Q2: organic decline of -26%, EBIT SEK -3m

Higher R&D expenses lower our estimates

Consumables set for a quicker rebound

Instrument sales hurt; Consumables held up better
Q2 sales were SEK 90.6m (-25.8% organic), in line with our forecasts. Instruments’ sales were SEK 23.6m, beating our SEK 18.5m estimate driven by more units sold (564) at a higher ASP. As expected, its own consumable sales held up better, with a decline of 18% y-o-y. Further down the P&L, the gross margin contracted 2.6pp, to 40.8%, due to low capacity utilisation, but was supported by SEK 1m from government grants. Operating expenses were down slightly q-o-q, mainly from lower sales and marketing activities, while investments in R&D and quality assurance continued. EBIT was SEK -3m. Even so, cash flow was good, supported by a release of NWC.

Constant investments show confidence amid the pandemic
In our view, Boule managed the lower demand in Q2 well, securing good liquidity while at the same time not stopping its longer-term internal projects. We think this shows that management is confident in a rather quick recovery in demand, also supported by its comments about a significantly higher order intake at the end of the quarter. We lower our adj. EBIT by 33% for 2020e, however. This stems from us modelling a slightly slower recovery for Instruments, higher R&D expenses and negative FX translation. The write-down of biosurfit (SEK 36.6m) burdens ‘20e net profit. Our negative EBIT revisions for ’21e are driven by a follow-through in R&D investments, which we think will continue for the coming year.

Organic growth to rebound in ’21e, Consumables lead the way
Overall, we now forecast negative organic growth of ~11% in 2020e, bouncing back to +16% in ‘21e. We find good reasons for Consumables’ sales to recover quickly, while we argue it could take longer for Instruments to reach 2019 levels. On our revised estimates, Boule is trading at a ‘21e EV/EBIT of c.18x.

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