Svedbergs: Solid gross margin offset by weaker than expected opex - Nordea

Svedbergs Group posted a soft set of Q3 2024 numbers, with sales coming in 4% below our estimates (no consensus), with organic growth at -1.4% vs. our estimate of 1%. The gross margin of 46% was 1.3pp ahead of our forecast, and 1.3pp up y/y. Adjusted EBITA came in at SEK 71m and 7% below our estimates (SEK 77m), explained mainly by weaker delivery in Thebalux, which saw a seasonally weaker quarter and was burdened by an unplanned halt in production. The Svedbergs brand continued to experience a challenging market, and was further burdened by costs related to the new production equipment in Dalstorp. Cash flow from operations (after changes in working capital) came in at SEK 4m, down vs. SEK 36m same period last year, burdened by a working capital build-up of SEK 62m. The company reiterated its long-term financial targets of reaching an average net sales growth of at least 10% over a business cycle, to be achieved both through organic growth and strategic acquisitions. It also aims to achieve an adjusted EBITA margin exceeding 15% while distribute up to 50% of the year´s profit after tax in dividends. Conclusion: Given the weaker than expected profitability, we expect a negative share price reaction in the range of 3-5% at first glance on these numbers today.

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