Svedbergs Group: Non-nordic operations continue outperforming - ABG

- Net sales SEK 512m, -6% vs ABGSCe and -5% vs Factset cons.
- EBITA SEK 71m, -13% vs ABGSCe, -10% vs cons.
- One-off production stop in Thebalux

Q3 in brief: Thebalux seasonality misunderstood
Svedbergs Group reports net sales of SEK 512m in Q3'24, for an organic growth of -1%. This is -6% vs ABGSCe and -5% vs Factset cons, although the miss appears driven by Thebalux specifically as the organic miss vs our estimates is a mere 2%. By segment, Svedbergs grew -20% y-o-y (-19% org.), Roper Rhodes by 1% (2% org.), Macro Design by 5% and Cassoe by 6%. Thebalux reported net sales of SEK 94m compared to our SEK 117m estimate. We (and Svedbergs Group management) have limited insight into seasonality for the company and as such we would not intepret the signal as a materially softer performance than e.g. Q2. The report furthermore includes a comment on a shorter unplanned production stop in Thebalux that is likely to be non-recurring in nature. Gross margins were 46%, +130bp y-o-y on the back of UK price adjustments, while the selling expense ratio was also c. 1pp higher y-o-y to drive further sales growth. The Group Q3 EBITA of SEK 71m was -13% vs ABGSCe and -11% vs cons, and corresponds to 21% growth y-o-y and a 13.9% margin.

Outlook: Nordic markets remain softer, cost cuts initiated
Svedbergs reiterates its view that the Nordic markets are even softer than abroad, however also highlighting that the UK market remains muted. Roper Rhodes continues to capture some market share. In Q2, Svedbergs Groups CEO statement included optimistic commentary on the demand in the Netherlands, and stated that it is making some investments into production in the country to meet said demand. This message is repeated in Q3. The Svedbergs brand, which reported a 12pp lower margin y-o-y in Q3, initiated some cost cuts during Q2. It is difficult to conclude what the impact might be and there is no update in the Q3 report.

Share trading at 8x '24e-'25e EV/EBITA
The share has been strong YTD with a total return of 37%. On yesterday's share price and unrevised estimates, the share is trading at 8x '24e-'25e EV/EBITA vs a historical one-standard deviation trading span of 7x-11x. The Q3 report alone moves cons. '24e EBITA estimates by -3%.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/svedbergs/Equity-research/2024/10/svedbergs-group---non-nordic-operations-continue-outperforming/