Cavotec: Losses should now be behind us - ABG

Orders remain strong while EBIT turns positive
4.2-9.4% EBIT margins vs. 3.2-9.2% previously in 2023e-24e
19-7x EBIT '23e-'24e, 18% org. sales CAGR '22-'25e


45% org. sales growth, margins to gradually improve

Cavotec continued to enjoy strong demand, supported by regulatory demand within shore power and increasing interest in electrification opportunities within mining. The order backlog grew 20% y-o-y, to EUR 150m (+2% vs. ABGSCe), while sales grew 45% y-o-y organically (ABGSCe 42%). However, the main positive was that Cavotec delivered positive EBIT (EUR 0.3m vs. ABGSCe -2.7m) for the first time since Q4'20 (excl. Q3'22). Although FCF remained subdued, we believe the strong backlog should lead to gradually higher sales throughout 2023e, which in turn should support a continued margin improvement (~2% in Q2, 6-8% in H2'23e). This is due to 1) higher volumes, 2) fading effects from low-margin orders and 3) cost reductions.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/cavotec/Equity-research/2023/4/cavotec---losses-should-now-be-behind-us/