Embellence Group: Careful decoration across markets - ABG

Sales +12% vs ABGSCe, adj. EBITA +4% vs ABGSCe
Soft near-term margin outlook, adj. EBITA down 6-1% '23e-'25e
Share trading at '23e-'25e EV/EBITA of 7-5x


Q1'23 report in brief

Embellence reported net sales of SEK 198m, 12% above both Factset cons and ABGSCe, corresponding to 7.1% y-o-y growth (-3.1% org.). The Nordic segment continued to show soft demand, decreasing ~7% y-o-y. Management highlights that a slight pickup was seen in March '23. Europe had a flat development with mixed demand. RoW displayed strong growth of +60% y-o-y (+10% org.) on the back of several brands performing well in the US. The gross margin of 57.2% (-2.2pp y-o-y) was negatively impacted by continued cost inflation, deleverage of fixed COGS and a negative sales mix in Europe. Opex increased slightly, which together with the soft gross margin resulted in an adj. EBITA of SEK 27m (+4% vs ABGSCe of SEK 26m, +9% vs Factset cons) for a 13.7% margin (-4.1pp y-o-y).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/embellence-group/Equity-research/2023/4/embellence-group---careful-decoration-across-markets/