DistIT - Slightly better than expected on profitability - ABG

Q2'24 results
Q2'24 sales came in at SEK 382m (2% below ABGSCe SEK 392m). Adj. EBIT came in at ~SEK -21m (vs. ABGSCe SEK -27m). On a segment basis, Aurdel performed in line with expectations when we consider adjusted metrics, and so did Septon. EFUEL was slightly better than we expected on sales but slightly weaker on costs, leading to a miss on EBIT. DistIT generated operating cash flow of ~SEK 5m, driven by a working capital release of SEK 95m.

Thoughts and outlook
With continued headwinds in the consumer electronics market, Aurdel continues to face macro-driven difficulty. However, DistIT is taking measures to rightsize the organisation and to partially deflect the headwinds. The company has reduced its workforce at Aurdel by approximately 30% and is looking to renegotiate some of its larger contracts in Q3. This is likely mostly reflected in consensus estimates given the company's previous statements on restructuring. Overall, we continue to deem DistIT's restructuring efforts as necessary for a sustainable return to profitability.

Valuation and estimate revisions
The share is down ~55% YTD, and is trading at '25e EV/EBIT of ~10x based on our unrevised estimates. Based on mechanical calculations following the report, we anticipate consensus to raise '24e-'26e EBIT estimates by high single digits.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/distit/Equity-research/2024/8/distit---slightly-better-than-expected-on-profitability/