I am visiting the company’s factory in Rovaniemi on Monday. Does anyone on the forum have any questions in mind for the visit?
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Hi
Could you ask about the customer field tests for the Norrdigi excavator, if they have started and how they have progressed?
Secondly, if the US tariffs vs. China remain in effect and cylinders start coming from there to Europe (I don’t know if cylinders are even exported from China to the USA), could it affect Norrhydro’s core business?
I assume that US tariffs have a limited impact on Norrhydro, as the company’s deliveries seem to be mainly to Finland + Nordic countries?
Thanks and have a good weekend
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- Collaboration between Aberdeen Dynamics and Norrhydro, are there any pilots or projects underway yet?
- Avant Wood collaboration, what does the future look like?
- Have additional orders been received for oil drilling equipment?
- Status of Volvo collaboration?
It’s probably worth being highly perceptive about the pulse and atmosphere at the factory.
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Here are Pauli’s comments on the company’s authorization for capital repayment. 
Norrhydro Group’s general meeting decided to authorize the board to pay capital repayment, which was contrary to what the board previously proposed. The change in direction could, at least in theory, be due to strengthening earnings prospects. In our view, the company’s high indebtedness and high financing costs weaken the conditions for capital repayment.
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From Kauppalehti’s website, I saw that the 2024 financial statement situation is as follows:
- Earnings per share negative for the last 2 years.
- Equity ratio 32.43%
- Net gearing ratio 120.89%
- Interest-bearing net debt 9.59 MEUR.
- Liquid assets 0.59 MEUR.
In my opinion, the company’s cash, balance sheet, and last year’s profit/cash flow do not support dividend payments. I would see this as doing a “Talenomit” and the company taking on debt for dividend payments, which is not sustainable in the long term and, in my opinion, not sensible or long-term business development. Even if this could be justified by improving earnings prospects, I still don’t think dividend distribution is sensible because the balance sheet is in such a mess.
In my opinion, this kind of management is unsustainable, and I have to seriously consider overnight whether to sell the few Norrhydro shares I have bought during the spring.
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The company has, during its listing and in every earnings release, emphasized the new factory and its positive impact.
Is it true that the factory premises are actually leased?
There has indeed been a very large lease liability on the balance sheet, and now it turns out that these relate to the premises (not production machinery), and as a result, the company has very high premises rents.
These have not been brought up at any point before. At least, they haven’t caught my eye.
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That’s a good question, could the rent payable be allocated to another financial period. I have discussed this with management on several occasions and this has not come up, so I would assume it applies to this financial period.
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@Pauli_Lohi how did the factory visit go, were there sounds of lathes at the factory? Did you get more information about ongoing projects?
The factory visit went very well! I had the opportunity to discuss with almost the entire management team, in addition to the CEO and the Chairman of the Board. Here are a few points, which are my own interpretations:
- Overall, I got the impression that activity at the factory and among customers is developing positively, as could be inferred from the company’s guidance. New customer acquisition has also apparently been successful in recent years, although this has not yet been reflected in volumes due to a weak market.
- The new factory operates more efficiently than the old one, but higher fixed costs mean that more volume is needed to achieve good profitability. Efficiency and capacity can be further increased through targeted investments that automate operations.
- Weak demand in recent years has forced the company to implement significant cost-saving measures, which is evident, for example, in sales resources through layoffs.
- NorrDigi EMA seems to be performing well on several fronts. The solution was recently presented at the BAUMA trade fair. Customers see added value in Norrhydro’s overall solution. The complete solution includes, in addition to the cylinder itself, a motor, inverter, and control unit, making it easy for the customer to implement. Competition in EMA focuses on smaller cylinders, but Norrhydro also offers solutions for larger ones. There are also challenging niche categories in the market (e.g., marine) where Norrhydro sees few competing solutions besides its own. For EMA products to break through, it would be crucial to increase volume and lower subcontracting costs per product, which would significantly improve the competitiveness of the solutions from the current level, as operations are still quite low-volume.
- NorrDigi MCC, on the other hand, seems to be taking longer than estimated, as the development of excavator control systems has continued, and product presentations to customers have likely proceeded slower than we estimated. Additionally, Volvo will be updating its excavator model range, which may also cause further delays in sales, as customers are interested in purchasing the new model, but demonstration units have so far been made for the older model.
- In the USA, investments in the oil drilling sector are also on hold due to uncertainty caused by Trump. Aberdeen Dynamics continues to acquire new potential customers.
- In general, the focus for selling Norrdigi solutions will be on building a partner network, where a local integrator is responsible for sales and technical support of the solution.
- In my opinion, there is still uncertainty regarding the balance sheet position, but I didn’t actually learn anything new in this regard.
- The import of cylinders from China to Western markets is minimal and focuses on small-sized, high-volume bulk production. The company did not seem concerned that an increase in Chinese imports due to the trade war would change the competitive landscape. Norrhydro manufactures smaller volume series customized according to customer specifications.
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I guess the offering will be coming soon. Banks have let it go on for a surprisingly long time. After the offering, money could, in principle, be returned, but I don’t really see the point in that either.
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Pauli Lohi has written a bit about Norrhydro and, among other things, its orders, etc.
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Quite good observations, and inventories have been emptied before additional tariffs, so the situation should improve in these respects, if it hasn’t already.
Ponsse’s machine is sputtering a bit here and there, e.g., in Sweden. Ponsse has a significant impact on Norrhydro’s figures and thus also on how Ponsse’s volumes are doing. It seems that Deere and Komatsu have at least now whistled past.
