Elanders: Continues to handle cost inflation - ABG

Q2 report due on Tuesday, 12 July Proved earnings resiliency in Q1, more of the same in Q2 10x ’22e EV/EBITA (adj.), or 7x lease adj. EV/EBITA Should maintain decent margins, as in Q1 We expect Q2 sales of SEK 3,160m, up 14% y-o-y (0% org, 0% FX, +14% M&A). The Automotive and Industrial customer segments will likely continue to struggle, but the more stable Fashion & Lifestyle customer segment should see strong organic growth as well as a significant contribution from the Bergen acquisition, which we expect to have another strong quarter. In Q1, we were positively surprised by Elanders’ ability to maintain solid margins in Supply Chain Solutions (SCS) in a turbulent market, although as expected, Print & Packaging Solutions (PPS) suffered from high paper prices. Seeing as the situation in Q2 has been similar regarding input prices, we forecast flat q-o-q adj. EBITA margins for both segments (6.3% and 3.9%), but the mix effect from higher growth in SCS leads to a slight margin increase at group level. All in all, we estimate adj. EBITA of SEK 179m, for a margin of 5.7% (5.2%). Minor changes to segments, neutral net effect on group We make very minor revisions to ’22e adj. EBITA, lowering our estimate for PPS by 3% on continued low margins, but raising SCS by 1%, mainly from raising our estimates for the Bergen acquisition. This results in a small net effect of +1% at group level. We also model a positive one-off of SEK 50m, affecting reported EBITA, from a communicated revaluation of minority interests, which will have no cash flow effect. Some improvements in H2’22e, and potential backlog in ’23e In our view, Elanders managing to maintain decent margins in Q1 de-risks ’22 estimates. We expect Q2 to be more of the same, followed by some improvements in H2’22e, in part since we have seen companies such as Daimler flagging for an easing of supply chain issues. Moreover, we see potential in ’23e from a substantial order backlog materialising among automotive and industrial cust ... Läs mer på ABG Sundal Collier