The mild winter continued in Q1
We expect another weak quarter as a result of the mild winter and the lack of snow to remove for GLGs companies, in both Sweden and Norway compared to more favourable winter conditions in 2024. In terms of organic growth, we expect -12% (vs. +8% in Q1'24) due to lower sales in both Sweden (-18%) and Norway (-6%). Previously announced M&A adds 10% to our Q1e sales, less 2% headwinds from FX, leading to sales of SEK 1,342m in Q1e, -3% y-o-y. We forecast adj. EBITA of SEK 59m for Q1, -36% y-o-y, for a margin of 4.4% (6.7% in Q1'24). This is due to a ~5% margin in Sweden and ~8% in Norway, while we estimate that the Rest of Europe is at a negative margin of -2%, as the companies in the region have strong seasonality. Finally, recent M&A lifted YE'24 ND/EBITDA to 2.8x, but solid cash flow (40-70% of EBITA in '25e-'27e, X% of net profit) and higher earnings mean that M&A headroom remains into 2025e-2026e.
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