Studsvik: Strong sales growth in Q2 - ABG
- Profitability yet to improve
- Extrem Borr och Sågteknik added to numbers
- Positive revision mainly from M&A: '25e EBIT up 9%
Q2: Organic sales +10% y-o-y, adj. EBIT margin 5.8% (5.6%)
Studsvik reported Q2 sales of SEK 236m (214m), with organic sales up 10% y-o-y. Adj. EBIT was SEK 13.7m (12.1m), with the y-o-y improvement especially in Fuel & Materials Technology (F&MT), which had scheduled shut-downs last year. Sales were 7% better than ABGSCe, but adj. EBIT was below our forecast of SEK 15.6m. The sales beat was driven by F&MT and Scandpower. In terms of profitability versus ABGSCe, we saw a promising trend in Scandpower, which had underlying profitability improvements, but this was offset by slightly weaker profitability in the other businesses. FCF of SEK -22.3m (33.8m) was weaker, as the company had a build-up in working capital from China and higher capex than last year.
First acquisition since 2015
We only make minor changes to underlying estimates after the report, with 2% higher sales offset by slightly lower profitability assumptions, resulting in flat underlying EBIT for '25e. We raise total sales and EBIT estimates by 5% and 9%, respectively, as we include the acquired Extrem Borr och Sågteknik into our numbers. The acquisition is the first since 2015 and is aimed at broadening the offering of Decommissioning.
Several opportunities ahead
The current business climate with a more positive view on the nuclear industry creates opportunities for Studsvik for many years to come. Currently, we see the following catalysts: 1) Profitability in Decommissioning improves with the acquisition, 2) F&MT's profitability is hampered by delayed regulatory permits for fuel transports, but once resolved, profitability should improve, 3) Scandpower should see improved profitability in H2 from the deal with Gardel, and 4) Waste Management recently signed an agreement with Uniper, which could act as a breakthrough for the InDrum technology.
Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/studsvik/Equity-research/2024/7/studsvik---strong-sales-growth-in-q2/
