Major profit warning on component shortage
Garo came out with a profit warning for Q4, indicating an EBIT of SEK 9m vs. ABGSCe SEK 50m. The result is held back by lack of components in E-Mobility, which holds back shipments significantly. The Electrification business area is doing well, hence the problems are mainly related to the EV charging business. In addition to the low shipments, the company also takes a one-off charge of SEK 15m in Q4, which is related to changing the product platform connected to the launch of the Entity product suite, which will go into production on 1 March. Apart from being a very interesting new product launch, much of the component problems should disappear with the Entity products, as those are depending on more standardised components that give Garo more flexibility regarding their choice of suppliers. Once production has been started, it will gradually ramp during ‘23. Consequently, we believe that Q4'22 through Q2'23 will be held back by lower shipment compared to our previous expectations, before we should see a normalisation in H2’23. Demand remains good, particularly in destination charging (shopping malls, commercial customers, etc), hence we are not too worried about future sales growth.
