Swedencare continued its triple-digit growth in its Q4 report, reporting a sales growth of 154% and an organic growth of 10% for sales of SEK 255m. This was above cons. expectations at SEK 248m and 6% above our expectations of SEK 241. The organic growth was reassuring, and acquired brands Rx Vitamins and Pet MD brands showed 13% and 21% y-o-y growth rates, respectively, which is not included in organic growth rates until 2022. CDMO Vetio was negatively affected by supply chain constraints, declining 12% during the quarter. For 2022, all volume customers in dermatology are stated to be projecting double-digit increases. The CEO also guides for above 20% organic growth in 2022.
Many moving parts in the margin miss
While top line was strong, the margin was below expectations. Adj. EBITDA came in at SEK 48m for a margin of 19%, 23% below our expectations of SEK 63m. The company has seen negative effects in personnel ramp-up, supply chain issues, raw material prices and front-up marketing campaign due to have pay-off in 2022. Price hikes have come into effect during end of Q4, and the company states that it expects an adj. EBITDA margin of above 25% already in Q1’22 which is reassuring. Adj. EBIT came in at SEK 16m, which was due to the start of PPA amortisations in line with our expectations. Hence, the relevant measures to look at going forward are EBITA & EBITDA.
Cons. estimates likely down mid-single-digits
On the back of the report, we could see underlying negative EBITDA revisions from cons. of mid-single-digits from a lower margin, while top-line assumptions are likely to be resilient. However, given the large M&A addition from NaturVet and Innovet due in H1’22, the estimate changes will naturally be lower given that the addition from these two acquisitions are unlikely to change. The company will host a conf. call at 15:
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