Cash flow strong despite lower earnings
We had already anticipated a meaningful growth deceleration in H2, but Q3 showed both a larger and more widespread softening of demand than we had expected, resulting in a sales miss of 13%. All customer segments in Supply Chain Solutions missed our expectations, despite the already factored in discontinuation of businesses with low profitability and normalised freight rates. The biggest misses were in Electronics and Fashion & Lifestyle. Electronics saw a clear deterioration towards the end of the quarter, while the other segments saw continuous soft demand. Overcapacity in certain areas continued to cost and new customer signings did not compensate for weaker demand from existing clients. Meanwhile, Print & Packaging had another strong quarter amid solid demand and higher pricing, beating our EBITA estimate by 6%. In sum, adj. EBITA missed our estimate by 13% despite an improved margin of 6.5% (5.6% in Q3'22). Operating cash flow impressed at SEK 426m, and we still expect a major NWC release in Q4, corresponding to 7% of the market cap.
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