Loomis AB's Strategic Resilience: Navigating Cash Logistics in a Digital Era

Loomis AB (FRA:K900) has long been a bellwether in the cash logistics sector, but its Q2 2025 results underscore a company that is not merely surviving in a rapidly digitizing world—it is thriving. The Swedish logistics giant reported revenue of SEK 7.4 billion, a 3.8% organic growth despite a 3.0% drag from the strong Swedish krona. This resilience is no accident. Loomis has masterfully balanced its traditional cash-in-transit (CIT) operations with a digital transformation strategy that positions it at the intersection of two growing markets: secure cash management and scalable digital payments.

Financial Resilience: Margins, Cash Flow, and Strategic Allocation

Loomis's Q2 EBITA margin surged to 12.7%, a record for a second quarter and up from 11.6% in the prior year. This margin expansion, driven by a favorable business mix and operational efficiency, outperformed industry peers like Brink's and Prosegur, which are grappling with flat or declining margins. The company's operating cash flow, while temporarily impacted by working capital fluctuations, remains robust. Over a rolling 12-month period, cash conversion exceeded 100%, a testament to its disciplined capital management.

Notably, Loomis's financial flexibility has allowed it to reward shareholders aggressively while funding strategic growth. Despite a record dividend and share repurchases of SEK 200 million in Q2, the company's net debt-to-EBITDA ratio improved year over year. A new SEK 200 million share repurchase program for Q3 2025 further signals confidence in its valuation.

Strategic Digital Transformation: The Burroughs Acquisition and Loomis Pay

Loomis's digital pivot is perhaps its most compelling long-term story. The acquisition of Burroughs, Inc., a U.S. leader in ATM and automated solutions, for USD 72 million (SEK 695 million) in June 2025, is a cornerstone of this strategy. Burroughs brings 600 skilled technicians, predictive maintenance capabilities, and a portfolio of smart safes and kiosks. This acquisition, valued at a 6.5x EV/EBITDA multiple (below industry averages), is expected to generate $450 million in annual synergies by 2027 and boost EBITA margins.

Simultaneously, Loomis Pay, its digital payments platform, is a breakout success. The segment generated SEK 43 million in Q2, driven by a 71.2% revenue surge in 2024. This growth reflects Loomis's ability to monetize its existing customer base—financial institutions and retailers—by offering digital transaction services that complement its cash logistics. The platform's expansion in Southern Europe, where cash usage remains stubbornly high, positions it to capture market share as hybrid payment models gain traction.

The Cash Logistics Sector: A Market Still Rooted in Physicality

While digital payments are surging—global digital transaction value is projected to hit $578 billion by 2033—the cash logistics sector remains indispensable. The North American cash logistics market alone is expected to grow at 6.5% CAGR, reaching $35.5 billion by 2032. Loomis is uniquely positioned to benefit from this duality. Its core CIT business, which includes armored transport and vault services, continues to grow in high-cash sectors like retail and government. Meanwhile, its digital initiatives, such as cash forecasting and smart ATM services, align with the industry's shift toward automation and real-time analytics.

Regulatory tailwinds further bolster Loomis's position. Stricter anti-money laundering (AML) and know-your-customer (KYC) requirements are pushing institutions to outsource cash management to providers with advanced security infrastructure. Loomis's adoption of IoT, AI, and blockchain for cash tracking and fraud prevention ensures compliance while enhancing operational efficiency.

Long-Term Investment Potential: A Hybrid Model for Sustained Growth

Loomis's strategic focus on operational excellence and disciplined M&A sets it apart. Its four priorities—growing established markets, M&A-driven expansion, margin optimization, and sustainability—create a clear roadmap for long-term value creation. The company's EBITA margin is expected to rise further, from 11.5% in 2024, as automation and route optimization reduce costs. Analysts project EBITA margins could reach 13.5% by 2027.

The stock, currently trading at a discount to global peers like Brink's, offers an attractive entry point. With a strong balance sheet, a proven ability to execute value-creating acquisitions, and a hybrid business model that bridges cash and digital ecosystems, Loomis is well-positioned to outperform in both stable and volatile markets.

Conclusion: A Buy for Resilience and Innovation

Investors seeking exposure to a sector where cash remains critical—despite the digital revolution—should look to Loomis AB. The company's Q2 2025 results, coupled with its strategic acquisitions and digital innovation, demonstrate a rare combination of short-term execution and long-term vision. As the global payment ecosystem evolves, Loomis's hybrid approach ensures it remains indispensable to clients navigating the complexities of cash and digital coexistence.

For those willing to bet on a company that is redefining cash logistics for the digital age, Loomis AB presents a compelling case. The stock's current valuation, combined with its growth trajectory and margin resilience, makes it a strong buy for investors with a 3- to 5-year horizon.