European EMS Industry Q3 2025: Playing Defense while the consolidation race for the largest public European EMS is heating up

Organic growth and improving margins

Starting from Q3 financials, six out of the disclosed eight companies reported year-on-year growth. Incap declined year on year and GPV remained flat. It is good to note that Hanza growth was driven by Leden acquisition while being organically almost flat.

Due to typical seasonality in the quarter to quarter comparison, the total revenue Q3 (~975 M€) was somewhat lower compared with Q2 (~1015 M€). However, the aggregate operative margin (EBIT or EBITA depending on reporting format) improved despite the seasonal decline, being 8.4% in Q3 (Q2 7.9%). This is very encouraging, especially thinking of the further potential with most companies indicating their growth to accelerate into 2026.

Underperformers, Average Joes and Outperformers

What I also find quite interesting is the wide range of EBIT/EBITA among the companies. Companies could be divided into three buckets: the underperformers, the Average Joes, and the outperformers.

The underperformers reporting below 6% margins are GPV (EBIT 4.3% my estimate based on reported EBITDA) and Inission (EBIT 5.2%). If we put the Inissions loss-making OEM business (Enedo) aside, their EBIT improves to a healthier level of 7.5%. Darekon is very likely to be in the underperforming category as well, with their reported 2023 indicating 4.8% operating profit, while I haven’t found any consolidated financial updates for 2024 other than sales remaining flat 2024 vs 2023 and Finnish subsidiary’s OP% of 3.5% in 2024.

The two clear outperformers among peers are Norbit and Incap. Norbit’s PIR business segment (EMS and related services) reported 18.3% EBIT while Incap reported 12.9%. Norautron is probably also among the double digit EBITeers, some sources reporting EBITDA of 13.8% in 2024.

The Average Joes reported EBIT/EBITAs between 6.6% and 8.9%.

In my later posts, I will come back to the topic discussing the differences in the profitability performance, trying to identify some patterns and key drivers behind. Stay tuned!

Defense, yes it’s started to boom… how about other verticals?

If one had to pick a single punchline behind the organic growth, it is “Defense & Aerospace”. It seems the Norwegian teams Kitron and Norbit have had a headstart with Defense.

Business growth of 82% (Kitron) and 419% (Norbit) in year-on-year basis. Most likely also Norautron is happily riding the Norwegian defense wave.

While the Mr. Market is certainly happy to hear the CEO mentioning the D-word, it might however mask the underlying development in other business segments. Let’s look at this in more detail.

When removing Defense growth from the picture, also the Team Norway starts to appear as ordinary mortals.

• Kitron Q3 year-on-year without Defense: +0% (+15.6% including defense)
• Norbit PIR Q3 year-on-year without Defense: +6% (+95.9% including defense)

The picture outside of defense and aerospace still looks quite flat. Some companies showing modest growth or decline in the segments, which may result from single customer cases and cannot yet be seen as the overall trend reversing to solid growth. The energy / electrification segment seems to be growing at all companies who are providing figures by segment.

To give you some examples:

• Industrial: flattish development reported by all
• Medtech: Mixed. Growth at Scanfil, however boosted by acquisition, while Kitron and NOTE reported double digit declines
• Energy/Electrification/Cleantech/Greentech: Growth reported by all
• Communication/Connectivity: Mixed

Europe’s largest listed contract manufacturer?

Hanza’s joy of stealing the “Largest European Listed EMS” trophy from Scanfil may be short-lived.

Hanza has been the most active Nordic EMS what comes to total size of business acquired within a year. After completing the Leden Group acquisition in Q1 (~100 M€), their shopping spree continued with Milectria (~30 M€) in early Q3. The big news broke in October with the announcement of acquiring BMK (~300 M€) and thus becoming the “Europe’s largest listed contract manufacturer with pro forma sales of SEK 10 billion (~914 M€)”.

The Swiss serial shopper, Cicor, doubled-down just two weeks later. First they had a warm-up with the Valtronic factory take-over announcement at the end of October, and two days later announcing some remarkable news: Cicor is intending to acquire UK-based TT Electronics which would take the total revenue to around 1.2 B€, snatching the trophy from Team Hanza. Both deals are still to be closed so let’s see who will reach the finish line and when.

What to Expect Going Forward

Overall sentiment and expectations for the future are positive both in terms of revenue and profit growth. There are very little mentions of external factors having had material impact on business, for example geopolitics or tariffs, although they are usually mentioned among general risks that may have an impact.