Kempower Oyj (HEL:KEMPOWR) Has Debt But No Earnings; Should You Worry?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Kempower Oyj (HEL:KEMPOWR) does carry debt. But should shareholders be worried about its use of debt?

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When Is Debt A Problem?

Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. The first thing to do when considering how much debt a business uses is to look at its cash and debt together.

What Is Kempower Oyj's Debt?

You can click the graphic below for the historical numbers, but it shows that as of June 2025 Kempower Oyj had €17.4m of debt, an increase on €6.20m, over one year. But on the other hand it also has €61.1m in cash, leading to a €43.7m net cash position.

How Healthy Is Kempower Oyj's Balance Sheet?

We can see from the most recent balance sheet that Kempower Oyj had liabilities of €105.3m falling due within a year, and liabilities of €26.7m due beyond that. On the other hand, it had cash of €61.1m and €48.0m worth of receivables due within a year. So its liabilities total €22.9m more than the combination of its cash and short-term receivables.

Of course, Kempower Oyj has a market capitalization of €933.1m, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. While it does have liabilities worth noting, Kempower Oyj also has more cash than debt, so we're pretty confident it can manage its debt safely. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Kempower Oyj can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

View our latest analysis for Kempower Oyj

Over 12 months, Kempower Oyj made a loss at the EBIT level, and saw its revenue drop to €230m, which is a fall of 10.0%. That's not what we would hope to see.

So How Risky Is Kempower Oyj?

By their very nature companies that are losing money are more risky than those with a long history of profitability. And the fact is that over the last twelve months Kempower Oyj lost money at the earnings before interest and tax (EBIT) line. And over the same period it saw negative free cash outflow of €11m and booked a €15m accounting loss. With only €43.7m on the balance sheet, it would appear that its going to need to raise capital again soon. Overall, we'd say the stock is a bit risky, and we're usually very cautious until we see positive free cash flow. When analysing debt levels, the balance sheet is the obvious place to start. However, not all investment risk resides within the balance sheet - far from it. These risks can be hard to spot. Every company has them, and we've spotted 1 warning sign for Kempower Oyj you should know about.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.