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Third party research

Green Landscaping Group - Market headwinds weigh on margins - ABG

Green Landscaping Group

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

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Q2 details
Lower sales and earnings vs. consensus. Sales came in at SEK 1,610m (-4% vs. ABGSCe, -8% vs. cons), -3% y-o-y of which -9% organically (ABGSCe -2%, cons -1%, -18% Q1'25), driven by the effects of the mild winter on the quarter in Sweden and Norway, but with a gradually improving activity level throughout the quarter. Adj. EBITA decreased -4% y-o-y to SEK 145m (-10% vs. ABGSCe, -13% vs. cons), for a margin of 9.0% (ABGSCe 9.6%, cons 3.8%, 9.1% Q2'24) driven by weak margins in Norway. FCF was weak, at SEK -142m (101m in Q1), while gearing was higher q-o-q at 3.3x (3.2x) and 2.9x pro forma (2.5x).

Estimate changes and outlook
Looking ahead, management says that the market has moved sideways in recent quarters and there is still uncertainty regarding how long the market will stay weak. We expect consensus to lower '25e-'27e EBITA by 3-5% as the uncertainty in the market remains.

Final thoughts
A report below expectations with a weak market and effects of the mild winter on the beginning of the quarter. The share has underperformed the broader market into numbers (-4% L1M vs. OMXSGI 4%) and is trading at 12-8x EBITA '25e-'27e (~12x L5Y). We believe the market will focus on the weak market in Norway and Sweden. There is a conference call at 14:00 CET (link)
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