Nolato: Input Cost Squeeze Meets Data Center Tailwind

Q2 2026 margins compress on oil and start-up costs, but materials growth and Hungary ramp point to a brighter second half

NOLA-B.ST · Earnings Call · 2026-07-17

A Quarter of Mixed Signals

Nolato reported a 4% currency-adjusted sales increase to SEK 2,454 million, but the market's attention quickly turned to the 150 basis point margin contraction, which landed at 10.1%. Management pointed directly at oil price and raw material pressures, with CFO Per-Ola Holmström quantifying the drag: “The effect is estimated to almost SEK 20 million, most part within Engineered.” — Per-Ola Holmström, CFO · 2026-07-17 The company also absorbed a SEK 6 million one-off severance cost and ongoing startup expenses for new programs, particularly in the Medical segment.

We saw a quarter with growth in both business areas, with a total growth of 4%, currency adjusted, with the strongest growth in the medical business area. This was achieved in a difficult environment, I would say.
Christer Wahlquist, CEO · 2026-07-17

The Data Center Silver Lining

While margins were squeezed, the Engineered Solutions segment posted a 19% organic growth in its materials business, driven by demand for thermal management and shielding products in the data center market. This aligns with a broader global trend—the market tape shows data center related keywords among top advancers, and Nolato is well positioned to ride that wave. CEO Christer Wahlquist highlighted the success: “We see success in new products and technology areas, mainly data center, that is positive for materials.” — Christer Wahlquist, CEO · 2026-07-17 This is a fresh theme for Nolato; in prior quarters, the company repeatedly cited consumer electronics and automotive, but data center is now a clear growth vector.

Repeated Themes and What's New

The Hungary ramp-up remains a central storyline. Commercial volumes have begun, and management reiterated a gradual climb to full capacity by 2029: “we will have a starting point in the second quarter of this year, then a gradual increase for some years, and reaching the full volume somewhere in 2029.” — Christer Wahlquist, CEO · 2026-07-17 This mirrors prior commentary—in the Q4 2025 call, the CEO described a similar timeline and validation phase. What is new is the explicit mention of GLP-1 deliveries, tying Nolato to one of the hottest pharma themes globally. The intensified M&A agenda also resurfaced, with increased group costs attributed to deal-making. On that front, the CFO noted: “We do see some of these costs also affecting the third quarter. We assess that we have taken two-thirds of that effect in this quarter, the rest will come in the beginning of the third quarter.” — Per-Ola Holmström, CFO · 2026-07-17 This cost pressure echoes prior quarter's discussions on silver and other input costs. In the Q1 2026 call, the CFO explained: “we are compounding a material, which is including metal particles and some of these materials within that part is based on silver particles.” — Per-Ola Holmström, CFO · 2026-02-05 The current oil-driven spike is a separate but similarly transient headwind. Nolato is not alone in facing these crosscurrents. Several peers reporting this week flagged raw material inflation and Middle East tensions, while data center investments continue to flow. The company's diversified exposure—defensive medical growth, cyclical engineered solutions, and a high-growth materials franchise—positions it to navigate near-term margin pressure while capitalizing on structural tailwinds. The key question for investors is whether the cost drag will fade as management expects, and whether the commercial volumes from Hungary and new program wins can lift margins back toward the 12%+ level investors have seen in the past.