• Q2: -9% org. sales growth, -4% adj. EBITA growth, weak cash flow
• '25e-'27e adj. EBITA up 0-1%; 7% CAGR '24-'27e
• 10-7x EBITA '25e-'27e, 10-17% FCF yields

The mild winter still impacted

Green Landscaping (GLG) delivered a soft Q2 with sales 4% and 8% below ABGSCe/FactSet consensus. Organic sales were -9% (ABGSCe -2%, cons. -1%, Q1'25 -18%), as the mild winter caused low activity in April. Adj. EBITA fell 4% y-o-y, 13% below cons., as Sweden (5.6% margin) had a slow start, but margins held up relatively well y-o-y (-0.1pp), indicating margin expansion is on plan, which management says will have full effect at YE'25. Rest of Europe performed best (19.5%) with Finland as the main positive driver while Norway, like Sweden, had a slow start and a soft market weighing on margins. As the soft market remains, we expect 1-4% org. growth, improving margins and easier comps to drive 13% adj. EBITA growth in Q3, and 13-30% in Q4-Q1e. Cash flow was soft, yielding pro forma gearing of 2.9x. We think GLG's guidance of acquiring SEK 80m-100m in EBITA '25, usually at a ~10% margin, could potentially raise '26e-'27e EBITA by 20-50%.

M&A to drive earnings

We slightly raise '25e-'27e adj. EBITA by 0-1%, mainly on adding announced M&A, and expect -5% org. sales growth in '25. Gradually, improving margins and M&A should support 3% adj. EBITA growth in '25e (5% '24) and a 7% CAGR '24-'27e. However, we continue to believe that GLG's M&A pipeline has the potential to support earnings growth above 10% p.a. over time (45% CAGR '19-'24).

Good M&A pace, double-digit growth, higher margins

We still believe GLG is well-placed to grow organically over time and to further lift margins given its exposure to steadily growing markets and high exposure to public customers. M&A headroom also remains. For '24-'27e, we expect GLG to deliver sales- and profitability growth and FCF fairly in line with peers, while the share (10-7x EBITA '25e-'27e, 10-17% FCF yields) is trading slightly below p