CTT Systems: In-line sales but lowered OEM sales forecast - ABG

Q2 details
Q1 seemingly marked the trough as CTT was able to deliver Q2 sales of SEK 38m (+1% vs. ABGSCe 37m), up 19% q-o-q. driven by a sequential improvement in both OEM and aftermarket sales. Earnings remained positive despite the low sales level, with adj. EBIT coming in at SEK 2m (vs. ABGSCe 6m), for a margin of 5%. In reported numbers, we note that CTT recorded one-off revenues of SEK 9m, offset by a SEK 4m impairment, which resulted in a positive SEK 5m effect on EBIT. Underlying activity continued to improve in addition to higher orders. However, CTT notes that further short-term adjustments to the delivery pace at Boeing raises uncertainty over OEM sales levels in H2’21. On a positive note, Airbus has recently flagged for improving production rates, indicating support for improved OEM sales 2022 and onwards. For Q3, the company guides for revenues of SEK 35-40m (down 9% to up 4% y-o-y vs. Q3’20, mid-point 30% below ABGSCe at SEK 54m). In addition, CTT also guides for FY’21 revenues of SEK 140-160m (down 20-30% y-o-y, mid-point 17% below ABGSCe at SEK 181m). We believe the main deviation is due to lower than previously expected OEM sales.