Svedbergs - No drama in Q4, exciting 2021 ahead

Q4 report showed strong demand Margins pressured by external factors Value range increased to SEK 28-64 (19-49) Showing strong demand Svedbergs showed continuous solid demand in its Q4 report. Group sales grew by 15% (4% M&A), with especially strong demand in Sweden (+10% y-o-y) and Finland (+34% y-o-y). On a brand basis, Svedbergs grew by 13% to sales of SEK 133m and Macro Design continued on its robust path throughout the year, posting sales growth of 18% to SEK 57m. While not having included the one month of Cassoe in our estimates yet, the report came in well above our expectations on sales, where we estimated a top line of SEK 166m vs.

organic sales (excluding Cassoe addition) of c. 179m. Margins pressured by FX, raw mats and freight cost While sales came in better than our expectations, the margin was on the soft side.

Adj. EBITA was SEK 20. 4m, in line with our expectations, but excluding the Casooe addition of SEK 1.

2m, it was c. 4% below our expectations. We believe the main reasons for the margin pressure likely are 1) FX - with the recent weakness in the NOK, and production in SEK from Dalstorp and Laholm, margins naturally get pressured; 2) raw material cost and 3) freight costs, as many other companies have seen.

Hence, in our view, these items pose little to worry about, given that these external effects can be counteracted by price increases over time - especially with a new product launch coming out during early 2021. We understand the number of SKUs per product in said product launch have been reduced significantly, aiding margins going forward. However, we take a cautious stance on margins going in to 2021 as mitigation of external effects can take a few quarters.

Value range raised to SEK 28-64 on Cassoe addition We make minor adjustments to our underlying estimates on the back of the Q4 report. However, in total, we raise our 2022 estimates by 15% for sales and 21% for EBIT due to the addition of Cassoe. Hence, we raise our value rang.