Q2 in line with expectations, estimates intact
Strong M&A pipeline and balance sheet
8x EV/EBIT, attractive LT earnings growth potential
Price increases driving organic growth of 11%
Q2 was fairly line with our estimates on sales and 3% below on adj. EBIT due to a minor margin miss. The Products & Solutions segment performed well, with org. sales growth of 15% (14% price and 1% volume), with its Bitumen, green infrastrucuture and synthetic rubber business showing strong growth while the prefabricated business was flat y-o-y, albeit at a high level. The Installation Services (IS) segment also showed good organic growth of 5%, although this was solely driven by price increases contributing 7%. The margin in IS, however, was sluggish at 3.1%, down 1.8 pp y-o-y (ABGSCe + 0.1 pp), explaining the small adj. EBIT miss (-3% vs. our ABGSCe). Management says the sluggish margin development is due to fierce price pressure in a fragmented market making it difficult to compensate for cost inflation.
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