Cavotec: Stronger margins, lower orders - ABG

• 45% organic sales, 2.6% EBIT margin (ABGSCe 1.9%)
• Guides for gradually improving margins in 2023
• Some positives and negatives, likely small pos. overall

Q2 details
Better deliveries and margins, but declining orders and negative cash flow. The order backlog declined 8% y-o-y and -6% q-o-q to EUR 140m (-8% vs. ABGSCe 153m). Revenues grew 45% y-o-y organically (ABGSCe 44%) to EUR 46m (+7% vs. ABGSCe 43m) as Ports & Maritime grew 66% y-o-y organically (ABGSCe 70%) while Industry also delivered strong growth (20% organically, ABGSCe 15%). EBIT reached EUR 1.2m (ABGSCe 0.8m), for a margin of 2.6% (ABGSCe 1.9%, -3% Q2'22). Net debt increased from EUR 19m to 23m, as lease adj. FCF was EUR 6m.

Looking ahead, the CEO expects the margin pressure from previously booked orders to remain in the coming quarters but that pricing on new orders should support gradually improved profitability. Also, the CEO cites uncertain macroeconomic conditions as the reason behind why customers have postponed orders but that the installed base continued to grow, which is positive for the service business. Finally, Cavotec at the end of the quarter agreed to a covenant waiver with its lenders for the remainder of 2023.

Länk till analysen i sin helhet: https://cr.abgsc.com/contentassets/85ba63a9c3ee4335ad39e9ffd7f6a826/pdf/stronger-margins-lower-orders.pdf