Bergs Timber: Q1e: likely a solid start to the year - ABG

Q1e EBITDA of SEK 82m
2022 likely another good year for the company
Trading at an EV/EBITDA of ~7x for ’22e-’23e

Q1e EBITDA of SEK 82m
We estimate Q1’22 EBITDA of SEK 82m, down from SEK 106m in Q4’21. The sawmills will likely continue to show good results in Q1 (we expect fairly unchanged prices q-o-q), while we expect the wood protection segment to be impacted by higher raw material costs (due to lag). For Q2e we expect EBITDA to improve again q-o-q, driven by higher prices and volumes for the wood protection and sawmill segments. Peers have announced a 20-30% price hike for sawn goods and wood protection prices will likely follow. Russia accounts for 20% of global sawn wood exports, and sanctions on Russia could tighten the sawn goods market. Note that Bergs has previously had some raw materials supply for its wood protection unit in Latvia from Russia/Belarus which could impact the availability and prices for its raw materials. Bergs Timber will report its Q1 numbers on 5 May.

Targeting growth of 10% both organically and through M&A
Bergs is now a more downstream-focused company with less cyclicality in its earnings and exposure to structurally growing end-markets (building with wood is more environmentally friendly). Value added wood products are now 60-70% of its EBITDA. Its remaining assets are modern and well-invested, so cash flow generation will be strong. We see room to grow, both organically and inorganically. Bergs Timber targets growth of 10% p.a. (both organically and via M&A) and has identified organic growth investments of ~SEK 500m for 2021-2023. Bergs has announced several new investments including: 1) organic growth investment in its wood protection segment, 2) the acquisition of PTPG and P&P, and 3) organic growth investment in its Joinery segment. It also has an interesting partnership with OrganoWood and a 25% ownership in Wood Tube, which could enhance growth.

Trading at an EV/EBITDA of ~7x for ’22e
We expect Bergs to generate EBITDA of ~SEK 330m in ’ ...
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