Midsona’s Q1 results were soft, as anticipated on the back of the current food retail climate. Sales declined by 4% organically to SEK 972m. This was 3% below our expectations at SEK 1,001m. Adj. EBITDA came in ahead of our expectations at SEK 62m, 14% above our SEK 55m estimate. We had anticipated the current climate to hit harder in the short-term, but the company states that the bounce-back in March was very strong after the initial uncertainties. Price hikes are stated to have been supporting the gross margin by 2.2pp during the quarter, with more to come.
Cost saving program initiated
On the back of the declining profitability during the last year, the company now initiates a cost saving program, mainly achieved by terminating temporary contracts. The program is said to save SEK 40m on an annual basis, which could add roughly 10% to a more normalised EBITDA level on a gross basis.
Cons. estimates likely up some low-to-mid single digits
On the back of the Q1 report, we could see cons. estimates coming up some low-to-mid single digits. Insecurities remain regarding inflation in the short-term, but the report marks a step in the right direction for the return to historical profitability.
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