Hospitality and premium holds up relative consumer segment
In the DIY-focused Nordic region, we expect Embellence to face a tough Q4e characterised by surging inflation, electricity costs and interest rates. With brands in the Nordics mainly geared towards a mid-price consumer segment, we expect to see lower demand and pencil in an organic decline of 8% in Q4e. On a positive note, we anticipate that Europe and RoW will hold up better. Driven by a favourable premium niche and exposure to hospitality which sees pent-up demand after the pandemic, we forecast organic growth of 1% and 2% respectively for Europe and RoW in Q4e. All in all, we forecast net sales of SEK 190m in Q4e, corresponding to 9% y-o-y growth (-4% org.), supported by the Artscape acquisition. We believe Embellence will be able to protect gross margins with rolled-out price increases and input costs have started to level out. We forecast an adj. EBITA of SEK 24m in Q4e, corresponding to a margin of 12.5% (-2pp y-o-y).
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