Embellence Group: We look for 11% EBITA growth in Q1 - ABG

Q1 report due 7 May
Q1'24e net sales SEK 206m, EBITA SEK 30m
We reiterate our fair value range of SEK 23-31


Q1 preview: Artscape mixes down gross margins

We expect an undramatic quarter for Embellence in Q1. We forecast 4% organic growth for net sales of SEK 206m. We expect the Rest of World segment to detract from this growth at 0% org. growth y-o-y despite Artscape's relaunch of an updated assortment to one of its key customers. The relaunch could hold back gross margins somewhat, as Artscape's gross margin is lower than the group average, but we expect Embellence Group to realise a 1pp better gross margin y-o-y, explained by lower input prices. This is the main driver for our forecasted 90bp EBITA margin expansion (for EBITA of SEK 30m, a 14.6% margin). We estimate that Embellence will deliver SEK 37m FCF in Q1, supported by a Borosan- and Artscape-related inventory release.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/embellence-group/Equity-research/2024/4/embellence-group---we-look-for-11-ebita-growth-in-q1/