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Core Insights - NKT A/S reported a strong financial performance in Q2 2025, achieving 13% organic growth and a record operational EBITDA of EUR 105 million, reflecting the highest operational performance in the company's history [1][4] Financial Performance - Revenue for Q2 2025 reached EUR 723 million, up from EUR 605 million in Q2 2024, marking a 13% organic growth [2][3] - Operational EBITDA increased to EUR 105 million in Q2 2025 from EUR 86 million in Q2 2024, with an operational EBITDA margin of 14.5%, slightly above the 14.2% reported in the same quarter last year [2][4] - For H1 2025, revenue totaled EUR 1.353 billion, compared to EUR 1.139 billion in H1 2024, with a 12% organic growth [2] Segment Performance - Solutions segment revenue was EUR 450 million in Q2 2025, up from EUR 379 million in Q2 2024, with an operational EBITDA of EUR 66 million [10] - Applications segment revenue increased to EUR 234 million from EUR 175 million, with operational EBITDA rising to EUR 31 million [10] - Service & Accessories segment revenue grew to EUR 70 million from EUR 64 million, achieving an operational EBITDA of EUR 14 million [10] Order Backlog and Investments - At the end of Q2 2025, the high-voltage order backlog stood at EUR 10.1 billion, down from EUR 10.7 billion at the end of Q1 2025 [5] - The company is progressing with high-voltage capacity investments, including the expansion of the site in Karlskrona, Sweden, and the construction of a new cable-laying vessel, NKT Eleonora, expected to be operational by 2027 [8][9] Financial Outlook - The updated financial outlook for 2025 anticipates revenue between EUR 2.65 billion and EUR 2.75 billion, and operational EBITDA between EUR 360 million and EUR 390 million [3]

Core Viewpoint - NKT A/S has initiated a share buyback program to fulfill obligations related to its employee share-based incentive programs, with a maximum repurchase of 268,949 shares, representing 0.50% of its current share capital [1][2][4]. Share Buyback Program - The share buyback program is authorized by the Board of Directors and is valid until March 31, 2026, allowing the company to repurchase shares up to a nominal value of 10% of its share capital [1][4]. - The program will run from May 22, 2025, to no later than June 20, 2025, with a maximum expenditure of DKK 175 million [4][7]. - NKT A/S has appointed Nordea Denmark as the lead manager for the share buyback, ensuring independent trading decisions [7]. Employee Share Program - NKT A/S confirmed the launch of an employee share program in June 2025, which is the basis for the share buyback initiative [3].

Summary of Key Points from the Conference Call Industry Overview - **U.S. Autos & Mobility**: The industry view has been downgraded to Negative due to multiple near-term pressures including earnings challenges, consumer health risks, and uncertainties surrounding auto tech investments. Auto tariffs are expected to persist, and current valuations do not fully account for these risks [5][13][67]. Core Insights - **Earnings Pressure**: The near-term investment case for the U.S. autos sector is increasingly difficult, with expectations of earnings pressure and potential withdrawal of 2025 guidance due to the uncertain environment. The consensus earnings estimates for Q1 2025 have been revised down to -2% for Europe and 7% for the U.S. [5][19][21]. - **Tariff Impact**: The revised definition of semiconductors under U.S. tariffs could affect an additional $261 billion in imports from major Emerging Asian economies, with Taiwan and Vietnam being the most impacted. This change may reduce the effective tariff rate on China's exports to the U.S. [6][29][27]. - **Sector Preferences**: There is a preference for suppliers over OEMs in the current environment, with favorable traits including low financial leverage, high margins, and strong pricing power. Specific companies like Autoliv (ALV) have been upgraded due to their defensive positioning [5][15][18][67]. Earnings Expectations - **1Q Earnings**: While beats on Q1 EPS are expected due to better-than-anticipated production and pricing, these are likely to be disregarded in the current market context. The overall sentiment suggests that earnings growth is stagnating, with significant downside risks in the event of a recession [5][19][21][22]. - **Valuation Concerns**: European equities are currently pricing in approximately 0% EPS growth, with potential downside if a recession occurs. The market has already reflected a ~10% pullback from February highs, indicating a cautious outlook [20][22]. Additional Insights - **Market Volatility**: The upcoming earnings season is expected to be scrutinized more than usual due to heightened volatility and tariff-related concerns. Investors are advised to focus on companies with relatively cheap or expensive earnings volatility [25][24]. - **Sector Dynamics**: Cyclical sectors are anticipated to drive EPS growth in Europe, but earnings momentum is weakening. Defensive sectors are catching up as revisions for cyclicals remain negative [23][22]. Rating Changes - **Downgrades**: General Motors (GM) has been downgraded to Equal Weight, with a significant reduction in EBIT estimates from $14.4 billion to $8.6 billion for 2025. Other companies like Aptiv (APTV), Mobileye (MBLY), and Visteon (VC) have also been downgraded due to risks associated with auto tech uptake [14][16][67]. Conclusion - The U.S. autos sector faces significant challenges from tariffs, earnings pressures, and macroeconomic uncertainties. The focus on suppliers and defensive positions may provide some resilience, but overall market conditions remain precarious with potential for further downgrades in earnings expectations.