Macro on repeat
Although Q3 was a somewhat brighter version of Q2, DistIT continues to face the consequences of pessimistic consumer sentiment and cost inflation. The company reported Q3 sales of SEK 622m (+2% total y-o-y growth but -6% organic growth), which was ~9% below our previous estimates. Adj. EBIT was SEK 5m vs. ABGSCe at SEK 34m. The key explanation for the discrepancy between the reported figures and our estimates lies in the COGS, which has increased due to cost inflation and FX headwinds (mainly the USD appreciating relative to the SEK). EFUEL continues to perform strongly and surprised positively by achieving an EBIT of SEK 6.4m (vs. SEK 3.9m ABGSCe). In particular, the gross margin was higher than we anticipated. It is therefore increasingly likely that the earn-out linked to EFUEL’s gross profit will be paid in H1’23e, and we continue to estimate that the company will need to raise an additional SEK 100m in debt to finance the consideration.
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