* Unforeseen organic decline in the UK still above the market
* We cut '27e EBITA by 2%, EPS by 6% on UK weakness...
* ...and our fair value range to SEK 55-73 (57-77)
UK margins weighed on Q3
Q3 EBITA was SEK 83m (+4% y-o-y), for a 13.4% margin (-170bp) on net sales of SEK 616m (+17% y-o-y). Organic growth was -1.5%, while UBC added 17pp to growth at a ~13% EBITA margin. In the UK, EBITA fell SEK 10m y-o-y, as the margin declined 320bp, to 16.2%, on negative FX on purchases, fuel-driven freight and elevated logistics costs, with organic sales -2%, which we still believe represents market share gains with RM&I forecasts at -8% for '26e. Nordics held EBITA flat at SEK 12m despite sales -2% y-o-y on price increases and cost control. Project sales are growing, according to the CEO, who also expects the restructuring cost savings to be gradual from Q4 with a total run-rate saving of SEK 25m.
We cut '27e EBITA by 2% on a softer UK market
We cut '26e/'27e EBITA by 4/2%. The revision relates mostly to a softer UK market that is now visible in Roper Rhodes' growth. The CEO said that the new UK warehouse is now expected to be live from Q1'27, as opposed to Q4'26 previously, which means we have delayed the logistics-related margin recovery. Below the EBITA line, we add restructuring costs for Svedbergs in Q4-Q1 as well, as it was communicated in the quarterly presentation that there was SEK 9m left to be taken in coming quarters, and align with Q3 PPA depreciation, for a '27e EPS revision of -6%.
The share is trading at 12x/9x '26e/'27e EV/EBITA
We trim our fair value range to SEK 55-73 (SEK 57-77) on our estimate revisions. This range corresponds to a 10.6x-14x '27e P/E, the upper half of the company's L5Y trading range of 8x-14x NTM. We align with the upper half due to Svedbergs' now-larger size, better market outlook and strong M&A track record. The current 16x/11x P/E '26e/'27e can be compared to a Nordic peer median of 11x P/E '27e.