Vestum: Water the bright spot in a tough Q2 - ABG

11% adj. EBITA miss but improvement already in Q3
'24e adj. EBITA down 9%, '25e-'26e down 2-1%; 8% CAGR '23-'26e
'24e-'26e: 11-7x EBITA , 8-14% FCF yields, 2.8-1.2x ND/EBITDA


Challenging end-markets to persist in H2'24

Vestum's growth and margins continued to be held back by tough end-market conditions in its Services and Infrastructure segments. Organic sales decelerated from -4% in Q1 to -9% (ABGSCe/FactSet cons -5%), also partly due to tough references in the well-performing Water segment (sales -6% y-o-y, ~24% EBITA margins). We remain confident in the earnings growth potential for Water, and expect this to be the main growth driver in H2'24 and beyond, while improving end-market conditions in Services and Infrastructure should start to lift earnings from Q1'25. Group adj. EBITA declined 17% y-o-y (-17% vs. ABGSCe, -11% vs. cons) as margins reached 9.7% (ABGSCe 10.6%, cons 10.3%, 9.4% Q2'23). Again, we expect Water to partly offset the challenges in the other segments and yield a 6-3% organic sales decline in Q3-Q4, fairly stable margins y-o-y, and a 14-11% adj. EBITA decline.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/vestum/Equity-research/2024/8/vestum---water-the-bright-spot-in-a-tough-q2/