Garo: Expect another strong report - ABG

Q2’21 expectations
We expect a strong Q2 report with sales of SEK 300m, +26% y-o-y (25% organic, 0% FX, 1% M&A) on normal group comps. Industry data suggest strong EV charging demand across Europe, and we expect GARO E-mobility to deliver 57% sales growth y-o-y (53% organic), boosted by strong demand for home and semi-fast chargers in tandem with the green tax deduction of 50% of the labour and material costs for installation of home chargers in Sweden. Electrical Distribution Products (+12%) should grow considerably, Project Business (+3%) decent and Temporary Power (+100%) at high levels as a result of uncommonly easy comps. In total, we forecast group EBIT of SEK 47m, for a strong margin of 15.6% (13.7% in Q2’20). Demand continues to be high, but we see margins as the biggest risk in H2. Generally, GARO has good pricing power and we expect limited margin impact from potential supply chain constraints and higher raw material costs.