Handicare Group
Handicare - Moving on up (ABG Sundal Collier)
2020-07-20 11:14
Q2 organic decline -32%, adj. EBITA EUR 0.9m
‘20e EBIT up 16%
Demand is recovering for Accessibility
Short- and long-term cost reductions taking effectHandicare delivered Q2 sales of EUR 39m for an organic decline of -31.6%, roughly in line with ABGSCe at EUR 38.1m. Accessibility sales declined by -34% and Patient Handling by -30%. Adj. EBITA of EUR 0.9m (incl. EUR 1.6m in governmental grants) was surprisingly good (ABGSCe –EUR 7m) despite the volume drop. Operating expenses amounted to EUR –12.9m, a y-o-y decline of EUR -5.6m or 30%, so clearly lower than we had anticipated. This was mainly driven by short-term cost reduction activities and the Lift up Program. Overall, the activities for the first phase of the Program seem to have had good traction already, and the company states that it is ahead of the plan (approx. 90% of the full cost impact already in July).
Lower opex in ‘20e lifts our EBIT estimate by 16%
Furthermore, the company states that it is seeing improving trends towards the end of Q2’20 with good order book momentum into July. As such, it expects sales to improve gradually. Group sales declined by -25% in June, with solid improvements in the countries that saw the strictest lockdowns. Additionally, and in light of the seemingly good start of the Lift up Program, we have raised our ‘20e EBIT by 16%. This is derived from lower opex in both Accessibility and Patient Handling as of this year. We leave our ‘21e-‘22e estimates largely unchanged, reflecting good improvements in the coming years.
Handicare now primed to meet its financial targets
We are encouraged by the progress that the company is currently making, with strong developments seen in the Lift up Program. Moreover, Handicare’s cash flow generating ability continues to impress, and gearing sits at 2.2x ND/EBITDA (3.2x last year). As demand is slowly returning (Accessibility sales down -23% in June vs. -40% in April-May), the firm seems set to reach its financial goals in the coming years.
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