Elanders: Staying calm in a stormy market - ABG

Impressive earnings despite a difficult market


Adj. EBITA raised by 4% for ’22e-’24e


A positive sign for all-important Q4 numbers


Q3: showing impressive resiliency once again

Elanders reported Q3 sales of SEK 3,979m (+15% vs. ABGSCe 3,465m, +13% vs. FactSet cons. 3,507m), and adj. EBITA of SEK 224m (+13% vs. ABGSCe 199m, +12% vs. cons. 200m), for a margin of 5.6% (ABGSCe 5.7%, cons. 5.7%). Supply Chain Solutions’ (SCS) adj. EBITA was 7% above our expectations, driven by Bergen Logistics as the standout performer, but with solid numbers across most customer segments, highlighting Elanders’ resiliency in a difficult environment. Also, if adjusting for the unusually high level of low-margin pass-through revenues (~SEK 300m) in Q3, the “underlying” SCS margin amounts to 6.6% (reported was 6.0%), close to the margin target of 7% even in a seasonally weak third quarter. Print & Packaging Solutions (PPS) outperformed expectations on adj. EBITA, with stabilised paper supply having an effect earlier than we had expected. Finally, NWC build-up weighed on cash flow, which should partly reverse in 2023.



Adj. EBITA up by 4% for ’22e-’24e, but higher financial costs

We raise our ’22e-’24e adj. EBITA estimates by 4%, with positive revisions in both SCS and PPS. We continue to be hesitant on growth in the Industrial customer segment but are more confident on Fashion & Lifestyle and Electronics, following the continued strong demand in Q3 in an environment with poor consumer sentiment. Moreover, going into the important Q4 (peak season for Elanders’ high-margin online print sales), we expect solid y-o-y growth against a softer Q4’21, where low travelling activity led to decreased demand for photobooks. We do, however, raise net financial costs on rising interest rates, and our ’22e-’24e net profit revisions therefore only amount to +2-1%.



Trading at 9x ’23e EV/EBITA (adj.), or 7x lease adj. EV/EBITA

Looking ahead, the resilient earnings in Q3 give us more confidence going into the all-important Q4. On our current estimates, the share is now trading at 9x ’23e EV/EBITA, or 7x lease adj. EV/EBITA, with estimated lease adj. FCF yields of 11-14% for ’22e-’24e.

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