Translation: Original comment published in Finnish on 4/21/2023 at 7:13 am.
Purmo will report its Q1 result on Wednesday morning. We expect the result to be in line with H2’22, which means that net sales and earnings will fall from the comparison period, especially as the demand for radiators decreases. Starting with the Q1 result, Purmo will report based on its new segment structure, where radiators are no longer their own segment, but part of the Climate Product & Systems segment. For the full year, the company’s guidance is adjusted EBITDA being on a similar level (+/- 5%) to 2022 (92.9 MEUR) which we expect to be repeated.
Net sales expected to decrease from the comparison period, but to be at around H2’22 level
Purmo’s demand, especially in radiators, deteriorated clearly during 2022, which resulted in its H1’22 figures being relatively good, but H2’22 figures were weak. We expect that Purmo's Q1 net sales have fallen by good 10% from the comparison period, but to be roughly at the same level as in H2’22. This is in line with the consensus estimate. We estimate the drop from last year to come from the Climate Products & Systems segment, where we expect a 15% drop in net sales, especially driven by radiators.
Earnings down from last year, but slightly up from Q4
The drop in net sales and its negative leverage also depresses Q1 earnings. We expect the adjusted EBITDA to decrease to EUR 19 million (Q122: 29 MEUR) and the margin to 9.2% (Q122: 12.4%). For earnings we expect a decline in both in the Climate Products & Systems segment due to falling net sales and in the Climate Solutions segment due to the very strong H1’22 performance. However, since comparison data for the new segments is only available for last year, seasonal variation is not fully known. Earnings and the margin level are, however, better in our estimates than in Q4’22 and we believe that a positive quarterly trend will continue throughout this year. This is supported by the progress of the company's efficiency program. The company's reported earnings are depressed by the non-recurring costs of the efficiency program, which means there is no reliable consensus estimate available for earnings.
Guidance on flat full year earnings likely to be reiterated
Both Purmo and its peers have reported that the radiator market will continue to be difficult this year as well, and overall, Purmo's target markets are expected to develop negatively this year. According to the company's comments, distributors destocking has eased, but we do not believe that there has been a significant change in the market outlook in Q1. The company has provided no net sales guidance for 2023 (we expect a 5% drop) but has said that adjusted EBITDA will be at the same level as in 2022, i.e., around EUR 93 million. Purmo says this means a +/- 5% change, or about EUR 88-97.5 million. Our estimate is EUR 88 million, which is at the bottom of the guidance range, and means an adjusted EBITDA on par with last year. Earnings development is supported by, e.g., the efficiency program Purmo launched in the fall.
Purmo Group
Purmo Group är verksamt inom komfortlösningar för inomhusklimat i Europa. Bolaget tillhandahåller värme- och kyllösningar till bostadshus och lokaler, inklusive radiatorer, handduksvärmare, golvvärme, konvektorer, ventiler och kontroller. Verksamheten är indelad i ett flertal affärsområden och lösningarna används exempelvis inom industrin samt bland fastigheter. Kunderna återfinns på global nivå med störst koncentration inom Europa. Produkterna riktar sig till företagskunder och privatpersoner.
Read more on company pageKey Estimate Figures2023-04-05
2022 | 23e | 24e | |
---|---|---|---|
Omsättning | 904,1 | 862,4 | 887,4 |
tillväxt-% | 7,18 % | −4,61 % | 2,89 % |
EBIT (adj.) | 60,7 | 55,7 | 67,6 |
EBIT-% | 6,71 % | 6,46 % | 7,61 % |
EPS (adj.) | 0,85 | 0,66 | 0,86 |
Utdelning | 0,35 | 0,35 | 0,35 |
P/E (just.) | 9,70 | 10,47 | 7,99 |
EV/EBITDA | 8,00 | 9,19 | 5,29 |