Q3: Low VHP volumes and pressured Medical margins
Nolato reported Q3 sales of SEK 2,626m (+4% vs. ABGSCe SEK 2,537m, +3% vs. FactSet cons. SEK 2,557m). At group level, organic growth was -24% (ABGSCe -26%), burdened by Integrated at -60%, while Medical remained solid at +13% (~50/50 price and volumes). Margins remained pressured due to several factors, and looking at Medical Solutions in particular we saw: 1) a poor sales mix due to de-stocking effects in the high-margin in vitro diagnostics (IVD) segment, 2) declining capacity utilisation, and 3) continued lag in moving on high input costs. This resulted in an EBITA of SEK 214m (-7% vs. ABGSCe SEK 230m, -8% vs. cons. SEK 232m), for a margin of 8.1% (ABGSCe 9.1%, cons 9.1%). On a bright note, the cash flow was strong (~100% FCF conversion), following several quarters where NWC build-up weighed on FCF.
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