Studsvik reported Q4 sales of SEK 252m (+10% y-o-y), in line with ABGSCe. The sales growth mainly stemmed from the Fuel & Materials Technology (F&MT) and Waste Management (WM) business areas, whereas Decommissioning & Radiation Protection Services (D&RPS) showed a y-o-y decline of 3% following the transitioning from reactor operations to dismantling mode in Germany. EBIT was SEK 38.4m (9.8m), or SEK 18.4m (9.8m) when adjusted for the renegotiated license agreement in WM. That was roughly half of what we expected with lower adj. EBIT versus ABGSCe in all segments except F&MT. The deviation was mainly driven by D&RPS and Scandpower. In D&RPS, adj. EBIT turned negative due to the headwind from a change of operations, and Scandpower had lower license sales than we forecasted. Studsvik has proposed a dividend of SEK 2 per share.
Negative revision stems from Decommissioning
We did not anticipate the struggles seen in Germany, although we did forecast a y-o-y contraction of the EBIT margin in our previous update. However, the deviation in Q4 leads us to lower our outlook for the D&RPS business area going into 2022. That is partly offset by higher expectations for F&MT, but we lower our sales estimates by 2.3%-1.4% overall for ‘22e-‘23e. We also cut our EBIT estimates by 4.7% and 1.6% for ’22e-‘23e. We think Scandpower should be able to achieve a higher EBIT margin in the long term, based on the nature of the business, but it might take a little longer than we previously thought.
Aims for 6% organic sales growth and a 12% EBIT margin
Studsvik announced new financial targets in conjunction with the report and now aims for average org. sales growth of 6% (10%) and an EBIT margin of 12% (8%). We think this is a rational change as Studsvik enters a more mature state in D&RPS and has outperformed its previous margin target this year.
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