Swedencare - In line with expectations on profitability

Sales -5% vs. ABGSCe -1% vs. cons. Adj.

EBIT -2% vs. ABGSCe +5% vs cons. Expect neutral underlying estimate revisions from cons.

Stellar start of the year Sales came in at SEK 134m, 5% below our expectations and -1% vs. consensus. The demand continues to be strong, and the company grew by 25% organically, a tad below our expectations at ABGSCe 30%.

All-in-all, sales grew by 255% y-o-y with M&A continues to drive the majority of sales growth. On profitability, adj EBIT came in at SEK 36m for a margin of 27%. This was 2% below our expectations at SEK 37m.

the company states that they see some supply chain issues, which is something we here from other companies as well. These orders will come back in Q2 instead. and explains the deviation to our sales estimates.

However, we note that profitability is holding up nicely despite this, showing a stronger operational leverage than our expectations. Q1 details Net sales SEK 134m (-5% vs ABGSC 141m and -1% vs cons 136m), Gross profit SEK 79m (-6% vs ABGSC 84m and -2% vs cons 81m), Adj. EBIT SEK 36m (-2% vs ABGSC 37m and 5% vs cons 34m), EBITDA SEK 36m (-7% vs ABGSC 39m and -1% vs cons 36m), Net profit SEK 26.

74m (-7% vs ABGSC 28. 70m and 11% vs cons 24. 20m).

The company reports a one-off of 0. 9m due to the Holden2 acquisition. We expect neutral underlying cons.

revisions. Mechanically, the report would lower our FY’21 PF estimates less than one percent on adj. EBIT.

One should keep in mind that Q1 is likely to be the smallest quarter of the year, given that Rx will add to the financials from Q2 and onwards. All-in-all, the report should lead to neutral estimate revisions from consensus.