• Q2 report Friday, 18 July at 12:00 CET
• '25e-'27e adj. EBITA up 0-3%; 6% CAGR in '24-'27e
• 10-8x EBITA in '25e-'27e, 9-16% FCF yields

2025's M&A story begins

We expect a stable second quarter. Sweden should start to see brighter quarters ahead as a result of a sizeable loss-making contract being out of the picture, as well as internal efficiency improvements. Conversely, we expect lower volumes in Norway due to increased competition alongside tougher comparables. However, this is offset by the year's first acquisition. In terms of organic growth, we expect -2% (+5% in Q2'24). Previously announced M&A adds 7%, with -3% from FX, leading to sales of SEK 1,680m in Q2e, +1% y-o-y. We forecast adj. EBITA of SEK 162m, +8% y-o-y, for a margin of 9.6% (9.1% in Q2'24), with a ~7% margin in Sweden, ~10% in Norway and 20% in Rest of Europe. Finally, Q1'25 ND/EBITDA at 3.1x, solid cash flow (40-70% of EBITA in '25e-'27e) and higher earnings support GLG's guidance of 8–10 acquisitions per year, usually at a ~10% margin, which could potentially increase '26e-'27e EBITA by 25-50%.

Estimate changes

We increase '25e-'27e EBITA by 0-3% on the new acquisition, but our estimates are held back by the Norwegian market and FX. We now forecast 3% adj. EBITA growth in '25e, which accelerates to 11-5% in '26e-'27e (6% CAGR in '24-'27e) as margins improve from 8.6% in 2024 to 9.4% in '27e.

Appealing M&A story continues

We believe GLG should be in a good position to grow organically over time given its exposure to stable markets and high exposure to public customers (~70%), supported by M&A and a positive margin trajectory (currently at ~9% vs. ~5% in '17-'20). In addition, GLG acts in local markets that — together with the large share of public funding — should leave it fairly insulated from tariff uncertainty. For '24-'27e, we expect GLG to deliver growth, margins, ROCE and FCF in line with peers. The share is currently trading at 10-8x EBITA (12x L5Y) with 9-16% FCF y