Sales were SEK 18.0m (-8% vs. ABGSCe 19.4m), gross profit was SEK 1.4m (+10% vs. ABGSCe 1.3m), for a gross margin of 7.7% (ABGSCe 6.5%) and EBIT was SEK -11.8m (ABGSCe -9.8m). Functional Wood had a difficult quarter, which was what we expected (sales SEK 10.5m, -2% vs. ABGSCe 10.7m), following price increases on customers to move on raw material cost hikes. In Non-Woven and Technical Textiles (NWT), we saw sales from the Duni contract start ramping up (SEK 0.8m, 0.2m in Q3’21, ABGSCe 1.0m), as Duni started a marketing campaign of their biobased product offering in January 2022. Also, in GCM, sales of OrganoTex more than doubled during the quarter.
Estimate changes and outlook
We do not expect any major estimate revisions on the isolated Q4 numbers. In terms of outlook, management says they only expect marginal fixed cost increases in 2022, which should support margins. They also remain optimistic on new product rollouts.
Final thoughts and valuation
The share is down 41% YTD following delayed NWT contract timelines. Now it trades at 2.5x ’22e EV/sales on our pre-Q4 estimates, which goes down to 1.8x for ’23e. The focus in the near-term will be on whether any new contracts are announced within the non-woven segment.
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