This article first appeared on GuruFocus.
Release Date: August 12, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
H+H International AS (FRA:J0H) delivered 6% organic growth in Q2 2026, with a return to a normalized EBIT margin of 6%.
The Polish market showed strong performance, with a 19% year-on-year increase in building permits and a 25% EBITDA margin, driving overall group results.
The company’s strategic restructuring in Germany is yielding positive results, with annualized savings of DKK 40 million and improved operational efficiency.
Free cash flow was strong at DKK 117 million in Q2, supported by asset sales, helping reduce the gearing ratio from 4.1 to 3.4.
The upgraded plant in Puavi is performing better than before, contributing to improved operational efficiency and payback on investment.
Negative Points
The UK market is a watch-out area, with a 6% decline in registrations and increased uncertainty due to a new government and rising interest rates.
Organic growth for the first half of 2026 remains negative at -5%, despite the strong Q2 performance.
The German market outlook is weak, with building starts expected at only 185,000 units, the lowest since 2012, and a slow conversion of permits to starts.
The company faces an adverse country mix effect, as strong Polish volumes with lower prices dilute overall revenue and margin averages.
Energy cost inflation and hedging impacts continue to pressure margins, though the company has managed to pass through costs so far.
Q & A Highlights
Q: What were the key drivers behind the company’s return to normalized activity and breakeven EBIT in Q2 2026?A: CEO Bjorn Bregtman stated that after a weather-impacted Q1, the company saw a normalization of activities, delivering 6% organic growth and a 6% EBIT margin. The result was mainly driven by strong activity in Poland, with the German business also developing in the right direction. This brought the company to a breakeven EBIT for the first half of 2026.
Q: How is the UK market performing, and what is the company’s outlook for this region?A: CEO Bjorn Bregtman highlighted the UK as a “watch out” area due to a slowdown in activity. Registrations are down 6% year-on-year, constrained by affordability issues and rising interest rates (up 0.7% in the last four months). The new government’s 40 billion pound program for affordable and social housing, targeting 200,000 additional homes over 10 years, is seen as a positive sign, but the company remains cautious. Despite lower volumes, the UK delivered a solid 12% EBITDA margin through price increases and capacity adjustments.
Q: What is the current state of the German (CWE) market, and how are the strategic changes impacting performance?A: CEO Bjorn Bregtman noted that building permits in Germany are up 17% year-on-year, a positive sign, but building starts have not yet picked up, with the German outlook at 185,000 units, the worst since 2012. The strategic changes to the German organization, including a new profit center approach, are gaining traction. The company has delivered DKK40 million in annualized savings on fixed costs and an additional DKK30 million from lower impairments, which are now materializing in the P&L.
Q: Can you provide details on the company’s cash flow and debt reduction progress?A: CFO Bjorn Petersen reported a strong free cash flow of DKK117 million for the quarter, driven by solid operations and asset sales. This helped reduce the gearing ratio from 4.1 to 3.4. The company expects free cash flow to remain positive for the full year, supported by ongoing asset sales.
Q: What is the company’s outlook for the full year 2026, and have any assumptions changed?A: CFO Bjorn Petersen confirmed the full-year outlook is maintained, with EBIT expected between DKK50 million and DKK100 million. Key assumptions have been adjusted: the Polish market is expected to be stronger than originally anticipated, while there is more uncertainty around the UK market. CapEx expectations have been slightly adjusted to around DKK100 million gross for the year.
Q: How is the company’s operational efficiency improving, particularly regarding plant performance?A: CEO Bjorn Bregtman highlighted significant improvements in operational efficiency under the “HOME” operating model. Net hours of production per week improved from 117 in 2024 to 135 in the first half of 2026, with a record quarter of 137 hours. The upgraded plant in Puavi is performing better than before the upgrade, contributing to the payback of the investment.
Q: What is driving the strong performance in Poland, and is it sustainable?A: CEO Bjorn Bregtman attributed the strong performance to a 19% year-on-year increase in building permits, driven by a friendly market environment and good investment climate. The company delivered stronger revenue and volumes with a 25% EBITDA margin. While some forward effects from legislation changes are present, the underlying activity is strong, and the company sees a robust pipeline of projects.
Q: How is the company managing the impact of rising energy costs on margins?A: CFO Bjorn Petersen explained that the gross margin of 22% confirms the company’s ability to pass through energy costs. Despite an adverse country mix effect from Poland’s lower prices and the mathematical headwind from a higher top-line due to cost pass-through, the company maintained its headline margin, which is a positive outcome.
Q: What is the company’s strategy for the German market, and what are the expectations for recovery?A: CEO Bjorn Bregtman stated that Germany is the big value creation area. The new profit center approach, organizing the business into four regional profit centers, is driving top-line growth and aligning sales with production. The company is slightly positive about potential momentum from rising building permits, which could support earnings levels in Germany going forward.
Q: Can you elaborate on the asset sales and their impact on the company’s financial position?A: CEO Bjorn Bregtman confirmed that the company sold a couple of assets, generating net income of DKK49 million in Q2. These sales are part of the strategy to utilize closed-down assets, optimize cash position, and reduce debt. The company will continue this approach as there are still assets held for sale.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.