Bergs Timber: Strategic transformation continues - SEB

Divestment of the Swedish sawmills is reshaping the group
On 17 June Bergs signed an agreement to divest its Swedish sawmill operations to Vida in order to refocus on its more stable and profitable further processing business and its Baltic sawmill operations. In 2019 the operations to be sold accounted for SEK 1,150m (36%) of sales and SEK 39m (25%) of adjusted EBITDA, corresponding to a margin of 3.4%. The continuing operations had an adjusted EBITDA margin of 5.6%. The balance sheet will strengthen, enabling further growth in the refocused business. While the deal is dependent on regulatory approval, we have assumed it will close as planned on 1 September. In line with the company’s accounting we treat the operations to be sold as discontinued operations until 1 September 2020E.

Strong Q2 improvement amid COVID-19 crisis
Q2 adjusted EBITDA including discontinued operations was SEK 70m, up from SEK 49m in Q2 2019 and SEK 50m in Q1 2020. It was well above our forecast of SEK 40m. The adjusted EBITDA margin of 8.4% jumped from 5.4% in Q2 2019 and 5.8% in Q1 2020.

Adjusted EBIT unchanged in 2020E, but cut 36% in 2021E and 32% in 2022E
Although our adjusted EBIT forecast for 2020 is unchanged, we have cut our forecasts by 36% for 2021 and 32% for 2022 to reflect the planned divestment. Q3 2020E reported EBIT includes a SEK 100m capital gain.

https://research.sebgroup.com/pdf/BergsTimber040820.pdf

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