We lower our EBIT estimates by 7-5% for '24e-'26e. The main driver is assumed lower demand in Germany, which as outlined above continues to see very weak economic activity: we now expect soft figures in Germany for the remainder of '24e. In the US, we make only minor revisions.
Trading at 15-9x '24e-'25e EV/EBIT, high debt near term
For '24e the share trades at 15x EV/EBIT, 21% above our distributor peer group, but for '25e Ferronordic's multiple drops to 9x, which is 24% below peers. In the near term, Ferronordic's balance sheet remains somewhat strained following the acquisition of Rudd, which accounts for 57% of our NTM sales. The company has been clear that it plans to expand further in the US, which is also a market we find attractive given its major planned infrastructure programs that should boost construction equipment demand, but we note that the '24e ND/EBITDA of 2.7x limits expansion opportunities in the near term.
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