Embellence Group: Big Artscape-driven beat - ABG

Net sales SEK 214m, 4% vs ABGSCe, 7% vs Factset cons.
Adj. EBITA SEK 34m, 11% vs ABGSCe, 24% vs cons.
Share trading at 7x-6x '24e-'25e EV/EBITA


Q1 in brief: Strong RoW performance

The report is better than consensus estimates in general. Net sales of SEK 214m is 8% higher y-o-y (8% org.), and is 4% above ABGSCe and 7% above Factset cons. The three geographical segments Nordics, Europe and RoW grew by -5%, 0% and 42% respectively, meaning RoW was the clear reason for the sales and profit beat in the quarter. During the quarter, Artscape launched a new range and other portfolio brands experienced strong demand in the US specifically. Gross margins were 58.3%, 110bp higher y-o-y and +60bp sequentially the direction of change for input prices seems to be going the right way. SG&A expenses as a ratio to sales was similar y-o-y good gross margin resulted in an EBITA growth of 24% for adj. EBITA of SEK 34m (16% margin). This was 11% vs ABGSCE SEK 30m and 24% vs cons. SEK 27m. The profitability growth led to FCF of SEK 8m vs Q1'23's SEK -2m.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/embellence-group/Equity-research/2024/5/embellence-group---big-artscape-driven-beat/