Q1 EBITDA of SEK 82m in line with ABGSCe. The sawn wood and joinery segments beat our expectations. The sawn goods segment showed strong volume growth of +12% q-o-q. Wood protection was below due to significantly higher raw material costs. The group’s EBITDA margin declined q-o-q, to 9% (13% in Q4’21). Note that Q1 is usually a seasonally weaker quarter for Bergs. Bergs expects to compensate for higher raw material costs with higher prices, and it sees higher prices for sawn goods/wood protection. Peers have announced price hikes of 20-30%, which should point to an improvement in EBITDA q-o-q in Q2. Q2 is usually seasonally better as well (better volumes). Note that Bergs has previously had some raw materials supply for its wood protection unit in Latvia from Russia/Belarus, which could impact the availability and prices for its raw materials.
Targeting growth of 10% both organically and through M&A Bergs is now a more downstream-focused company with less cyclicality in its earnings and exposure to structurally growing end-markets (building with wood is more environmentally friendly). Value-added wood products are now 60-70% of its EBITDA. Its remaining assets are modern and well-invested, so cash flow generation should be strong. We see room to grow, both organically and inorganically. Bergs Timber targets growth of 10% p.a. (both organically and via M&A) and has identified organic growth investments of ~SEK 500m for 2021-2023. Bergs has announced several new investments including: 1) organic growth investment in its wood protection segment, 2) the acquisition of PTPG and P&P, and 3) organic growth investment in its Joinery segment. It also has an interesting partnership with OrganoWood and a 25% ownership in Wood Tube, which could enhance growth.
Trading at an EV/EBITDA of ~6x for ‘22e We expect Bergs to generate EBITDA of ... Läs mer på ABG Sundal Collier
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