Midsona - Soft start of the year

Sales -5% vs. ABG -5% vs. cons Adj. EBITDA -10% vs ABG We expect negative estimate revisions Soft performance vs.

tough comps Midsona came in with a soft performance after its strong Q4 report, posting sales of SEK 965m and an adj. EBITDA of SEK 94m, which was 5% and 10% below our expectations, respectively. We stress that the comparables were extraordinarily tough from Q1’20 due to the consumer hoardings, which resulted in a negative organic growth of 6%.

In total, sales grew by 2% aided by M&A. On profitability, the tough comps and negative organic growth resulted in a declining adj. EBITDA margin, which came in at 9.

7% (ABGSCe 10. 3%), compared to 11. 3% Q1’20.

All-in-all, the report was softer than our expectations. We suspect that the company has acquired more seasonality in System Frugt, which could be one explanation to the soft result. We further note that the company has been more active on brand marketing efforts than usual, affecting the result by c.

10m. These efforts seldom come with an instant payback and could be seen as a one-off investment. Q1 details Net sales SEK 965m (-5% vs ABGSC 1,012m and -5% vs cons 1,021m), Gross profit SEK 275m (0% vs ABGSC 276m and -5% vs cons 288m), Adj.

EBITDA SEK 94m (-10% vs ABGSC 104m), Adj. EBIT SEK 56m (-12% vs ABGSC 64m and -10% vs cons 62m), EPS SEK 0. 50 (-19% vs ABGSC 0.

62 and -44% vs cons 0. 90). Expect negative cons.

revisions Based on the report alone, FY cons. figures could mechanically come down by c. 2%.

With sales coming in lower than expected, and the marketing initiative working as an offsetting factor, we could see cons. estimates coming down by some mid-single digits on the back of the report.