Q2 was another good quarter for Christian Berner, and marked the third quarter in a row that provided evidence of management's efforts to increase margins yielding results. Sales were SEK 246m, growing 15% y-o-y, purely organically. The growth was driven entirely by the Energy & Environment segment, which delivered on the large order backlog and saw good development within shorter lead-time sales. A positive product mix also contributed. The Technology & Distribution segment had a somewhat slower quarter with a business system change affecting productivity. In the long-term, however, this should increase efficiency. EBITA was 18m, up 51% y-o-y, for a margin of 7.1% (5.4%). The higher margin was achieved, despite cost increases, through a combination of sales growth and a favourable product mix in the E&E segment (18% margin). The T&D segment experienced the opposite effect. The company took a charge of SEK -1.5m for decommissioning the old business system, which was replaced during the quarter.
Minor estimate changes, outlook good
We make only very minor estimate changes following the largely in-line Q2 report. Order intake remains high, coming in at SEK 285m in the quarter, growing 9% y-o-y despite tough comps. R12m book-to-bill is now at 1.03, and the outlook remains good. We interpret this report as the third in a row to improve our confidence in management's efforts to improve margins. Nevertheless, we would not be surprised if the high Q2 margin was a local peak on what is likely to be a bumpy road upwards.
Trading at 12x P/E
The share is currently trading at 11x-10x '23e-'25e P/E, i.e. 50-20% below peers. We maintain our fair value range and reiterate our positive outlook on the company, as it continues to provide us with evidence of a margin expansion journey underway
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