Norrhydro - Provider of Energy-Efficient Hydraulic Cylinders

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Peculiar binary thinking regarding that MCC. New technology is not necessarily sold in such a way that “yay this is good” and then billions of orders come in, or “this is crap” and no one orders. Norrhydro is a small company and the penetration of new technology into the market will continue to be slow, if it happens at all. If the device is good, it will gradually enter the market as awareness grows; if not, then very little of it will go there, and at a decelerating pace as awareness grows :smiley:

And that Aberdeen Dynamics is hard not to see as a good opportunity: a free entry into the US market. Why wouldn’t it be a good opportunity even if it is a small company and serves, say, 100+ industrial sectors? If a euro coin is found on the ground, it’s a good opportunity to put it in your pocket, even if it’s not a gold bar.

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It’s hard to say precisely, of course, but I somehow don’t believe that anything more than, say, contract lawyer fees and flight tickets has necessarily been invested at this point. It’s also an advantage for Aberdeen to expand its offering, so it’s a win-win. For this reason, I believe it’s a free lunch for Norrhydro. And if similar ones were to appear all over the world, then surely it would generate at least some revenue if the product has any appeal? It would be difficult to see it as negative. I would see it more negatively if investments and efforts were made towards moving to the USA. That money is easily thrown away if nothing happens in the market.

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Our bull case is primarily based on the upward development of the traditional cylinder business. This would likely enable the company to reduce its debt in the coming years (debt has been at a relatively high level for the past 3 years) and would reduce earnings-based valuation multiples (EV/EBIT) quite quickly. Key drivers for earnings development include, among others, economic development and demand from key customers. In the big picture, it is also observed that the new factory enables stronger profitability than historically and helps gain market share (for which there is also historical evidence).

NorrDigi is rather seen as an uncertain option, to which significant value is not yet ready to be assigned until stronger evidence of commercialization is obtained. There is certainly demand in the market for the features of MCC and EMA, but as an outsider, it is difficult to assess how well the technologies actually work in customers’ work machines.

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Yrjö’s sales are strong relative to turnover:

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This is what happened. Is the consensus still that there’s no reason to worry?

  • No reason to worry. The CEO is just sharing good things with others cheaply and diversifying their assets.
  • There is reason for pessimism. The CEO knows/suspects something that they don’t want to disclose.
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There can be many reasons for selling, but only one for buying. I wonder who buys?

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Shares are indeed being sold off at a rapid pace. I have indeed expressed my stance before regarding the company’s situation, which is not very flattering. The balance sheet is tight.

I have followed the company a bit less lately, but how exactly did the CEO situation unfold? When the company was listed, Matias Parviainen served as CEO, and he was announced to resign immediately sometime in 2023. After this, Trög became the interim CEO, and the search for a new one began. Trög still remains as CEO and is selling his shares to a considerable extent. Has there been any comment on the recruitment of a new CEO after the events of 2023?

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Lately, I’ve been inclined to think that this is Yrjö’s personal matter and doesn’t seem to be related to the company. If it were related to the company, one would think that other insiders would also be selling. Of course, Yrjö’s sales certainly make all of us following the company cautious, but perhaps that’s exactly why one should buy now, because the stock price would clearly be higher without Yrjö’s sales.

On the other hand, other close associates have not increased their ownership either, which could also have been an interesting opportunity, now that an economic turnaround is almost visible and yet the stock price has fallen due to Yrjö’s sales. The fact that other close associates are not buying despite the stock price drop could also indicate that even they do not see the stock’s risk-adjusted return expectation as sufficiently attractive, despite the economic turnaround in sight. This is still a rather peculiar case, no matter how one thinks about it!

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That’s incorrect. Norrhydro was listed at the end of -21. Parviainen started as Norrhydro’s CEO in 11/22 (though he was fired already in 5/23):

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Based on Parviainen’s LinkedIn, he has at least done several interim CEO roles. Was there a phase where an interim person was needed, or did he get fired anyway? It’s probably useless to speculate about this.

In any case, it’s a shame that the Company can’t find, or Yrjö won’t give up, the CEO position and bring in a young and hungry CEO like Harvia’s Matias Järnefelt, who wouldn’t exude the kind of giving up that the company currently does.

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Years just fly by and get mixed up – shouldn’t try to dig them up from memory. Thanks for the correction, I stand corrected.

Based on Parviainen’s LinkedIn, he has at least done several interim CEO jobs. Was there a phase where an interim person was needed, or did he get fired anyway? It’s probably pointless to speculate about this.

Pointless to speculate, indeed, but I do remember that the departure happened quite quickly. Hopefully, a suitable CEO will be found, if the search for one is still ongoing.

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Regarding the previous point, when you refer to Harvia’s Järnefelt. He organized the planning of organizational changes at the end of 2024. In 2025, the reorganization began, and they changed sales, country/regional organizations, and personnel. New professionals from outside the business. Krauth is responsible for EOS, Sabbato started in 2025 and is responsible for European operations. Hagemeier started in the US last month. Harvia’s management team is large and has strong expertise from many different industries.

