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Ferronordic: Net debt down sequentially, but still high - ABG

Ferronordic

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

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Soft Q1 earnings driven by gross margin pressure in the US
Weaker USD weighs on estimates, given US-heavy operations
Net debt down sequentially, but still at high levels


Soft Q1 earnings due to US gross margin pressure

Ferronordic reported Q1 net sales of SEK 1,206m, up 3% y-o-y, and EBIT of SEK 13m (FactSet consensus SEK 37m), for a margin of 1.1% (1.8% in Q1'24). The y-o-y decline is mainly explained by gross margin pressure in the US, where the product mix was suboptimal. However, we highlight that these mix effects can be quite lumpy from quarter to quarter, and as such we see this as a temporary slump rather than a structural margin decline. Moreover, the company managed a sizeable working capital release, leading to net debt coming down to SEK 1,826m, down from SEK 1,978m in Q4'24.
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