number of subsidy applications, which functions somewhat as an indicator for future sales. Applications increased by 78% in September and 49% in August, which will likely affect the manufacturing sector with some delay.

The German market is also significant for Nibe. We estimate that it accounts for approximately 10–15% of Climate Solutions’ sales, and since Europe as a whole accounts for about 70% of the business area’s turnover, the region is central to Nibe’s development. At a European level, heat pump sales increased by 9% during the first half of 2025, signaling good demand from end consumers. In addition to Germany, Sweden, the Netherlands, and Italy have also driven growth, while the recovery in France and parts of Eastern Europe is slower.

We have already received statistics for heat pump sales in Sweden and the Netherlands for Q3, where both countries show stable but somewhat decelerating growth (Sweden: 8%, Netherlands: 6%). In Sweden, construction has slowed down more than the more optimistic forecasts of the first half of the year indicated. At the same time, the temporarily raised ROT deduction (ROT-avdraget) to 50% (from 30%) is expected to stimulate demand during the rest of the year. However, when the deduction returns to 30% at the turn of the year, there is a risk of a slowdown in sales during early 2026.

The Dutch market is partly affected by the reduction of subsidies for smaller air-to-water heat pumps at the beginning of the year. This led to an order intake peak during Q4’24, with deliveries during the first months of 2025 – which likely explains the relatively high growth during the first half of the year. This indicates that the increase may have been temporary rather than structural, making it particularly interesting to follow market data in the Netherlands in the coming quarters.

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Lucas has written a company report following the Q3 results. :slight_smile:

While NIBE’s Q3 report fell slightly short of our expectations, we believe the big picture remains unchanged: a gradual recovery in sales volumes and margins continues in the right direction. Therefore, we consider the market reaction, which drove the share price down by 13%, to be somewhat exaggerated and see it creating an even more attractive buying opportunity for the company’s compelling long-term investment story. As a result, we reiterate our Accumulate recommendation, but lower our target price slightly to SEK 38.0 per share (prev. SEK 40.0), mainly due to lower forecasts.

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Here are Lucas’s preview comments as NIBE reports its results on Thursday, February 12. :slight_smile:

We expect the report to show that the gradual recovery of revenue volumes and margins is moving in the right direction. Although the business environment remains challenging, particularly in the new construction market, we expect improved demand in Europe’s key heat pump markets and effective cost control to support the result. In the Q4 report, we will focus on management’s updated comments regarding the 2026 margin targets.

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Here is a fresh company report on NIBE from Lucas :slight_smile:

NIBE’s Q4 report fell slightly short of our expectations, mainly due to stronger-than-expected currency headwinds. However, underlying organic growth and margins were strong, especially in the key Climate Solutions business area, which gives us more confidence in the current turnaround. Despite the recent rise in the share price, we still believe that the valuation (P/E 2026-2027: 25x and 21x) is attractive. As a result, we reiterate our Accumulate recommendation but raise our target price to SEK 44 per share (prev. SEK 38 per share), mainly due to raised forecasts and a slightly lowered risk profile.

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The new inverter ground source heat pumps are at least very efficient according to the specs, and you would think that this would create new markets for Nibe’s products.

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Here are Lucas’s comments on how the German government is changing the heating law and how it may affect Nibe.

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Here are comments from Lucas regarding how German heat pump subsidy applications have grown significantly. :slight_smile:

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These days, winning stocks are rare. But as we struggle to move away from oil and natural gas, geothermal energy is a winning solution. In the midst of all the panic, NIBE’s stock is rising. The frog is turning into a princess-

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Then, coincidentally, news broke that heat pump inquiries in Germany have risen by 30% since the start of the Persian Gulf situation, and at the same time, Handelsbanken upgraded its recommendation from sell => hold.

In fact, besides companies producing natural gas and LNG, very few benefit from rising natural gas prices, but Nibe is one clear beneficiary. Now is a good time to sell new inverter ground source heat pumps.

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@lucas.mattsson has written the preview comments, as NIBE reports its Q1 results on Tuesday, May 19th :slight_smile:

We expect the report to show a gradual but steady recovery in both sales volumes and margins, driven particularly by the Climate Solutions business area. Although we believe the currency headwind caused by a stronger SEK will present challenges, we anticipate that improved demand and solid cost discipline will support the results. In the report, we will focus on management’s comments regarding the development of European heat pump sales and progress toward the 2026 profitability targets.

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