Ferronordic: Solid segment EBIT, but high group costs - ABG

Segment EBIT SEK 12m (ABGSCe 10m), but OH costs -26m
Sees strong outlook for both regions
Net cash position SEK 681m (~50% of market cap)


Q1 outcome

Sales were SEK 631m (+11% vs. ABGSCe 570m), and the gross profit was 85m (+6% vs. ABGSCe 80m), for a gross margin of 13.5% (ABGSCe 14.0%). EBIT was positive in both operating segments, SEK 5m in Germany (ABGSCe 6m) and 7m in CIS (ABGSCe 4m), however overhead costs were higher than we expected, leading to a group-level EBIT of SEK -14m (ABGSCe -1m). This illustrates how the opex base is too big for Ferronordic's smaller operations since the Russia divestment, and the company needs to use the net cash position aggressively for M&A or scale down opex. The net cash position amounted to 681m (~50% of mcap) by end of Q1, down from SEK 957m in Q4'22, largely due to NWC build-up hurting cash flow.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ferronordic/Equity-research/2023/5/ferronordic---solid-segment-ebit-but-high-group-costs/