Össur: Q2 expected to be soft, with tough comps - ABG

Volatile APAC and cost base negatively impacting Q2 We expect FY’22 EBITDA guidance to be under pressure Fair value range down to DKK 26-56 (32-60) Q2 focus likely to be on outlook and LT strategy Going into the Q2 report, we expect a rather soft quarter with an organic group sales growth of ~4% (company collected consensus 3.5%) on the back of a very strong Q2’21 (organic growth of 32%). This is in line with the communication from the company that FY’22 will be back-end loaded. However, we note that consensus estimates from pre-Q1 to pre-Q2 have been downward adjusted (FY’22 revenue estimates down ~3% and net profits down ~11%). We expect these downward adjustments to reflect the ongoing volatility seen in the APAC region, with China still utilising lockdowns, and the continued high cost pressure. Overall, we expect the Q2 numbers to be soft with the focus going into the report likely to be on 1) Industry outlook (M&A activity, shake-up at main competitor Ottobock, which lost both its CEO and CFO in May), 2) cost base management and 3) the long-term strategy, which will likely be evaluated now that the executive team is complete, with the new CFO (Gudny Arna Sveinsdottir) joining on 1 September.

USD 13m in extra costs for FY’22 starting to seem low Looking at the FY’22 guidance, we know that it takes into consideration a negative impact from China in Q2, but it now seems that China will not reopen fully in Q3 either, which would cast a shadow of doubt over the current organic revenue guidance of 6-9% (ABGSCe and cons. both at 6.2%). Additionally, we know that the implemented price increases (~2.5% on a group level, effective mid Q1’22) were to counter the ~USD 13m in extra costs under the current guidance (USD 7m in H1, USD 6m in H2). Based on the continued inflation, however, we expect the EBITDA margin, which is currently guided at 20-21% (ABGSCe 19.6%, cons. 19.9%), to be squeezed.

Q2 is not likely to be a major share price trigger We update our scenario-based estimate ... Läs mer på ABG Sundal Collier

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