Avensia: Weak end to 2022 - ABG

Weak Q4 due to a soft end market
We lower '23e-'24e EBIT by 56-44%
Market to remain sluggish in the coming quarters


Q4 sales -2% y-o-y, -10% vs. ABGSCe

Going into Q4, we had assumed further decelerating sales growth, reflecting the trajectory in recent quarters together with a tougher end market. Even so, utilisation in Q4 was worse than expected, as sales of SEK 112m (-2% y-o-y) were -10% vs. ABGSCe. Based on data from Ework on hourly prices, we calculate that Avensia's utilisation fell 27% y-o-y (vs. -14% y-o-y in Q3), as its headcount grew 18% y-o-y. According to our model, this was the first time since Q2'12 that Avensia saw lower sales y-o-y. Meanwhile, adj. opex rose 15% y-o-y, resulting in an adj. EBIT of SEK -10m (vs. SEK 11m in Q4'21). This was well below our forecast of SEK 7m. Avensia saw several NRIs in the quarter, including SEK 7m in costs for implementing a new ERP system, and provisioning for bad debt of SEK 3m. We believe that the latter relates to Indiska. On a positive note, however, Avensia said that it saw a slightly improved market at the end of the quarter. Even so, we expect the market to remain sluggish in the coming quarters.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/avensia/Equity-research/2023/2/avensia---weak-end-to-2022/