Bergs Timber - Continues to deliver on its growth strategy

Acquires PTPG – strengthen its position in Joinery The acquisition could add ~10% to EBITDA Trading at EV/EBITDA 7x Acquisition of PTPG - almost doubling its Joinery segment Bergs Timber has announced that it will acquire the UK based company PTPG (Performance Timber Products Group) for SEK 140m. The company will be included in Bergs accounts as of yesterday. PTPG is a player within wooden windows and doors, and the acquisition supports Bergs strategy of growing its exposure to value-added wood products. Bergs expects the acquisition to increase sales by SEK 250m per year, and over time contribute with an EBITDA margin in line with Bergs target of 9%.

By using the EBITDA margin target of 9%, the acquisition will increase its EBITDA by ~10% vs. 2020, and almost double EBITDA from its Joinery segment. Bergs also expects the acquisition to positively contribute to EPS in 2021.

Continues to deliver on its new growth strategy The acquisition increases Bergs exposure to more value-added wood products, which have more stable margins over the cycle. Berg’s subsidiary Byko-Lat has supplied PTPG’s products for several years, and the deal could support for further growth opportunities within the Joinery segment. The deal is line with Bergs strategy of growing its Joinery and wood protection segments.

Previously this year, Bergs increased its growth target from 5-10% to 10% (both organically and via M&A). We see the acquisition as positive as Bergs continues to deliver on its new growth strategy. This is the second growth investment announced by Bergs since its strategic update in March.

Note that Bergs aims to invest SEK 500m in ’21-’23 in organic growth i. e. this comes on top of the acquisition of PTPG.

Bergs is trading at a ’21 EV/EBITDA of 7x Bergs is almost a debt-free company, which should enable further growth both organically and through M&A. Bergs is currently trading at ‘21e EV/EBITDA of 7x.