Nordic Waterproofing: Difficult Q2 comps will get easier in H2e - ABG

Q2 report due on Thursday 20 July
Price hikes fading, but volumes are still declining
11x '23e EV/EBITA on bottom-of-cycle earnings


Difficult Q2 comps get gradually easier during H2e

We expect Nordic Waterproofing (NWG) to report sales of SEK 1,270m, up 1% y-o-y (-11% org, +6% M&A, +6% FX). Latent effects from last year's price hikes are now starting to fade (we est. +4% price growth in Q2) while the volume decline remains (we est. -15%). Although a more stable bitumen price should support a solid gross margin, expected under-absorption of fixed costs due to lower volumes and weak earnings from prefabricated elements (~17% of sales) results in an estimated EBIT of SEK 143m (-21% y-o-y), for a margin of 11.3% (14.4%). We note that for Q2 NWG faces difficult comps since H1'22 was a sweet spot where it started hiking prices, but volumes had not yet started to decline too drastically, and we note that comps will get gradually easier in the coming quarters.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/nordic-waterproofing/Equity-research/2023/7/nordic-waterproofing---difficult-q2-comps-will-get-easier-in-h2e/