Bergs Timber Q2: Sequential improvement - ABG

Q2e EBITDA of ~SEK 140m Sawn goods prices up ~15% in Q2, could weaken in H2 Trading at EV/EBITDA 4x for ’22e and 5x for ’23e/’24e Q2e EBITDA of ~SEK 140m
We estimate Q2’22e EBITDA of ~SEK 140m, up from SEK 82m in Q1’22 and somewhat in-line y-o-y (SEK 146m in Q2’21). The sawmills will likely fare better q-o-q driven by better volumes and ~15% higher prices. Wood protection prices will likely follow, and we expect an improvement in the segments’ margins q-o-q due to higher prices, lower raw material costs (due to lag) and seasonally stronger volumes. Note that the US lumber price has dropped ~55% since March and the direction for sawn goods could be down in H2. Key sawn goods indicators have shown weakness lately: inventories levels have risen, and new orders have declined. Bergs Timber will report its Q2 numbers on 25 July. We raise our ’22e EBITDA by ~7%, driven by our expectation of better results in Q2. Our ’23e/’24e EBITDA is up 2-3% due to the recent acquisition of Pinus.

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. Bergs’ remaining assets are modern and well-invested, so cash flow generation should 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 ’21-’23. Furthermore, it has strengthened its position within windows and doors recently, acquiring three companies and investing for organic growth. After the recent acquisition of Pinus, management now expects windows and doors to have sales of ~SEK 600m p.a., double vs. ’21. Margins for the Joinery segment are more stable over the cycle and the expansion of the segment could contribute to reduce the cyclicality of Ber ... Läs mer på ABG Sundal Collier

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