Interesting learnings from the pandemic
Elanders has faced markedly softer demand of late. While we have lowered our estimates meaningfully to reflect this, a lot of uncertainty remains. That said, we see several attractive growth alleys for Elanders going forward, and we see significant potential in the recently announced acquisition of Kammac. In addition, the demand slump resulting from the COVID-19 outbreak, taught us some important lessons about how the company navigates in uncertain times. Not only has Elanders demonstrated agility in transforming its business model, it has also shown flexibility in terms efficiently prioritising between growth and cash flows depending on market outlook. The focus in recent years has been on expansion through opening new facilities and attracting new customers, both organically and through acquisitions. However, in the quarters following the start of the pandemic in Q1'20, Elanders quickly prioritised strong cash flow (at the expense of growth), paid down debt, lowered financial expenses, and released working capital (see charts below).
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