Financial results
Group net sales amounted to SEK 610m, an increase of SEK 261m from SEK 349m in the second quarter of 2025, which the company mainly explains by a higher delivered volume of iron ore concentrate. The comparison is not entirely straightforward: two of the quarter's shipments were made on CFR and CIF terms, where the seller pays the sea freight, which lifted both revenue and costs by approximately SEK 110m. The company notes that this should be taken into account when comparing with earlier periods.
The turnaround is visible at every level of the income statement. Gross profit rose to SEK 153m from negative SEK 117m, earnings before depreciation and amortisation (EBITDA) to SEK 80m from negative SEK 97m and the operating result (EBIT) to SEK 6m from negative SEK 168m, while the result for the period came in at SEK 4m against negative SEK 141m, equivalent to SEK 0.05 per share against negative SEK 1.95. Of the improvement of SEK 174m, volumes account for SEK 163m according to the company's earnings bridge and inventory impairments in the comparison quarter for SEK 57m, while the change in inventory pulled SEK 63m in the other direction.
Lower waste rock production is, according to the company, the main reason operating costs fell by SEK 21m to SEK 396m, and personnel costs dropped by SEK 11m to SEK 79m. Administrative expenses, by contrast, rose to SEK 153m from SEK 46m, since the sea freight under the CFR and CIF terms is reported in that line.
Production and operations
Production at the processing plant amounted to 587 kt of iron ore concentrate, compared with 532 kt in the first quarter of 2026 and 476 kt in the second quarter of 2025. The company explains the increase mainly by a higher incoming iron content, which rose to 27.0 percent from 25.2 percent in the previous quarter and 22.4 percent a year earlier. The outgoing iron content was 67.7 percent.
Ore production in the mine amounted to 1,525 kt, below the 1,781 kt produced in the corresponding quarter of 2025. Waste rock production came in at 1,088 kt against 4,177 kt a year earlier, a lower level that is in line with plan and that according to the company had a positive effect on the cost level and contributed to an improved cash cost. During the quarter, 426 kt were shipped out from Narvik, compared with 401 kt in the second quarter of 2025.
Sea freight, geopolitics and market conditions
The quarter continued to be shaped by developments in the Middle East. The Strait of Hormuz was closed for essentially the whole period, which according to the company affected global trade flows and the conditions for sea transport, and freight rates stood at almost twice the levels seen in the first quarter. Towards the end of the period, shipping traffic partly resumed and freight rates fell back, but cost levels remain above those seen before the conflict broke out and the company describes the uncertainty ahead as considerable.
For Kaunis Iron, sea freight costs landed at SEK 110m, against zero in the corresponding period of 2025. The situation has also affected delivery logistics. One planned shipment was redirected to China, which according to the company meant both more capital tied up in current assets and a lower margin as a result of an even higher freight cost.
Market conditions were otherwise more stable. The iron ore price according to Platts 65 averaged 121.9 USD per tonne against 108.4 USD a year earlier, while the FOB price was 97 USD per tonne. Since all of the group's revenue is generated in US dollars, the currency matters for the outcome: the dollar strengthened during the quarter, but the average rate of 9.36 USD/SEK was still below the 9.67 recorded a year earlier.
Cash flow and financial position
Operations generated a positive cash flow of SEK 78m before changes in working capital. What turned the flow was working capital, which tied up SEK 153m as a result of higher trade receivables from postponed shipments to the Middle East, leaving cash flow from operating activities at negative SEK 75m. After amortisation of loans and lease liabilities of SEK 14m, cash decreased by SEK 89m during the quarter.
No major investments were made, which according to the company is in line with the approved budget. At the end of June, cash and cash equivalents amounted to SEK 506m, of which SEK 193m is restricted bank funds linked to a bank guarantee for reclamation costs, and equity stood at SEK 1,814m against SEK 2,253m a year earlier.
Outlook
CEO Klas Dagertun describes the quarter as continuing to be marked by an uncertain geopolitical situation that has affected global transport flows and the company's logistics costs, while production developed better than in the first quarter of the year on the back of higher incoming iron content. Looking ahead, the company says the focus is on following developments in the wider world and running the business with stable and efficient production given the conditions that prevail.
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Kaunis Iron is an unlisted company, which means its shares are not traded on a regulated exchange. For investors, unlisted shares offer an opportunity to take a position in industrial companies such as Kaunis Iron outside the public market. The interim report for the second quarter of 2026 shows a company that has turned to a positive operating result, but it is important to understand the risk picture: lower liquidity, a capital intensive business, exposure to commodity prices and exchange rates and a more limited reporting base are all factors that set unlisted apart from listed.
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