Energy Save (ESGR) ABGSC Investor Days summary

Business overview and strategy

• Focuses on air-to-water heat pumps for residential and commercial markets, leveraging a partnership strategy for scale and reach across 29 European countries.

• Operates with a production partner in China and is establishing a joint venture in Turkey to enhance supply chain resilience and market access.

• Owns its IP platform, enabling independence and innovation, including a new tech stack based on propane refrigerant for improved efficiency and environmental impact.

• Targets both ES-branded and OEM markets, allowing for multi-layered market penetration and scalability.

• Transitioned from a hardware-only to a combined hardware and software company, supporting recurring revenue opportunities.

Market trends and outlook

• European heat pump market experienced a significant decline (47% in H1 2024) due to policy and subsidy changes, but signs of recovery are emerging, especially in Germany.

• Heat pumps are positioned as a key technology for the EU’s net zero targets, with 90 million gas and oil boilers needing replacement by 2050.

• Subsidy applications in Germany have improved by over 100% in late 2024, indicating renewed demand.

• Inflation and interest rates are easing, while gas prices are rising, improving the competitive position of heat pumps.

• Expansion focus includes Central Europe, Italy, Germany, Benelux, and the U.S., with tailored refrigerant strategies for each market.

Financial performance and investments

• Five-year CAGR of 35%, outpacing the market’s 27%, despite recent turnover declines due to market conditions.

• Sales improved quarter-to-quarter in 2023 but declined in the latest quarter; stabilization expected for a few quarters before anticipated recovery in 2025.

• Major investments include a new factory in Turkey, scaling up R&D, and strengthening the IP platform to support future growth.

• Maintains a net cash balance sheet, supporting ongoing investments and market expansion.

• Financial targets are 20% annual growth and a 15% operating margin, dependent on both internal execution and external market recovery.