Urb-it: A soft start to the year - ABG

Seasonally softer, but volumes up 6x y-o-y
Continued geographical expansion to support volumes
We make minor estimate revisions

Q1’22 takeaways
As we expected, Urb-it’s Q1 report came in on the softer side, with both sales and EBIT below our expectations. Sales grew 124% y-o-y to SEK 11m (-11% vs ABGSCe of 12m), supported by a 6x increase in volumes. Although sales grew y-o-y, it declined q-o-q by 32%, which mgmt. explains as foremost a seasonality effect. However, as mentioned in our previous notes, Urb-it decided to exit contracts that were not delivering desired volume or margin growth. We had expected these exits, along with the seasonality effect, to drive the sequential drop, but mgmt. said the exits had a limited impact on volumes in the quarter. Furthermore, the exits should allow for more cost-efficient growth ahead. Turning to EBIT, it came in at SEK -44m (-7% vs ABGSCe of -41m). We are particularly pleased to see some operating leverage, with EBIT only dropping by 2% q-o-q despite the sequential double-digit sales decline. This was in line with our initial expectations of a more normalized cost base into Q1 from the Q4’21 high.

Set to reap benefits from urban regulations and trends
Although the last-mile delivery market has low entry barriers and is fragmented, we emphasize that Urb-it is a certified B Corporation, which is highly rare, hence providing it with a competitive advantage. Additionally, we are seeing more initiatives by both corporations and regulators to become fossil free. For instance, PostNord earlier this year committed to having 100% fossil-free transports by 2030 and last-mile deliveries by 2027. In sum, we believe that Urb-it looks set to continue reaping the benefits from these increased efforts and the focus on fossil-free (i.e. green) alternatives. As such, we retain our outlook and make minor estimate revisions, lowering ‘22e sales and EBIT by 1% and 2%, respectively, mainly on the Q1 deviations.
Value range unchanged at SEK 2-9 per ...
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