Quantitative tightening or quantitative easing. High inflation or low employment. Trade war or trade truce. AI bubble or AI boom. The world feels increasingly polarized and uncertain, so let’s quantitatively ease your mind with some certain data from Končar D&ST’s Q3 results, and why they might actually be stronger than they first appear.
Over the past few years, Končar has become one of the most talked about names on the Croatian capital market, marked by improving revenues, profitability, and fundamentals, strong share price performance, and surging liquidity. Its rise has also underscored the growing relevance of Croatia’s often-overlooked industrial and equity market. This momentum extends across Končar Group [KOEI CZ], Končar D&ST’s ordinary and preferred shares [KODT CZ], [KODT2 CZ], as well as Dalekovod Group [DLKV CZ] and Končar – Mjerni transformatori [KOTR2 CZ] (listed on the Progress Market), with the latter two driven mostly by retail investors. In this blog, however, we turn our focus to Končar D&ST’s latest results.
Last Monday, Končar D&ST kicked off the Končar Group’s earnings season with a set of mixed results, prompting a share price decline of 4.1% for ordinary shares and 4.4% for preferred ones.
The Group reported sales revenue of EUR 371.4m for the first nine months of 2025, up 6.9% YoY. Exports continued to dominate the business, accounting for 95.9% of total sales (EUR 356.2m, +7.3% YoY), while domestic revenue declined 2.0% YoY to EUR 15.2m. On the cost side, OPEX rose just 1.2% YoY, supported by a 3.5% decline in COGS due to inventory revaluation, partially offset by a 24.2% increase in employee costs, as the Group expanded its workforce by 140 employees compared to September last year. Consequently, EBITDA rose 18.9% YoY to EUR 127.7m, yielding an EBITDA margin of 34.4% (+3.7 p.p. YoY). Net profit to majority climbed 21.5% YoY to EUR 102.3m, translating to a net margin of 27.6% (+3.4 p.p. YoY). The only notable weakness came from the 6.9% decline in new orders, which totaled EUR 526.4m, leading to a book-to-bill ratio of 1.4x, down from 1.6x a year earlier. However, the order backlog remains strong, rising 14.3% YoY to EUR 973.8m, signaling continued demand visibility.
Končar D&ST key financial indicators (9M 2024 vs 9M 2025, EURm)
Source: Končar D&ST, InterCapital Research
Overall, the results appear strong, with the only soft spot being the decline in new orders, likely influenced by project timing, capacity constraints, or temporary demand normalization. However, given the scale of ongoing capital investments across the industry, within Končar Group, and specifically at Končar D&ST, it seems improbable that weakening demand is the main driver behind this drop.
The Group noted that two of the three projects under the “Održivi SETup” investment program – aimed at optimizing production by normalizing output volumes and expanding storage capacity – were completed in May, while the final project is expected to conclude by year-end, as planned. In addition, in June, the Group acquired land in the Falečnjak business zone in Zaprešić, later approving an investment to expand production capacity, though no monetary value or MVA increase was disclosed. For context, KPT, the joint venture between Končar Group and Siemens Energy, focused on power transformers, announced a EUR 260m investment to raise its annual capacity from 30,000 MVA to 45,000 MVA over the 2027-2031 period. Similarly, during Q3, the Group’s Poland-based subsidiary, PET, purchased land and is currently evaluating additional capacity expansion opportunities.
Končar D&ST key financial indicators (Q3 2024 vs Q3 2025, EURm)
Source: Končar D&ST, InterCapital Research
On the other hand, the Q3 results help explain the stock’s correction. Sales reached EUR 107.6m, representing an 8.5% YoY decline. Export sales amounted to EUR 103.2m (-6.8% YoY), while domestic sales fell more sharply to EUR 4.4m (-35.3% YoY). EBITDA came in at EUR 33.6m (-6.4% YoY), although the EBITDA margin improved by 0.7 p.p. to 31.3%, indicating continued operational efficiency. Net profit to majority decreased 4.6% YoY to EUR 26.9m, with the net margin rising by 1 p.p. to 25%. New orders for the quarter totaled EUR 131.1m, down 21.4% YoY, providing further justification for the market’s reaction.
However, this weakness may be temporary. The value of finished goods within current assets rose to EUR 40.8m, a 54% increase compared to year-end 2024. This suggests that part of the revenue recognition may have been deferred to Q4, assuming a relatively even seasonal distribution of sales. This interpretation is supported by the broader Končar Group data, with the total backlog expected to be executed by year-end amounting to EUR 510m, indicating a healthy project pipeline and solid near-term visibility despite softer quarterly figures.
From a macroeconomic and industry perspective, global demand for transformers continues to surge, supported by several structural drivers: accelerating renewable energy transition and electrification, modernization of aging grid infrastructure, and the rapid growth of data centers. While the relative impact of these factors differs across regions, the underlying trend is global and likely to remain strong over the long term.
In summary, Končar D&ST’s results are mixed, reflecting a temporary slowdown in new orders and topline growth. However, when factors such as project timing, accounting treatment, capacity bottlenecks, and ongoing capital investments are taken into account, the picture appears considerably less bleak. Key risks, including supply chain constraints, material prices, competition pressures, and execution challenges, still persist, as they are always present to some extent. Still, the fundamental demand outlook remains solid, suggesting that the current softness is cyclical rather than structural and the trends are unlikely to reverse in the short- to mid-term.