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Cavotec: CEO Mikael Norin to leave during 2022 - ABG

Desire to return home to the US from Switzerland…
…and will leave when a successor is in place
Unfortunate timing in our view

An instrumental part of Cavotec’s improvements last 5 yrs
Cavotec’s CEO Mikael Norin has decided to leave the company during 2022 due to his desire to return home to the US with his family. The company has initiated the search for a replacement and Mr. Norin is expected to leave when a successor is in place. Mr. Norin has been the CEO of Cavotec for almost five years, after being appointed in mid-2017. During his tenure, we argue that Mr. Norin was instrumental in significantly improving Cavotec’s operating model by reducing cost, streamlining processes, reshaping the portfolio and improving execution. In addition, we believe that Cavotec was on track towards reaching its 10-12% adj. EBIT margin target during 2020 before the pandemic hit.
We fear this raises the execution risk of the new strategy
Although significant improvements have already been made, in our view, we find the timing unfortunate as the company is still managing supply chain challenges and hesitant customer activity (notable improvement lately though). In addition, we believe that Mr. Norin was one of the architects behind the ‘New Cavotec’s growth strategy related to profitable growth within areas such as port electrification and automated mooring. Thus, we believe this raises the execution risk somewhat and the level of responsibility among the remaining members of the management team.
Improved order momentum, deliveries mainly in 2023
The stock is down 14% YTD, vs. the OMXSGI -10% and is trading at 9-5x EV/EBIT ‘22e-‘23e (ABGSCe). However, we believe that today’s announcement could impact near-term sentiment negatively due to the reasons mentioned above. Looking at the business, we understand that market activity has continued to improve, but that Cavotec is experiencing prolonged delivery times and cost inflation due to supply chain constraints. Thus, we believe there is a risk
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