Temporary issues isolated to H1, back to normal in H2
Organic development continues to be strong
We are optimistic about the growth prospects in GermanyBack to normal in H2’22e
We hosted Awardit’s CEO Erik Grohman on ABGSC Investor Days. Mr. Grohman highlighted Awardit’s solid history of integrating 10 acquisitions, profitable growth (33% EBITA per share CAGR ’16-’21), and how Q1’22 started off with similar strength: 40% organic sales growth and 13.3% EBITA margin adjusted for one-offs, +2.7pp y-o-y. EBITA in Q1 was SEK 5m vs. ABGSCe SEK 24m, however. Most of the miss came from a temporary loss of revenue from German energy clients. All Awardit’s ~10 energy clients paused all loyalty campaigns in Q1 to handle a significant movement of customers following bankruptcies in the sector. Mr. Grohman said the clients need some time to recalibrate before they resume campaigns, which is expected to happen from Q3’22e. The company has also reassured us that none of its energy clients have gone bankrupt. Therefore, we expect no long-term impact from this event. This event was coupled with two one-off items in Q1, which we think multiplied the negative reaction. MBXP’s strong seasonal effects likely added fuel to the fire as well: it showed a loss in Q1, while we expected a profit. Excluding the issues in Germany, the acquired units performed in line with management expectations, according to Mr. Grohman.
Significant potential in Germany and other parts of Europe
Germany is a fragmented market without any clear full-service provides, which Awardit has shown is an effective model. Mr. Grohman talked about the possibility for Awardit to build a technical platform and integrate it with Prämie’s fulfillment service and compete with the platforms Prämie fulfills for. It can also acquire existing platforms and cut out external suppliers to the platforms to improve margins. Either way, there are many opportunities to scale and achieve synergies in that region.
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