• Q2e sales of SEK 55m, +1.8% y-o-y
• Continued softness in lightweight, Recycling uptrend to continue
• Trading at 1.7x-1.2x EV/Sales

Q2 expectations

We expect Q2 sales of SEK 55m, +2% y-o-y and +11% q-o-q, after three quarters of negative growth. We anticipate that the slow lightweight sales will persist into Q2 due to continued weak end-markets in PET foam, but for the development to be partly offset by the strong momentum in the Recycling segment. Reactive Recycling grew by +50% in Q1'25 (albeit from low levels), and we expect this positive trend to continue into Q2 and to continue to contribute to growth in FY'25e. For Masterbatch, we expect a stable development and anticipate sales of SEK 32m for the quarter (+1.8% y-o-y). On EBIT, we expect the company to near break-even (est. SEK -0.2m).

Estimate changes and outlook

We only fine-tune our '25e-'27e sales, resulting in a '25e-'27e EBIT increase of SEK 2m. We believe that Nexam's broad product portfolio will compensate for the weaker demand in the PET foam market and find the company's niche in Reactive Recycling attractive. During the quarter, Nexam announced that it had secured its largest customer by volume in the Recycling segment, which has now begun full-scale commercial production and is purchasing additives accordingly.

Valuation

We are impressed by Nexam's cost-cutting journey and continue to find the long-term potential for Nexam's additives interesting. We find the company's niche in Reactive Recycling attractive and believe it represents a good growth opportunity for the company, driven by both cost-saving incentives and environmentally friendly solutions. The share has returned +38% in the L3M (vs. peers at 22%, OMXSALLS at 7%) and is currently trading at 1.7x-1.2x '25e-'27e EV/Sales.