Continued strong, margin-accretive growth in Bergen

Further lockdowns in China could pose a risk

Increasing non-cyclical customer exposure

>7% EBITA margin reachable in ’23 in a normal market
We hosted Magnus Nilsson, CEO at Elanders, for a presentation at today’s ABGSC Investor Days seminar. Apart from the generally strong underlying demand, Mr. Nilsson put particular emphasis on the recent Bergen acquisition, which saw double-digit growth in Q1, adding that synergies from the acquisition are being realised quicker than expected. Part of Bergen’s growth comes from onboarding new customers, which Mr. Nilsson says it will be able to continue doing throughout ’22 at current capacity. Moreover, Bergen’s growth is margin-accretive for the group (we estimate it has ~10% EBITA margin), which will be one contributing factor for Elanders to reach its target of >7% EBITA margin (5.6% adj. EBITA margin in ‘21). According to the company, the margin target should be met in 2023 given a return to normal market conditions, while our current estimate is 6.7%.

So far no major impact from Chinese lockdowns
Elanders has been mildly affected by Shanghai lockdowns, as it has some presence in the city, but it has no exposure to Beijing. However, the company warns that there is a risk to Electronics customers’ supply chains in case of longer (>2 month) lockdowns in the cities Chongqing or Chengdu. Worth noting, however, is that decreasing consumption in China because of lockdowns does not substantially affect Elanders since its service is mostly related to products that are then exported to other markets (we estimate China is 4.5% of sales after the Bergen acquisition, it was 5.2% in ’21).

A less cyclical company today, but still looking to improve
As we have previously highlighted, Elanders has managed to decrease its reliance on highly cyclical automotive and industrial customers, instead growing in non-cyclical segments such as Fashion & Lifestyle and Healthcare & Life Science. While the comp
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