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Publicerat: 2022-05-12 13:02:59

Eurocon - Heading for an impressive 2022 - ABG

Q1 starts off the year at full steam
Positive revisions from profitability surprise
SiteBase is finally contributing to the group
Q1: Net sales +27% y-o-y, EBIT margin of 14.8% (6.6%)
Eurocon reported a strong set of Q1 numbers. Net sales of SEK 87.5m (SEK 68.8m) was up 27% y-o-y and 2% above ABGSCe. The deviation to our estimates stems from a slightly higher net recruitment and higher utilisation/prices towards customers than we had anticipated. EBIT was SEK 12.9m (SEK 4.5m), corresponding to a margin of 14.8% (6.6%) and 20% above ABGSCe. We had expected a strong improvement following the gradual improvement during 2021 but our forecasted EBIT margin of 12.6% was 2.2pp below the actual number. Increased cost control for other opex was a main contributor to the improvement: we think it comes from from the SiteBase product business, which turned a negative EBIT of SEK -0.6m in Q1 2021 into a positive contribution of SEK 0.7m this year. It corresponds to an EBIT margin of 15.6% for that business, meaning it was accretive to the group margin.

Demand is holding up, despite macro uncertainties
Although Q1 profitability was impressive we should keep in mind that the quarter had one more business day than 2021, which is why we are slightly cautious for the remainder of the year when it comes to profitability improvements. With that said, we do raise our estimates on the back of the report, increasing ’22e sales and EBIT by 3% and 12%, respectively. This stems from an increase in forecasted employees, slightly higher prices, and the positive Q1 deviation in profitability. We are encouraged by management’s communication that it sees no indication from its customers about waiting with investment decisions, despite the inflationary environment and the war in Ukraine. We now forecast ’22e sales growth of 17% and think that the continued long-term green investments that Eurocon is exposed to in the northern part of Sweden will lead to a situation where the company can sustain a high l
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