Svedbergs Group: Still a challenging market for the Svedbergs brand - Nordea

Svedbergs Group posted a solid set of Q2 2024 numbers, with sales coming in-line with our estimates (no consensus),with organic growth of -1.6% (-1% expected) and gross profit coming in 1% below our estimates. The gross margin of 44.2% was -0.6pp below of our forecast, and up 1.9pp y/y. Adjusted EBITA came in at SEK 76m and 5% below our estimates (SEK 80m), explained mainly by weaker delivery in Svedbergs, while all other estimates beat our estimates. Cash flow from operations (after changes in working capital) came in at SEK 119m, up vs SEK 106m same period last year, supported by a WC release of SEK 56m.The company reiterated its long-term financial targets of reaching an average net sales growth of at least 10% over a business cycle, to be achieved both through organic growth and strategic acquisitions. It also aims to achieve an adjusted EBITA margin exceeding 15% while distribute up to 50% of the year´s profit after tax in dividends. Conclusion: Despite the company missing our estimates on adj. EBITA, we believe the lower performance in Svedbergs to already be understood by the market, and expect a neutral to slightly positive share price reaction in the range on these numbers today.