Elanders reported Q1 sales of SEK 3,371m (+16% vs. ABGSCe, +12% vs. FactSet consensus), up 23% y-o-y. The sales beat was largely due to exceptional growth in the Bergen acquisition, but organic growth was also better than expected (+2% vs. ABGSCe of -4%). Adj. EBITA was SEK 187m (+33% vs. ABGSCe SEK 141m, +32% vs. cons. SEK 142m), for a margin of 5.5% (ABGSCe 4.9%, cons. 4.7%), up from 5.2% in Q1’21. Despite experiencing headwinds from several external factors, such as cost inflation and component shortages, the company managed to expand margins y-o-y by moving price increases on to customers and by growing in what we understand to be high-margin customer segments. As such, it showed better earnings resiliency than we had expected. Supply Chain Solutions outperformed expectations significantly (EBITA +40% vs. ABGSCe), but Print & Packaging Solutions had a difficult quarter due to high paper prices, and was roughly in line with our expectations (EBITA +3% vs. ABGSCe).
’22e margins raised as Elanders proves earnings resilience
We raise our adj. EBITA estimates by 9% for 22e and by 5% for ’23e-‘24e on 1) higher sales from the Fashion & Lifestyle customer segment, where sales from the Bergen acquisition are reported, and 2) raised margin assumptions for ’22e. Although management says there are still some uncertainties on the horizon from continued inflation and the war in Ukraine, we are now more optimistic on ’22e margins even in the current turbulent market conditions, given the strong Q1 performance.
Trading at 12x ’22e EV/EBITA, or 9x lease adj. EV/EBITA
We had previously expected a soft H1’22 for Elanders and therefore argue that the company’s ability to maintain earnings in the face of cost inflation somewhat de-risks our estimates. On our estimates, the share now trades at 12x ...
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