Studsvik: Solid start to the year - ABG

- More positive news for Scandpower
- Profitability has always been volatile
- Minor revisions with '24e EBIT down 1%

Q1: Organic sales +11% y-o-y, adj. EBIT margin 4.6% (5.2%)
Studsvik reported Q1 sales of SEK 209m (189m), with organic sales up 11% y-o-y. Adj. EBIT was SEK 9.7m (9.9m), with the y-o-y improvement in F&MT offset by Decommissioning. Sales were 3% better than ABGSCe, but adj. EBIT was below our forecast of SEK 15.2m. The main reason why the sales beat did not translate to adj. EBIT was because Scandpower's Q1 profitability was underwhelming,r as it had to make investments in order to prepare for a new larger contract win in the North American market. We think this should be treated as a positive development long-term. Other than that, the company saw some delays within Waste Management but the potential demand for its inDrum technology remains strong.

Scandpower profitability should recover
We only make minor adjustments following the Q1 report, as the group developed in a slightly positive way overall. The miss on adj. EBIT in Q1 towards our estimates was mainly caused by Scandpower, and we think there is a solid possibility that the profitability recovers mid-term. In total, we raise our sales estimates by 2% and lower EBIT by 1% for '24e.

Exciting decade awaits the company
It was quite an uneventful quarter for Studsvik, as there were no major news on new-builds on the Studsvik site. Waste Management continues to invest in its demo facility, and it seems that commercialisation of the inDrum technology is getting closer. Scandpower saw additional sales momentum, albeit at low incremental margin, and F&MT continued its positive sales momentum with sales growth above 20% y-o-y. The next decade will probably be quite eventful for the company as the world commits to a future that will see a lot more nuclear energy than what was previously thought to be the case. At some point, we think Studsvik will benefit from that.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/studsvik/Equity-research/2024/4/studsvik---solid-start-to-the-year/