Eltel: Price hikes and cost savings bear fruit - ABG

3.5pp q-o-q margin expansion a strong statement
Adj. EBITA estimates raised by EUR 6-9m on higher margins
Price hikes and cost cuts taking effect


Q3 a strong statement with 3.5pp q-o-q margin expansion

Eltel reported Q3 net sales 6% above our expectations, with higher organic growth (6.8% vs. ABGSCe 1.6%), of which ~1/3 price and ~2/3 volume, according to management. The price hikes, in combination with realised cost reductions from the ongoing savings programs, led to significantly higher adj. EBITA than we expected (EUR 5.9m vs. ABGSCe 1.6m), which included a EUR -0.9m NRI from restructuring costs. The picture differs notably by geography, with ~5% EBITA margins in both Finland and Denmark, while Norway struggled on lower volumes and Sweden improved y-o-y but is still lagging the group average. Finally, cash flow was very strong, with lease adj. FCF at ~270% of EBIT, thanks to significant working capital release, and as a result lease adj. net debt/equity came down to 44% (52% in Q2).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/eltel/Equity-research/2023/11/eltel---price-hikes-and-cost-savings-bear-fruit/