Green Landscaping Group - When Norway plays rough, margins get tough
27 oktober, 07:00
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Norway was worse than fearedGreen Landscaping delivered a soft Q3 with adj. EBITA 4% and 5% below ABGSCe/FactSet consensus. Organic sales were -3% (ABGSCe -2%, cons. -4%, Q2'25 -9%), as competition is still high in Sweden and Norway. Adj. EBITA was flat y-o-y, 5% below cons., as Norway (2.5% margin) focused on volumes rather than margin in its tough market environment. There was also a SEK 21m project write-down in Norway weighing on margins (5.9% adj. EBITA margin). Rest of Europe was strong (22.7%) with Finland and the newly acquired companies as the main drivers. As the soft market remains, we expect -2% org. growth, and declining margins in Q4. However, we expect '26 to be a turning point for Sweden. Cash flow was soft, yielding pro forma gearing of 3.0x. GLG's guidance of acquiring SEK 80m-100m in EBITA '25 remains. This is usually done at a ~10% margin, which could potentially raise '26e-'27e EBITA by 5-35%. M&A to drive earningsWe lower '25e-'27e adj. EBITA by 5-2%, mainly on the low margins in Norway that we think will take some time to rebound if the market gets used to a lower level. We expect '25 to be weak for Green, but beyond that, we think gradually improving margins and M&A should support 15% adj. EBITA growth in '26e (-11% '25e) and a 3% CAGR '24-'27e. 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 markets over timeWe believe GLG is well-placed to grow organically over time and to lift margins given its exposure to steadily growing markets and high exposure to public customers. For '24-'27e, we expect GLG to deliver sales growth, margins and adj. ROCE fairly in line with peers, while the share (11-7x EBITA '25e-'27e, 9-19% FCF yields) is trading slightly below peers on '25e-'27e EBITA. |
Läsaren av innehållet kan anta att ABG Sundal Collier har erhållit eller kommer att erhålla betalning för utförandet av finansiella företagstjänster från bolaget. Ersättningen är på förhand avtalad och är inte beroende av innehållet.
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Green Landscaping Group - When Norway plays rough, margins get tough
27 oktober, 07:00
|
Norway was worse than fearedGreen Landscaping delivered a soft Q3 with adj. EBITA 4% and 5% below ABGSCe/FactSet consensus. Organic sales were -3% (ABGSCe -2%, cons. -4%, Q2'25 -9%), as competition is still high in Sweden and Norway. Adj. EBITA was flat y-o-y, 5% below cons., as Norway (2.5% margin) focused on volumes rather than margin in its tough market environment. There was also a SEK 21m project write-down in Norway weighing on margins (5.9% adj. EBITA margin). Rest of Europe was strong (22.7%) with Finland and the newly acquired companies as the main drivers. As the soft market remains, we expect -2% org. growth, and declining margins in Q4. However, we expect '26 to be a turning point for Sweden. Cash flow was soft, yielding pro forma gearing of 3.0x. GLG's guidance of acquiring SEK 80m-100m in EBITA '25 remains. This is usually done at a ~10% margin, which could potentially raise '26e-'27e EBITA by 5-35%. M&A to drive earningsWe lower '25e-'27e adj. EBITA by 5-2%, mainly on the low margins in Norway that we think will take some time to rebound if the market gets used to a lower level. We expect '25 to be weak for Green, but beyond that, we think gradually improving margins and M&A should support 15% adj. EBITA growth in '26e (-11% '25e) and a 3% CAGR '24-'27e. 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 markets over timeWe believe GLG is well-placed to grow organically over time and to lift margins given its exposure to steadily growing markets and high exposure to public customers. For '24-'27e, we expect GLG to deliver sales growth, margins and adj. ROCE fairly in line with peers, while the share (11-7x EBITA '25e-'27e, 9-19% FCF yields) is trading slightly below peers on '25e-'27e EBITA. |
Läsaren av innehållet kan anta att ABG Sundal Collier har erhållit eller kommer att erhålla betalning för utförandet av finansiella företagstjänster från bolaget. Ersättningen är på förhand avtalad och är inte beroende av innehållet.
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