Embellence Group: Defending margin despite lower topline - ABG

• Net sales SEK 170m, -13% vs. ABGSCe, -9% vs. Factset cons
• Adj. EBITA SEK 18m, -13% vs ABGSCe, -17% vs cons
• Report moves cons. '23e EBITA by -3%

Q2 report in brief
The report can be considered a miss on topline versus consensus estimates, but Embellence does protect margins to a large degree. Net sales of SEK 170m corresponds to -11% y-o-y growth, and is -13% vs ABGSCe and -9% vs Factset cons. The same trends as in previous quarters can be seen, with Europe and RoW outperforming Nordics at -1.1%, -10.7% and -18.5% y-o-y growth respectively. Gross margins are an all-time-high, 4 pp better sequentially, 61.4%, we believe partly driven by a higher share of premium sales, but the lower topline results in a -25% adj. EBITA growth y-o-y for adj. EBITA of SEK 18m, -13% vs ABGSCe and -17% vs cons. By segment, Europe outperforms on profitability, with a 1 pp higher margin y-o-y on rather flat sales growth. FCF was SEK 10m, lower than we had expected, after a slight inventory buildup.

Länk till analysen i sin helhet: https://cr.abgsc.com/contentassets/8daf3e84f55c43779f6425d996b5203c/pdf/defending-margin-despite-lower-topline.pdf