OrganoClick: Nonwoven hampered by restaurant weakness - ABG

- Sales -14% vs. ABGSCe, EBIT SEK 0m vs. ABGSCe 2m
- NW&FT drives sales miss due to restaurant market weakness
- Gross margin better, and cash flow improves financial position

Q2 results
Sales came in at SEK 39m (-14% vs. ABGSC 45m), -6% y-o-y (-6% organic). NW&FT drove the sales miss, as a weak restaurant market hampered sales. EBIT was 0m (ABGSC 2m), and adj. EBIT was 0m (ABGSC 2m) for a margin of -0% (ABGSC +4%). Despite lower than expected sales, EBIT held up well, as the gross margin continued to improve. Adj. net income was -2m (ABGSC 0m) for a margin of -5% (ABGSC +1%). The company produced lease adj. FCF of 8m, +130% y-o-y, and ended the quarter with a cash balance of 15.7m vs. R12m FCF -7.6m.

Estimate changes and outlook
On numbers alone, '24e-'26e sales come down 4% and '24e adj. EBIT comes down by SEK 2m. Despite current market headwinds hampering Q2 sales, management remains confident in the long-term potential of the NW&FT segment. GC&MP is performing well, and this has continued into Q3. FW is seeing continued weakness from the construction market.

Valuation
The share is up 27% L3M (vs. peers -4%, Swedish small cap +11%), and is currently trading at 2.9-2.5x '24e-'26e EV/Sales on our pre-report estimates.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/organoclick/Equity-research/2024/7/organoclick---nonwoven-hampered-by-restaurant-weakness/