Proact: Cost reductions yield an in-line adj. EBITA - ABG

- Q3 org growth -8% (ABGe -7%), 1% adj. EBITA beat on lower costs
- Operating cash flow at SEK 133m (-74m Q3'22) and up 194% YTD
- Small revisions on in line Q3, stock neutral to slightly up

Q3 details
Sales SEK 1,065m (-4% vs ABG 1,108m, no cons), Adj. EBITA 73m (1% vs ABG 72m), Adj. EBITA margin 6.8% (ABG 6.5%). Organic sales growth -8% (vs ABG -7%), of which system sales declined -20% organically and services grew 7%.

Lower costs yield margin support
Cost reduction program is according to plan and yielded lower costs in the quarter, holding up earnings as expected. EPS beat from a positive one-off of divesting the small Lithuanian business. OCF strong at SEK 133m (-74m Q3’22). Proact does not see any significant changes in demand, except from somewhat longer lead-times in some markets outside the Nordics, and the negative organic growth in System sales is a result of a strong delivery quarter last year.

Neutral estimate revisions
We think it is likely to see consensus do relatively unchanged revisions and keep a declining top-line for H2’23e although solid margins from cost reductions. Share likely neutral or slightly up on the strong cash flow, where valuation should be supportive (7.1x ‘23e EV/adj. EBITA). Conf call at CET 10.00