Bergs Timber - Mixed Q3 followed by public takeover offer - ABG

- Sales SEK 777m, up 10% y-o-y (est. -15% org.), adj. EBIT SEK 1m
- Mixed outlook for different segments, '24e better than '23e
- Public takeover offer of SEK 44.5, an 86% premium to closing price

Q3: Low demand for wood, better for processed products
In Q3 the company had sales of SEK 777m, up +10% y-o-y (we estimate -15% org., +9% FX, +16% M&A). Doors & Windows and Furniture & Components contributed most of the growth in the quarter, while Sawn Wood was the only segment with a sales decline, shrinking -38% y-o-y. Adj. EBIT was SEK 1m (23m), for a margin of 0.1% (3.2%). Doors & Windows, Furniture & Components and Energy & Logistics were profitable in Q3, while Sawn Wood and Wood Solutions contributed negatively, but Wood Solutions improved both y-o-y and q-o-q, as lower raw material prices and reduced costs offset low volumes. Adj. net income was SEK -24m (22m), for a margin of -3.1% (3.1%), which converted into adj. EPS of SEK -0.69 (0.63). Lease adj. FCF was SEK 152m (281m), containing a seasonal WC release of SEK 139m.

WS better in '24e, SW uncertain winter, D&W and F&C solid
We reduce '23e-'25e sales by 4-2%, raise '23e adj. EBIT by SEK 9m, and reduce '24e-'25e adj. EBIT by 5-3%. The decline in construction has led to decreased demand for wood, and the development during the winter for Sawn Wood is uncertain, but the company expects an increased delivery rate for Wood Solutions in the coming season (Q2'24-Q3'24), as inventory levels in the supply chain are now balanced. The outlook for Doors & Windows and Furniture & Components remains good, and management expects mostly full capacity utilisation for the rest of '23e; there are however some signs of slowing demand as the company is seeing longer lead times in D&W, and the Polish F&C factory is seeing a slightly reduced order intake.

Takeover offer of SEK 44.5 per share
This morning a public takeover offer of SEK 44.5 per share was announced by the largest shareholder, see our fast comment for details. We tighten our fair value range to SEK 40-60 (25-75).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/bergs-timber/Equity-research/2023/10/bergs-timber---mixed-q3-followed-by-public-takeover-offer/