Cost cuts bearing fruit, and positive signs on new orders
Ferronordic reported a Q3 adj. EBIT of SEK 32m, notably above ABGSCe and FactSet consensus at SEK 10m and SEK 22m, respectively, largely driven by improved profitability in Germany thanks to continued cost cuts. The German market remains weak, but there are positive signs as the company flags for increasing orders. Net debt came up to SEK 1,792m (compared to 1,671m in Q2), for a ND/equity of 121%. We are optimistic on Ferronordic's US expansion opportunities in the long-term, but in the near-term we argue that the focus needs to be on first decreasing leverage. The share is trading at 12-9x '25e-'26e EV/EBIT, while our distributor peer group trades at 14-13x.
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