* Lower earnings due to FX and inventory adjustments * Q4 deviation and FX to negatively impact ABGSCe FY'26 EBIT * Share -17% into numbers, trades at 16-11x EBIT '26e-'27e (pre-Q4)
ANNONS
Q4 details
Note that our latest published estimates are from October, while the USD/SEK has moved considerably since then. Sales were 26% below our expectations, with sales of SEK 57m declining 22% y-o-y organically (ABGSCe +7%). This was driven by a 43% decline in aftermarket sales (ABG -28% y-o-y), while system sales grew 6% y-o-y (ABG +58%). AM share of sales was 61% (ABG 57%). According to the CEO, the negative inventory adjustment effect on AM sales in the quarter was -10m, and that inventory levels in the beginning of 2026 at the distributors are "better balanced", while the installed base grew 10% y-o-y in FY'25. EBIT declined 79% y-o-y (ABG -61% y-o-y), as the margin came in at 12% (ABG 17%, 41% Q4'24) due to FX headwinds, lower overall volumes and a lower share of AM sales. Free cash flow of -8m was soft (+14m last year) due to late deliveries in Q4'25, with payments to be made in H1'26. The FY'25 EPS was SEK 3.08 while the dividend was SEK 2.4 (ABG 6.0), vs. 5.35 last year.
Outlook and estimate changes
CTT will not yet reinstate its usual revenue guidance for the upcoming quarter. However, the CEO expects higher sales, in USD terms, in Q1'26 vs. Q4'25, driven by more OEM deliveries and higher AM sales, but with low-to-no VIP deliveries in H1'26. For FY'26, the outlook is for "significantly higher volumes from OEMs and improvement in our AM business" while FX movements remain a key uncertainty. Finally, the CEO expects higher volumes and cost control to "gradually drive the margin upwards to 25% or above" (vs. ABGSCe ~30% '26e-'27e). All other assumptions intact, the Q4 deviation on EBIT and our impression of the Q1'26 guidance vs. ABGSCe would mechanically lower our FY'26e EBIT by ~10%. In addition, using current FX rates vs. our latest published note, we note that the USD/SEK would lower sales by ~5%, with a greater impact on EBIT (which could have a 2-3x impact on EBIT vs. sales).
Final thoughts
A soft end to the year, which CTT also guided for back in October. We find it encouraging to hear that inventories are balanced and that management now expects OEM deliveries to closer mirror the recent increase in aircraft production rates, even though the usual quarterly guidance was not yet reinstated. The share has returned -17% L1M, below the broader market (OMXSGI +4%), and trades at (pre-Q4 estimates) 16-11x EBIT '26e-'27e (20x L10Y).