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Norrhydro will henceforth report its results quarterly (previously semi-annually). It’s about time.

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Norrhydro customer Avant Wood’s project in Bhutan seems to be progressing.

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Norrhydro published a stock exchange release today:

Change in the management team: Carl Mattson leaves the company

03.02.2026 at 13.00

Norrhydro Group Plc’s Director of Digital Business Carl Mattson is leaving the company and moving to the service of another company. Mattson’s employment will end by 31.3.2026.

The position of Director of Digital Business will not be refilled. Digital business sales tasks will be transferred in their entirety under Sales and Marketing Director Anniina Piira Wendeler. The Tampere technology team will report directly to the Company’s CEO Yrjö Trög under the leadership of a team leader.

In digital business, there is an increasingly strong shift towards product sales and marketing, and in the future, the focus of product development will be on maintenance and development tasks and the final testing of certain areas. New technical sales experts will be recruited for digital business sales, while the mapping of global technology partnerships will also continue.

”On behalf of all of Norrhydro, I would like to warmly thank Carl (Kalle) for his significant contribution to the company. I wish Kalle success in his new challenges,” says Norrhydro’s CEO Yrjö Trög.

The mention of a new focus for (digital business) product development sounds significant, possibly even a major change. I don’t know the company well enough myself to know how that should be interpreted. :thinking:

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I can’t comment on that matter either.

But this mention sounds very good to me: “New technical sales professionals will be recruited for digital business sales.” It feels like this is exactly what Norrhydro needs right now.

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Pauli Lohe’s comments on the release:

A few highlights:

NorrDigi’s growth prospects were already uncertain, and the departure of the Business Director does not exactly support the outlook, although the company still intends to recruit technical sales experts for NorrDigi. Our interpretation is that the company wants to save on NorrDigi’s costs, allowing the positive cash flow from the traditional cylinder business to be better reflected. Our “accumulate” (lisää) recommendation has been based on the earnings turnaround of the traditional cylinder business and the strengthening of the balance sheet, rather than on NorrDigi.

Digital solutions accounted for an estimated 1–2% of Norrhydro’s revenue in 2025. The company’s goal is for digital solutions to represent more than 30% of revenue in 2028. The company did not comment on changes to targets or growth prospects in the release, but we consider it likely that the targeted growth in NorrDigi will not be realized within the mentioned schedule. In our view, the departure of the Business Director increases the uncertainty related to the growth prospects.

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It could be as Pauli states.

Nevertheless, I personally think that sales and marketing of digital products are exactly where investment is needed right now. And therefore, regarding the digital business, the situation could be even better in a couple of years with the equation “no Mattson, but new technical sales experts” than it would have been with “Mattson in-house, but not as much investment in new technical sales experts.” This, of course, requires finding suitable individuals who succeed in acquiring many new customers.

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Here is Pauli’s preview, as Norrhydro reports its results on Thursday, Feb 19th. :slight_smile:

We expect strong revenue growth and a clear earnings improvement from the company, following the path set by the previous quarter, although the rate of improvement will decrease slightly due to more challenging comparison figures. There is more uncertainty than usual in forecasting the quarter, as the company is only just transitioning to quarterly reporting, and consequently, there is limited information on seasonality from previous years. We consider the demand outlook for 2026 to be somewhat positive and thus expect the company to provide upward-trending guidance regarding both revenue and earnings.

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A pretty good H2. Better than I expected, meaning my own preconceptions/fears didn’t materialize. A dividend of €0.04/share is also being paid. This is a good basis to continue from.

2026 Outlook:

The company estimates that its business development will continue to be positive also in 2026 and expects revenue to be 30,000–32,000 thousand euros (28,702 thousand euros in 2025) and reported EBITDA to be 3,000–4,000 thousand euros (2,651 thousand euros in 2025). The main focus of growth is expected to be in the second half of 2026.

January–December 2025 in brief

Revenue increased by 18.5% and was 28,702 (24,228) thousand euros

Group EBITDA was 2,651 (1,258) thousand euros

EBITDA margin was 9.2% (5.2%)

Group operating profit was 1,352 (-85) thousand euros

Result for the financial year was 233 thousand euros, 0.8% of revenue

Earnings per share was 0.021 euros (-0.120)

Diluted earnings per share was 0.020 (-0.112)

Return on equity was 2.9% (-15.72%)

Equity ratio was 34.6% (33.2%)

Cash flow from operating activities was 1,057 (878) thousand euros

July–December 2025 in brief

Revenue increased by 24.3% and was 13,824 (11,118) thousand euros

Group EBITDA was 1,424 (486) thousand euros

EBITDA margin was 10.3% (4.4%)

Group operating profit for the review period was 779 (-191) thousand euros

Group result for the review period was 225 (-878)

Earnings per share was 0.020 euros (-0.08)

Diluted earnings per share was 0.019 euros (-0.07)

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