Q4 sales were better than expected, driven by Products & Solutions showing strength, but profitability was slightly soft due to Installation Services still struggling. All in all, sales were SEK 890m (5% vs. ABGSCe), up 16% y-o-y, of which 5% was organic. Adj. EBIT was SEK 59m (-10% vs. ABGSCe), corresponding to a margin of 6.6% (ABGSCe 7.8%). Notably, the Products & Solutions segment was strong, with a margin of 10.9% (8.6%); testament to NWG’s strong pricing power in the waterproofing business. Installation Services was softer than we expected, however, with a margin of -3% (9%), due to component shortages (see earlier notes) and two recently acquired companies not performing in line with expectations. Nevertheless, management expects a turnaround at both entities, where improvement measures have already been implemented.
’22e-’23e EBIT up 8-5% on positive guidance, despite est. miss
During the conference call, management communicated a rather explicit and positive guidance: it expects ’22 margins in the Products & Solutions segment to remain around ’21 peak levels, since cost inflation should be offset by price increases (we previously estimated -2.5pp y-o-y). By contrast, the recovery in the Installation Services segment seems to be delayed until H2’22e, with a full year margin of ~3-4% (our previous estimates reflected a recovery already from Q1’22e). We adjust our estimates to better reflect management’s expectations. Thus, we increase our ’22e-’23e adj. EBIT ests. by 8-5%, despite the estimate miss. There could be further upside to our estimates, based on the management guidance, but we remain somewhat cautious due to low visibility.
Trading at ~11x ’22e EV/EBIT; M&A could add to estimates
The share is down 21% YTD and trades at 11x ’22e EV/EBIT on our updated estimates.
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