Elanders: Solid earnings growth after Q1e - ABG

Q1e to mark low point amid organic decline...
...but we expect solid earnings development in subsequent quarters
Low valuation and in good shape for eventual market recovery


Softer demand and contract closures to affect Q1 sales

We expect Elanders to report Q1 net sales of SEK 3,238m, -10% y-o-y (-5% organic, +0% FX, -5% M&A). The key reasons for lower sales include widespread, softer demand in Supply Chain Solutions (SCS) and the closure of low-profitability contracts, which continue to have a y-o-y effect. However, we note that the closure of these contracts is having a positive margin effect, while the Bishopsgate and Kammac acquisitions compensate. For SCS, we estimate an adj. EBITA margin improvement to 7.3% (6.9%), driven by the acquisitions and efficiency improvements. The overcapacity in certain areas continues to cost, but we expect Elanders to gradually fill this. For Print & Packaging Solutions, we estimate continued solid performance, with 1% organic growth and an adj. EBITA margin of 5.1% (3.7%). In total, we expect adj. EBITA of SEK 214m, for a margin of 6.6% (6.0%).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/elanders/Equity-research/2024/4/elanders---solid-earnings-growth-after-q1e/