The Nordic consulting market remains weak, putting pressure on hourly rates, utilisation and therefore growth. Although the public sector has historically been resilient in downturns, the sector is currently a headwind, not only for Ework but also for many of its peers. However, there have been positive signs in several other sectors recently, which bodes well for improved growth in H2. These include retail and finance, and automotive and life sciences remain healthy. Meanwhile, Ework is taking several steps to strengthen its profitability and increase the operating leverage of the platform once demand returns. For example, it is rolling out a new operating model while rebalancing its client portfolio. In addition, cost savings are now bearing fruit, with Q2 EBIT of SEK 52m (+4% vs. ABGSCe) up 24% y-o-y, despite sales -5% y-o-y.
Small estimate revisions
We make small revisions to our forecasts after the Q2 report. We continue to expect improved growth in H2, but see '24e sales -4% y-o-y after the subdued H1 coupled with the headwind from the rebalanced customer portfolio (e.g. Vattenfall). However, the latter paves the way for expanding gross margins. In combination with recent cost savings and a better mix in the order intake (more senior consultants), we see good prospects for gradually improving EBIT margins.
11x '24e EV/EBIT adj.
The Nordic consultancy market has been weak for >15 months, and we are now starting to see signs of improvements. Although we do not expect a quick recovery, Ework has recently taken several actions to put itself in a stronger position once the market recovers. The share is trading at 11x '24e EV/EBIT (vs. peers at 12x-14x), which is slightly below its 10Y avg. of ~12x.
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