Swedencare continued its strong growth journey in its Q3 report, reporting a sales growth of 218% and an organic growth of -1% for sales of SEK 221m, which was 6% below our expectations and -3% vs. consensus. The company has seen significant delays in deliveries from Q3 to Q4 due to 1) exhibition delays, which usually present large orders and 2) a covid outbreak said to have negatively affected top line by USD 1m and USD 0.3m on EBIT. 3) a SEK 10m delay from Q3 to Q4 due to supplier issues. Current cons. estimates point to a SEK ~30m q-o-q growth from Q3 to Q4. Hence, the abovementioned delays should support Q4 estimates heavily. On profitability, adj. EBITDA came in at SEK 57m. This was 5% below our expectations and 6% below cons, with margins holding up nicely.
Q3 details
Swedencare (Sponsored) - Q2'21 report: Net sales SEK 221m (-6% vs ABGSC 236m and -3% vs cons 229m), EBITDA SEK 43m (-28% vs ABGSC 60m and -22% vs cons 55m), Adj. EBIT SEK 57m (3% vs ABGSC 56m and 5% vs cons 55m), EBIT SEK 43m (-22% vs ABGSC 56m and -13% vs cons 49m), Net profit SEK 30m (-29% vs ABGSC 41m and -21% vs cons 38m). -1% organic growth in the quarter due to significant delay in orders from Q3 to Q4. The key number to look at is adj. EBITDA due to heavy FX revaluations and M&A NRIs on EBIT. Adj. EBITDA came in -5% vs. our forecasts and -6% vs. cons.
Positive outlook comments
While the negative organic growth is slightly worrying, the top-line bridge to cons. estimates in Q4 seems to be solid. In the CEO comments, Mr. Lagerberg confidently states that they count on at least 20% organic growth during the coming years. We believe cons. estimates are likely to hold up relatively well on adj. EBITDA on the back of this report, and we would expect cons. to make negative revisions in the low-single digits on adj. EBITDA.
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