Oboya Horticulture Industries
Oboya Horticulture - Clearing the weeds (ABG Sundal Collier)
2019-08-13 08:51
Q2 sales down y-o-y, gross margin lower than expected
Combipot divestment to lower sales and opex
Currently trading at P/B 0.8x
Q2 sales and gross margin lowers profitOboya reported Q2 sales of SEK 128.2m (ABGSCe SEK 151.2m), a 12% decline y-o-y, and EBIT of SEK 0.7m (ABGSCe SEK 3.5m). Gross profit came in at SEK 31.3m (ABGSCe SEK 40.8m) resulting in a gross margin of 24.4% (ABGSCe 27.0%). The lower sales volume y-o-y was partly driven by the Combipot divestment, which is expected to have lowered sales in the quarter by SEK -5m, and other Danish operations showing lower sales than expected. The miss was also due in part to the company’s increased focus on profitability. Oboya expects the divestment of Combipot to decrease its sales by SEK 20m p.a. and its gross profit by SEK 10m. Combipot had relatively high opex, however, making it less profitable on EBIT level. We find this divestment positive despite its effect on sales and gross profit, as Oboya can streamline its operations and focus on profitability.
Opex streamlining showing positive results
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