Wednesday, 15 February 2023

NIBE - Full Year Results

NIBE is a heating technology company based in Sweden. It has three basic business areas - Element, Climate Solutions and Stoves. Climate is the fastest growing segment and over the past year accounted for around 2/3rds of sales and 72% of the groups profits. Clearly climate change is rising to the top of the political agenda on a global basis and the company is well positioned to take advantage of the opportunities this provides - especially in the field of heat pumps which will become an option for heating our homes as an alternative to fossil fuels such as natural gas. It is one of the leading companies in Europe and North America in the area of sustainable solutions for domestic heating.

The company has been trading for over 70 years and has a long-standing ethos of working on sustainable solutions and energy efficiency. It was floated on the stockmarket in 1997 and has grown sales at an average of 18% p.a. over this period with an ever increasing global presence.

Heat pumps and related technology are tried and tested solutions for space heating in Scandinavian countries but relatively unknown in many parts of the world. Many countries, including the UK are actively looking at ways to decarbonise the domestic heating sector which accounts for around 40% of carbon emissions.


Climate change is the greatest challenge of our time. We need to reduce greenhouse gas emissions by 50% by 2030 compared to 2010 levels to keep on track for net zero by 2050. All of the products offered by the company are designed to make a significant contribution to tackle climate change. They offer sustainable, energy-efficient solutions such as heat pumps that reduce energy consumption by up to 80% and reduce GHG emissions in all types of buildings both domestic and commercial.

Last year, the EU announced their 'Green Deal' and proposals to target net zero carbon emissions by 2050. A central part of the strategy will be the goal to decarbonise the energy sector and prioritise energy efficiency and transition to a power sector based on renewable energy. In the US, the Biden administration has pledged to cut greenhouse gas emissions by at least 50% by 2030. This is double the country's previous commitment under the 2015 Paris agreement.

(click to enlarge)

Of course the situation in Ukraine and the resulting energy crunch has brought a sharp focus to the dangers of our dependence on fossil fuels and there is now a growing realisation of the need to speed up the decarbonisation process and move to a greener, more decentralised energy system based on cheaper renewables.

Heat Pumps

The largest sector for the group is climate solutions and within this sector, the largest element is heat pumps. These pumps extract the stored energy from the sun contained in the soil or air and transfer this energy indoors to provide indoor heat as well as hot water. The two main types of heat pump are ground source where pipes are laid under the soil and air source where heat is extracted directly from the air.

In the UK (and much of Europe) around 85% of our homes are heated by gas central heating. However we have legislated for net zero emissions by 2050 and will need to find alternative ways to heat the nations homes as gas (fossil fuel) will not be an option. We have already ruled out gas central heating for all new homes built after 2024 so electric heat pumps (as well as solar and battery storage) could play a big part in the huge transition of our energy use.

The UK offers financial incentives to install a heat pump via the new Boiler Upgrade Scheme. These incentives will go a long way towards the costs of installing a heat pump system with a grant of £5,000. The aim is to offer 30,000 grants in each of the first three years on a first come first serve basis.

Obviously the demand for solutions which support the switch from fossil fuels to renewables will grow and grow. As the market grows so prices fall which in turn creates greater demand. Companies like NIBE who have a clear commitment to sustainable solutions will be the likely beneficiaries of the transition to a new way of doing things. This is why I decided to add this company to my green portfolio.

Results for 2022

The company have today released full year results for 2022 (link via company website).

Combined sales increased by 30% to SEK 40bn and generated net profits of SEK 5.7bn (2021 4.3bn) which reflects a margin of 14%. The company pays a small dividend which will increase by 30% this year to SEK 0.65 per share (subject to FX considerations for UK shareholders!).

Given the backdrop of the global pandemic and the conflict in Ukraine, this has been an excellent performance and the new target for sales is doubled to 80bn.

Commenting on the results, Gert Lindquist, MD and CEO said: “We would sum up 2022 as a year of extremely strong demand. The main reason for this was the realisation by both politicians and end-consumers that we need to end our dependence on fossil fuels in order to be able to deal with the climate change issue in earnest. This realisation has been further strengthened by Russia’s terrible invasion of Ukraine. Our biggest challenge during the year concerned material and component supply, which impacted our delivery capacity, but this situation has gradually improved. In the fourth quarter, our production and deliveries were at a substantially higher level than before, while productivity also improved. This was the result both of our sub-suppliers’ ability to adjust to a much higher level of demand and our own extensive measures to increase capacity. We can therefore look back on a strong full-year performance, with continued robust growth in both sales and profits, and report that we exceeded SEK 40 billion, which means we were once again able to double sales in four years”

The shares were added to my green portfolio in June 2020 at the price of SEK 50 (adjusted for share split) and advanced steadily to reach an all-time high of SEK 135 by the end of 2021. The shares retreated quite sharply during 2022 but have recovered to the current price of SEK 123. The holdings currently makes up around 6% of my green portfolio.

NIBE 12m share price

From what I have seen so far, this appears to be a very well run and profitable company with a focus on providing solutions to the global problem of climate change. As the world increasingly moves away from its dependence on fossil fuels, this will provide huge opportunities for growth from companies such as NIBE which offers ready-made, energy efficient systems using renewable energy.

The biggest challenge we face is the reduction of greenhouse gas emissions to slow down the current rate of climate change. There is now a growing awareness of the impacts from a changing climate and the rise in extreme weather which threatens our living conditions, biodiversity and political stability. NIBE and its products will increasingly be part of the solution and is a good example of how businesses are an essential part of solving the climate crisis we face.

Although I have disposed of most individual share holdings over the past year, I think NIBE is likely to be a long term hold.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!


  1. Thanks for your writing and sharing. I am your new reader and frankly speaking reasonably new to investing in individual shares, currently only do ETFs and index funds.

    Would you mind please sharing what's the mechanism in investing in individual stocks, specifically the ones that are listed overseas and not widely common as the US. I checked 212 and noted they don't offer shares of NIBE.

    Thanks in advance for your time. M

    1. Thanks M,

      I would suggest caution investing in individal shares for those who are new to investing and especially those listed overseas. But if you decide to go ahead you will need to be with a broker that offers this option.

      I am not familiar with 212 but I am with AJ Bell Youinvest and hold NIBE in my ISA with them.

      All the best with your future investing.