Roughly in-line sales and earnings vs. consensus, but good margins and cash flow. Sales came in at SEK 1,539m (0% vs. ABGSCe, -2% vs. cons), +8% y-o-y of which +3% organically (ABGSCe 0%, cons +1%, +5% Q2'24), driven by higher sales in Sweden and Europe. Adj. EBITA grew 6% y-o-y to SEK 137m (+9% vs. ABGSCe, +1% vs. cons), for a margin of 8.9% (ABGSCe 8.2%, cons 8.7%, 9.0% Q3'23) driven by solid margins in Norway and Europe while Sweden remained weak. FCF was strong, given seasonality, at ~40% of EBITA (neg. in Q2), while gearing was stable q-o-q at 2.8x and 2.7x pro forma (2.7x).
Estimate changes and outlook
Looking ahead, management says that the market has moved sideways in recent quarters and there is still uncertainty regarding how long the market will stay weak. We expect consensus to raise '24e-'25e EBITA by 1-3% as Europe's margins continue to impress while the challenging project in Sweden was concluded in September.
Final thoughts
A solid report. The share has slightly outperformed the broader market into numbers (0% L1M vs. OMXSGI -2%) and is trading at 13-9x EBITA '24e-'26e (~12x L5Y). We believe the good profitability, comments regarding how the challenging project in Sweden was completed, and the solid cash flow could be interpreted positively by the market. There is a conference call at 08:30 CET, link: https://ir.financialhearings.com/green-landscaping-group-q3-report-2024.
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