• EBITA +29% (adj. +49%) vs. our estimate, driven by both segments
• Extrapolate T&D performance, not E&E: adj. EBITA up 16%/7%/6%
• FVR to SEK 50-80; company looks set to reach 9% target in '27e

A strong report across the board

Berner Industrier delivered a strong Q2 report, with orders up 12% y-o-y (3% below our estimate), sales that grew 7% (beating our estimate by the same amount), and a much-improved EBITA margin of 9.0%, or 10.4% if adjusting for acquisition and redundancy costs. This meant EBITA and adj. EBITA beat our expectations by 29% and 49%, respectively. The outperformance vs. our estimate was driven equally by both segments, with E&E delivering a 17.3% margin thanks to completed project deliveries and positive product mix. More importantly, T&D showed a margin of 5.5% (7.2% adjusted), as sales grew 17%, particularly in high-margin areas, with no major one-off deals driving the result.

Estimates up on more positive view of T&D margin

The strong showing in Q2 drives us to raise our '25e-'27e adj. EBITA by 16%/7%/6%, primarily as a result of higher margin assumptions in the T&D segment, where the measures implemented to improve profitability seem to be yielding results more rapidly than we had estimated. We do not extrapolate the strong E&E margin, as this is volatile between quarters.

Company to reach 9% margin target in '27e

We find the developments in the T&D segment encouraging, and our new estimates imply that the company will reach its 9% EBITA margin target in '27e. Leverage came in somewhat lower than we had expected, at 1.3x adj. ND/EBIDTA (0.8x lease adj.), leaving plenty of room for further M&A. The share has performed well over the past three months, returning 28%, and is now trading at a P/E of 17x, but given the progress the company is making, and our significant estimate changes, we raise our fair value range to SEK 50-80 (40-70).