Pricer: Strong growth, but muted earnings - ABG

Strong sales and orders, but weak gross margins
We make large EBIT cuts on the back of lower GMs
Strong sales growth in ’22e, but with contracting margins

19% sales growth y-o-y, but the GM fell by 220bps q-o-q
Pricer’s key Q1 results were pre-announced on 7 April. Orders and sales were strong, with y-o-y growth of 19% and 24%, respectively, driven by continued strong demand for ESL solutions. Orders were 13% above ABGSCe and sales were in line. EBIT was significantly lower than we expected, however, amounting to SEK -10m (vs. ABGSCe SEK 19m), down from SEK 17m in Q1’21. 22% y-o-y growth in opex and a 220bps q-o-q drop in the gross margin explains the weaker profits. As in previous quarters the gross margin was hurt by elevated freight rates together with elevated input prices and unfavourable FX movements, leading to a metric of 18.0% (vs. ABGSCe 20.2%). Although we note the recently declining freight rates, we remain cautious on near-term gross margins.

Positive sales est. revisions on the back of recent orders
We make a major cut to our ’22e EBIT (-49%), primarily due to lower gross margins, where we take down our ’22e assumption to 18.3% from 21.0%. That said, we lift ’22e-’24e sales by 5% due to the recent strong momentum in orders. This is partly driven by the recent higher inflation in most of Pricer’s markets, which in turn increases demand from retailers for digitalising manual tasks such as changing prices. Consequently, we forecast 2022 sales of SEK 2.2bn, up 25% y-o-y, albeit with an EBIT margin of 3.1%, which is down from 5.5% in ’21.

Pricer will soon disclose new financial targets
Looking into 2023e, we expect margins to improve on the back of a less distressed supply chain. In addition, we see a tailwind from Pricer’s recently initiated cost-saving measures that should come to fruition in 2023. Another comment that was made today was Pricer’s intention to host a CMD soon. We are encouraged by that news, particularly the fact that management seeks to set new ...
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