Polygiene - Reason to be optimistic for 2021
Stays Fresh is recovering Revisions made on ViralOff and FX headwind DCF valuation range SEK 30-48 (30-49) Q4: Lower GM, FX and integration fees behind EBIT loss Polygiene reported Q4 net sales as pre-announced at SEK 26. 6m (+40% y-o-y). EBIT was SEK -2. 4m (-2.
2m), adj. EBIT was SEK 0. 2m, as Polygiene had M&A related fees of SEK 2.
6m in Q4. We expected adj. EBIT of SEK 2.
5m, and the deviation was mainly explained by a lower gross margin caused by higher freight costs, as well as a higher FX impact. Operationally, we saw a recovery for Stays Fresh, which was up 3% y-o-y in contrast to a decline of almost 20% for the first nine months of 2020. The business area is benefitting from fewer COVID-19 restrictions, as its customers are preparing for the re-opening by producing apparel for their spring collections.
Odor Crunch is also gaining momentum from a low base, and has moved from having a few customers to 23 during 2020. On the other hand, ViralOff saw declining sales q-o-q, whereas we had expected a gradual ramp-up. We think the discrepancy is due to a timing effect, with initial sales of face masks having declined while larger signed orders (Milano Colori, Diesel, Takisada, etc.
) have yet to start production. Adj. pro forma EBIT margin of 22%, excl.
synergies An additional 29 customer agreements were reached in Q4, taking the tally for 2020 to roughly 100 new agreements, where half have started to generate revenues. Addmaster also posted a strong Q4, with external sales of SEK 19. 7m for Q4 and SEK 61m for 2020.
The adj. pro forma EBIT margin for 2020 was 22% excluding any synergies. We decrease our sales forecast by 3.
3% for 2021e due to lower expectations for ViralOff (SEK 87m vs. SEK 100m previously) and a weaker USD. For the EBIT margin, we make a minor adjustment to 24.
6% (24. 9%), which results in a 4. 5% decrease in EBIT for ‘21e.
January sales up 70% y-o-y, incl. Addmaster 2021 has started strongly for Polygiene (and Addmaster), with January sales up.