The marketing of Volvo’s Norrdigi machine is still quite subdued in Finland, when one looks for information about it in the latest publications of the earthmoving industry or seeks applications from earthmoving equipment fairs? How exactly has its sales and marketing been planned, because product accessibility is now a challenge, at least in Finland…
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It’s been quiet on the forum and nothing has been heard from the company’s side during the spring. Still a little over a month until the next report 
During the spring, Volvo launched new models https://www.volvogroup.com/en/news-and-media/news/2025/feb/volvo-brings-hydraulic-hybrid-technology-to-new-gen-excavators-w.html
so these new models have Volvo’s own energy-saving system, not as efficient as Norrdigi, so I think one can ask, why don’t these have Norrdigi? Originally, when the company was listed, I at least got the impression that Norrdigi would have been a system that Volvo would start using more widely. However, last summer it became clear that Norrdigi is only available as retrofits for Volvo models through CEES, a Volvo subsidiary.
I just wonder why the Volvo collaboration faded, or if I (and possibly others) just had too high expectations. Here’s an image from Inderes’ latest comprehensive report regarding the CEES collaboration:
So the machines are brought from South Korea to Sweden where CEES modifies the machines with the Norrdigi system, https://www.cees.se/excavators/ there’s no mention of the topic on the pages, the pages don’t seem to be updated much, but it’s a bit concerning in my opinion.
The above is mainly just my own reflection on the company’s situation; feel free to challenge it if you wish. And perhaps a thought that the company could have been more direct about the Volvo collaboration and its status.
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Hydroline Oy (2417546-2) Parent company in the last financial year 12/2024, Hydroline Oy generated 36,073,660 EUR (43.5 million euros) in revenue and its profit was 2,281,469 EUR (2.9 million euros).
At least, Hydroline’s revenue dropped significantly last year.
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One possible outcome of high-tech collaboration projects between large companies is that the larger player absorbs the expertise, nominally releases some doomed product, quickly bypasses patents with its own model, and thus leaves the smaller player high and dry. For NorrDigi, expansion into the US oil and gas markets via Aberdeen Dynamics also looks bleak. There, operations are now being almost completely shut down, and 2026 investment budgets are being cut to a fraction of the current level, because there is a severe oversupply of oil and natural gas now and in the near future.
My own expectations regarding NorrDigi’s development in the coming years have proven to be clearly overestimated, and the additional revenue it brings seems to be shifting clearly towards the 2030s. On the other hand, if no further investments are needed in NorrDigi, a share issue might also be avoided.
Even without NorrDigi, Norrhydro itself is in a very interesting position as a turnaround company. Costs are fixed and debt is exceptionally high, so growing revenue from the current trough will create tremendous leverage and enough momentum to multiply the share price. Infrequent reporting, limited coverage, and the illiquidity of the stock mean that when the cycle turns, the rise should be sudden and sharp. But when will Norrhydro turn around? My own crystal ball doesn’t say, but if Ponsse were to suddenly deliver excellent figures at some point, Norrhydro’s own half-year could hardly go very badly.
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Pauli has published a new company report on Norrhydro.
In recent years, Norrhydro Group has invested in a new modern factory, expanded its customer base, and also focused on new higher value-added product areas, all of which, in our view, support the company’s earnings growth potential in the medium term. On the other hand, the burden caused by investments, combined with a weak industry cycle, has led to high indebtedness. We anticipate that a recovery in demand and cost savings will support earnings growth in the coming years, which, based on our current assumptions, would help the company gradually reduce its debt burden. If forecasts materialize, current high valuation multiples would decrease quite rapidly in the coming years. High financial leverage and a challenging balance sheet position increase the stock’s risk level. We raise our recommendation to Add (previously Reduce) with a target price of 1.40 euros (previously 1.50 €).
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Here are Pauli’s preliminary comments, as Norrhydro reports its H1 results next Tuesday.
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January–June 2025 summary:
o Revenue grew by 13.5% and was EUR 14,878 (13,110) thousand
o EBITDA was EUR 1,226 (772) thousand
o EBITDA margin was 8.2% (5.9%)
o Operating profit was EUR 573 (106) thousand
o Earnings per share were EUR 0.001 (-0.040)
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For autumn 2025, forecasts collected from customers show overall growth compared to the second half of 2024, and thus our guidance for revenue growth in 2025 compared to the previous year appears to be realized. Simultaneously, profitability is also expected to improve with increasing volume. Geopolitical uncertainties and trade war, however, may affect the growth figures for autumn 2025.
Regarding the NorrDigi ® business, we have started investments in marketing and sales during the first half of the year. The maturity of NorrDigi products has been reached, and sales efforts will be increased during the current year. Especially in the field of electric cylinders (EMA), activities have grown significantly regarding preliminary technology mappings as well as the quotation and order backlog. We expect the revenue of EMA products to grow during 2025 compared to the previous year. Regarding the NorrDigi MCC product, field tests continue, and the results are still very encouraging. Feedback from excavator operators on the operation, productivity, and energy efficiency of a machine equipped with NorrDigi MCC has been positive. Regarding the NorrDigi MCC excavator solution, we are progressing towards the start of sales.
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Forecasts were nicely exceeded regarding the most important, i.e., revenue 
The review date for the covenants is at the end of the financial year on December 31, 2025. Cash flow still looks quite weak, so that revenue growth for the rest of the year is needed 
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