• Adj. EBITA SEK 180m (-16% vs. ABGSCe 214m)
• Consensus full-year EBITA should come down by mid-to-high single digits
• 11x 2024e EBITA on pre-Q1 estimates

Q1 outcome

Sales came in at SEK 3,268m (+1% vs. ABGSCe SEK 3,238m, +4% vs. FactSet cons. 3,143m), and adj. EBITA was SEK 180m (-16% vs. ABGSCe 214m, -10% vs. cons 199m), for a margin of 5.5% (ABGSCe 6.6%, cons 6.3%), with acquisition-related NRI of -25m (ABGSCe -20m). Net profit was SEK 8m (-76% vs. ABGSCe 34m, -71% vs. cons 28m). On top line, Fashion and Health Care missed our expectations, while the other segments beat our estimates. The EBITA miss was driven by a weaker margin in Supply Chain Solutions (5.4% vs. ABGSCe 7.3%). According to Elanders, the lower demand in mainly Fashion in combination with overcapacity put pressure on profitability. Customers with exposure to durable and consumable goods are facing weak demand. Meanwhile, Print & Packaging Solutions had another strong quarter, with an EBITA of SEK 51m (+52% vs. ABGSCe). On another positive note, OPCF was strong at SEK 641m (512m), partly driven by reduced working capital. Lease-adj. proforma net debt/EBITDA of 3.2x was in line with our anticipated development.

Estimate changes

We expect consensus adj. EBITA to come down by mid-to-high single digits for 2024e. The company expects continued challenging demand in Q2, but still anticipates improvements in H2, driven by both existing and new customers. We think the company is well-positioned for the eventual demand recovery, and we are optimistic about the possibilities to fill overcapacity. This, together with the recent acquisitions, should lead to margin expansion.

Valuation and conference call details

On our pre-Q1 estimates, the stock is trading at 11x 2024e EBITA, and offers meaningful cumulative lease adj. FCF yield over the coming years. In our view, the stock should trade down ~5% on the announcement. Elanders will host a conference call at 15:00 CET. Registration details and the presentation material