Svedbergs Group: Roper Rhodes keeps outperforming - ABG

- Net sales SEK 562m, 0% vs ABGSCe and Factset cons.
- EBITA SEK 76m, -7% vs ABGSCe, -6% vs cons.
- Thebalux continues to impress: 26% EBITA margin

Q2 in brief: Svedbergs brand keeps struggling
Svedbergs Group reports net sales of SEK 562m in Q2'24, for an organic growth of -1.6%. This is in line with ABGSCe and Factset cons. By segment, Svedbergs grew -21.4% y-o-y (on a -20% org. comp), Roper Rhodes by 9% (6% org.), Macro Design by -1% and Cassoe by 11%, once again highlighting the softer trend in the Nordics (Sweden) compared to abroad. While the Q2'23 net sales for Thebalux is not known, the Q2'24 net sales of SEK 107m (vs ABGSCe SEK 103m) suggests to us that sales growth was strong in the newcomer to the Group. UK price increases in H2'23 lift the gross margin by 190bp y-o-y. It is slightly offset by higher marketing and sales staff costs, but the net effect is positive for an EBITA margin expansion of 80 bp y-o-y. The Group Q2 EBITA (13.5% margin) of SEK 76m is -7% vs ABGSCe and -6% vs cons, with soft performance in the Svedbergs brand being the main detractor.

Outlook: strong momentum outside Nordics, cost cuts
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. Svedbergs Groups CEO statement also includes optimistic commentary on the demand in the Netherlands, and it states that it is making some investments into production in the country to meet demand. The Svedbergs brand, which reported a 9pp lower margin y-o-y, is said to initiate some cost cuts in personnel primarily.

Share trading at 7x '24e-'25e EV/EBITA
The share has been strong YTD with a total return of 55%. On yesterday's share price and unrevised estimates, the share is trading at 9x-8x '24e-'25e EV/EBITA vs a historical one-standard deviation trading span of 7x-11x. The Q2 report alone moves cons. '24e EBITA estimates by -2%. Svedbergs hosts a conference call today at 10:00 CET, a link can be found here. Questions are to be sent in advance to [email protected].

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/svedbergs/Equity-research/2024/7/svedbergs-group---roper-rhodes-keeps-outperforming/