Takeaways from the report
The Q3 report was in line with both our and FactSet consensus estimates. Y-o-y organic growth was 1pp below our estimate of 13%. The M&A contribution was quite strong given that pro forma organic growth was 16%. The company missed on the gross margin by 80bps and 60bps vs. ABGSC and cons. estimates, respectively. This miss is mostly explained by a relocation of inventory in some subsidiaries as products with low turnover and/or profitability were divested. That said, the adj. operating cash flow of SEK ~120m (operating cash flow less interest expenses and added back NRIs) was very strong, and beat our expectations for the fourth time in a row. In our view, this serves as additional evidence that the group's underlying businesses can reliably generate cash.
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