Equity Research Enrad, Q1 2025: European expansion and fulfilled expectations

Enrad AB’s net sales of SEK 16.2 million in Q1 2025 exceeded our estimate of SEK 16.0 million by 1%. The growth compared to Q1 2024 was higher than the company itself had expected. Enrad is now preparing for further expansion through a new subsidiary in the Netherlands, aimed at driving growth on the continent.

Entering into the European market

Enrad AB (“Enrad” or “the Company”) reported net sales of approximately SEK 16.2 million in Q1 2025, which exceeded our estimate of SEK 16.0 million by around 1%.

The gross profit of SEK 8.1 million in Q1 2025 was slightly below our estimate of SEK 8.3 million. EBIT for Q1 2025 amounted to SEK 0.9 million, compared to our estimate of SEK 2.0 million. The net result came in at negative SEK 0.2 million, falling short of our estimate of a net profit of SEK 1.8 million. The deviation is primarily attributable to higher-than-expected costs of goods sold, external expenses, and personnel costs, totaling approximately SEK 1.5 million. Depreciation and amortization were also higher in Q1 2025 than we had initially estimated.

As of March 31, 2025, the Company’s cash position stood at approximately SEK 37.3 million. The cash was replenished just before the end of the quarter following a rights issue that generated net proceeds of around SEK 25.3 million. The rights issue was subscribed to a total of approximately 124.6%, which serves as a strong vote of confidence in the current market environment. In connection with the rights issue, Enrad noted significant demand for its products outside the Nordic region and identified the Netherlands as the next step in its planned expansion. On April 17, 2025, Enrad announced that a subsidiary had been registered in the Netherlands, which will provide valuable exposure to a larger market. According to the Company, the Netherlands has a suitable structure for Enrad’s products and services, particularly as the country is taking a leading role in advancing the REACH proposal aimed at banning PFAS.

We increase our estimates for Enrad’s net sales for 2025, 2026 and 2027 due to strong performance and the expansion into the Netherlands. At the same time, we are also raising our long-term revenue growth assumptions for the period 2029–2037. We assume a gross margin of 52% for 2025–2028, which is then expected to decline from 50% in 2029 to 45% during 2034–2037.

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