* A soft end to '25 on earnings
* We cut '26e-'27e adj. EBIT by 7-6%
* Trading at ~7x EV/EBIT on our NTM estimates
Q4: strong orders but pressured margins
Q4 was a weak quarter on adj. EBIT, ~30% below expectations despite a 2% beat on sales and a gross margin of 47.2% vs 46.2% in Q4'24. FX had an impact on Q4 sales of SEK -27m, and we believe that FX headwinds contributed to the net-negative effect on earnings. The adj. EBIT margin amounted to 5.2%, the lowest level since Q4'23. Management alluded that the margin pressure was due to FX, negative scale on operating leverage and elevated administrative expenses. Order bookings increased by 5.5% y-o-y to SEK 251m, which was above our expectations, and was partly driven by a large order of SEK 18m that spilled over from Q3 due to a later seasonal pattern in 2025.
We cut estimates on FX and increased opex
We leave our '26e-'27e organic sales estimates largely unchanged, but updated FX movements lead to sales estimate cuts of ~3% p.a. for '26e-'27e. Moreover, we cut '25e-'27e adj. EBIT by 7-6% on the back of the report. We keep our assumptions that the '26e-'27e GM will be slightly lower than in '25e, as packaging sales should return once the luxury market recovers (management expects this to happen by mid-2026). We believe that Nilörn's profitability will gradually increase as the current investments in e.g. the new Bangladesh factory start to pay off. Our estimates imply an 11% adj. EBIT margin in '28e.
Valuation
Our updated estimates imply that Nilörn is trading at an NTM EV/EBIT of ~7x, which is ~17% below the five-year median for Nilörn and ~25% below peers.