Midsona - Soft Q2 but Q3 is looking brighter

Sales -7% vs. ABG -8% vs. cons Adj. EBITDA -22% vs.

ABG -22% vs. cons. We expect negative cons.

revisions of 5-9% Q2 details Net sales SEK 903m (-7% vs ABGSC 973m and -8% vs cons 982m), Gross profit SEK 257m (-7% vs ABGSC 276m, Adj. EBITDA SEK 78m (-22% vs ABGSC 100m), EBITDA SEK 89m (-11% vs ABGSC 100m and -11% vs cons 101m), EPS SEK 0. 37 (-36% vs ABGSC 0.

58. Soft Q2 but June EBITDA showed y-o-y growth Midsona’s Q2 report was softer than our and cons. expectations.

As the company faced tough comps, organic growth came in at -4%, while we expected an organic growth of -1%. Furthermore, M&A additions came in lower than expected, adding 12% to the Q2 growth vs. our expectations of 16%.

This resulted in sales coming in 7% below our expectations. The lower-than-expected sales development resulted in an even larger deviation on adj. EBITDA, which came in 22% below expectations.

Margins have been negatively affected by 1) operational leverage 2) Higher marketing campaign costs (SEK 12m vs. ABGSCe 10m) and 3) supply chain issues. The company states that development improved throughout the quarter, and that the company saw a higher EBITDA than last year in June.

Consensus to come down by mid-to-high single-digits While the performance is showing sequential improvement, the Q2 report alone takes down cons. adj. EBITDA estimates by c.

5%. We could therefore see cons. estimates come down by mid-to-high single digits for 2021e.

Midsona will host a conf. call at 11:00 CEST. Dial-in details: SE: +46 856642703 UK: +44 3333009267 US: +1 6467224903.