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Third party research

BHG: Positive start to Q3 - ABG

BHG Group

This is a third party research report and does not necessarily reflect our views or values

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Q2 details
Net sales SEK 3,551m (6% vs ABGSC 3,348m and 9% vs cons 3,270m), Gross profit SEK 945m (% vs cons 0m), Adj. EBIT SEK 278m (-2% vs ABGSC 285m and 3% vs cons 270m), EBIT SEK 262m (-3% vs ABGSC 270m and 3% vs cons 253m), Net profit SEK 199.90 (-1% vs ABGSC 203m and 6% vs cons 188m). Good beat on top-line and a slight beat vs. cons. on adj. EBIT. Margin on the weaker side in Home Furnishing, where the adj. EBIT margin declined by 4pp. y-o-y to 5.2% leading to the segment’s adj. EBIT coming in 25% below our expectations.

Margin compression in Home Furnishing
BHG saw a continuously high demand in both segments during the second quarter, with the DIY segment continuing to stand out. After the strong performance of other DIY players in Q2 the BHG’s DIY segment posted a strong an adj. EBIT beat of 17% vs. our expectations. The Home Furnishing side, on the other hand, came in 25% below our expectations on adj. EBIT. The adj. EBIT margin declined by c. 4pp. y-o-y due to supply chain issues, raw material prices and increasing customer acquisition costs. Actions are said to be in place to offset these negative margin effects going forward.

Strong performance in the beginning of Q3
Despite the margin issues in Home Furnishing, the report was a slight beat on cons. headline numbers. The company states that Q3 has started strongly, although freight costs are expected to remain high. We expect 2021 consensus estimates to be positively revised by low-single-digits.
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