Q2: A pause in the improving sales trend
Q2'24/25 sales declined 38% q-o-q to SEK 49m (ABGSCe 79m), but were still up 46% y-o-y. Sales were driven by deliveries to Aira (we estimate ~90% of sales), as ES-branded sales remained subdued. In addition, we fear that inventory adjustments and a slower-than-expected market recovery will result in stable sales q-o-q until Q4'24/25, but a 2-13% y-o-y decline in fiscal Q3-Q4, before returning to y-o-y growth in mid-2025. On a positive note, we believe that improving end-market activity in key regions recently and the good sales activity at Aira (sales of ~SEK 100m) should support a return to growth. EBIT was SEK -8m (ABGSCe +1m), vs. SEK +0.3m in Q1, and we do not expect a return to profitability until volumes start to improve. We find it positive to see that inventory declined further, and we estimate that ES' ~SEK 48m cash balance will be enough until FCF turns positive in late FY'25/26e (-7m in Q2).
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