HMS orders rise 29%, sales reach 1,024 million kronor
Key Facts
HMS Networks reported a 29% increase in orders in the third quarter of 2026, with sales and operating earnings rising despite pressure from component costs and tariffs. Orders totalled 1,104 million Swedish kronor, compared with 855 million kronor in the same period a year earlier, according to the earnings report published on October 21. Quarterly sales rose 15% to 1,024 million kronor, compared with 894 million kronor a year earlier. Order intake for the quarter thus exceeded the company's sales for the same period. The expansion in business came as some customers brought forward purchases ahead of price increases the company is preparing to implement to offset rising costs.
Annual order growth accelerated from the second quarter, when the company reported a 20% increase, according to its first-half earnings report. Orders in that quarter totalled 979 million kronor, compared with 816 million kronor in the corresponding period a year earlier. Sales rose 18% in the second quarter to 991 million kronor from 843 million kronor. Sales in the latest quarter therefore increased from the previous quarter, while their annual growth rate slowed. This sequence places the third-quarter results in the context of continued increases in orders and sales, with annual growth accelerating for the former and slowing for the latter between the periods.
Commenting on order trends, the chief executive estimated that customers bringing forward some purchases had an impact of about 70 million kronor in the third quarter. He explained that customers took this step in anticipation of longer delivery times and price increases, shifting some purchases to an earlier date. The impact was concentrated mainly in the Industrial Network Technologies division, according to management commentary accompanying the quarterly results. On sales, the company identified the Industrial Network Technologies and New Industries divisions as key growth drivers. Organic sales growth was 6% during the period, a measure the company presented alongside the overall increase in quarterly sales.
On profitability, the gross margin fell to 62.7% in the third quarter from 64.1% in the same period a year earlier. Management attributed the pressure to higher component prices and tariffs, despite support from sales volumes and currencies. Earnings before interest, taxes and amortisation of intangible assets, meanwhile, reached a record 280 million kronor. These earnings stood at 242 million kronor in the third quarter of the previous year, according to the company's quarterly figures. The margin on this earnings measure rose to 27.4% from 27.1% a year earlier, even as the gross margin declined year on year.
HMS makes industrial electronic products that enable machines and devices to communicate with software and systems, according to its business description for investors. This links the company's business to factory demand for connectivity and automation technologies through products used to connect equipment to software systems. In its first-half report, management highlighted the role of data centre investment in driving growth in its customers' businesses. It said at the time that "investments in data centres continue to be a key driver of growth," describing one source of demand among those customers. It explained that the impact of these investments extends across multiple stages of the value chain, particularly semiconductor manufacturing.
The quarterly results come as the company pursues an expansion strategy targeting sales of 7.5 billion Swedish kronor in 2030, according to its strategic targets announcement. The strategic framework also includes a target margin of 25% for earnings before interest, taxes and amortisation of intangible assets during the period. For comparison with its annual business scale, the company's sales totalled 3,577 million kronor in 2025, according to the group's financial development page. Annual sales were 3,059 million kronor in the previous year, placing the strategic target in the context of an expanding business base. The earnings margin recorded in the third quarter was above the margin the company is targeting during its strategic period.
As its next step to address rising costs, management said price increases would take effect from January 1, 2027. The company linked its pricing adjustments to the cost increases weighing on its gross margin, including component prices and tariffs. Management expects pressure on that margin to persist until the new pricing is fully reflected in its business. The increases will take effect after the end of the fourth quarter of 2026, which the company will report in its next financial release. The investor calendar lists publication of that quarter's report on January 28, 2027, at 07:30 GMT.