Incap: Good profitability in Q2, full year guidance unchanged - Nordea

Net sales was close to consensus (Refinitiv) in Q2. Clean operating profit margin was better than consensus in Q2. Pennatronics acquisition will add 14% to annual net sales, of which some 6% in this year. Guidance for y/y declining net sales for the full year 2023 was repeated. The effects of big customer's inventory reductions were only partially visible in Q2, and most of the impacts will be visible in H2 2023. We forecast that a customer specific need for destocking could lower organic revenue by 12% in 2023 but estimates for second half of 2023 includes a lot of uncertainty. However, the company should be able to sustain its operating margin to 13-14% thanks to its proactive management of utilization ratios which practically means personnel reductions in India.

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