Energy Save: Back to growth, but softer H1'26 expected - ABG
* Q4: Back to growth and positive EBIT; sales +12% vs. ABGSCe * Seasonally softer H1'26e, stronger H2'26e expected * We cut '26e-'27e sales by 4-3% and total EBIT by SEK 13m
ANNONS
Seasonally softer Q1 ahead, EBIT positive in H2e
ES returned to growth in Q4 and delivered a positive EBIT. Sales were SEK 70m (+12% vs. ABGSCe, +33% y-o-y) while EBIT was SEK 1.2m (vs. ABGSCe SEK 2.4m). OEM sales rebounded after a temporary inventory build-up among OEM customers in Q2/Q3. Growth was driven by Residential (+40% y-o-y), while Commercial remained weak (-29% y-o-y). Heading into '26, management guides for a seasonally softer H1'26e but expects a clear pick-up in Q3/Q4e. We view this as reasonable, supported by: 1) improving market conditions, 2) contracted OEM volumes, and 3) continued propane (R290) roll-outs. For Q1e, we expect growth to turn negative again on seasonality, before improving from Q2e on easier comps and building momentum into Q3/Q4e.
Estimate changes
We cut '26e-'27e sales by 4-3% and total '26e-'27e EBIT by SEK 13m, on our lowered volume expectations for H1'26e. We expect EBIT to be negative in H1’26e (seasonality), before improving to positive EBIT in H2’26e. For FY'26e, we now forecast EBIT of SEK -1m, followed by SEK +17m in '27e.
Improving market conditions
ES appears well-placed to benefit from a broader market recovery. We think the company can recover volumes and re-enter a growth trajectory in '26e, with recent heat-pump market data suggesting conditions are starting to improve (SE+NL+DE HP unit sales up +21% y-o-y in Q4'25), although the timing and pace of the recovery remain uncertain. Moreover, we still expect negative FCF in ’26e, and note a more pressured net cash position. However, we think with improving profitability in '26e and improving market conditions, ES should return to positive FCF in ’27e and strengthen its financial position. ES is currently trading at 6x-3x EV/EBIT '27e-'28e. We lower our fair value range on our revised estimates to SEK 20-37 (20-50).
