Elanders: Improvement expected after Q1's perfect storm - ABG

Q1 weaker than expected...
...but outlook remains bright
Low valuation and leverage on market, lower interest rates


Slow start to the year

While the top-line held up in line with our expectations in Q1, adj. EBITA was 16% below our estimate at a margin of 5.5% (Q1'23 6.0%, ABGSCe 6.6%). This was disappointing, as we had expected the recent acquisitions to provide some cushion to a still-sluggish market. The Fashion segment was a significant drag, but weakness was widespread across geographies and a softer UK market affected Kammac negatively. As expected, overcapacity remained an issue. However, activity appears to have picked up meaningfully in March and April following a weak start to the year. Also, recall that comps will become easier from Q2 after a period of negative y-o-y effects due to contract closures and the normalisation in Air & Sea. On another positive note, Print & Packaging had a strong Q1, and we expect the trend to continue. Elanders also continued to impress with its ability to adjust to prevailing market conditions, resulting in another working capital release and an OPCF of SEK 641m, implying impressive cash conversion.

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