Elanders: Kammac drives estimate increases - ABG

Organic sales decline again...
...but strong margin and FCF development
In good shape for eventual market recovery


Impressive handling of sales decline

We expect Elanders to report Q3 net sales of SEK 3,461m, -16% y-o-y (-10% organic, +3% FX, -9% M&A). The key reasons for lower sales include softer demand and the closure of low-profitability contracts, while two months of Kammac sales compensate. Specifically, we believe the US market has weakened sequentially. In this context, we also highlight the company’s strong track record of dealing with lower demand. For Supply Chain Solutions, we estimate an adj. EBITA margin improvement to 8.1% (7.8%), driven by Kammac and efficiency improvements. We expect the strong momentum to continue for Print & Packaging Solutions, as we estimate 1% organic growth and an EBITA margin of 11.5% (10.1%). In total, we expect adj. EBITA of SEK 299m, for a margin of 8.6% (8.1%). We have lowered 2023e DPS to SEK 4.15 (5.00) to reflect the lower net profit.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/elanders/Equity-research/2024/1/elanders---kammac-drives-estimate-increases/