* Q3 earnings miss, but restructuring supports earnings recovery
* We cut '27e-/'28e EBIT by 1.8%/10%
* Further operational improvements needed to drive growth
Weak Q3 earnings, but cost savings to support profitability
Catella reported Q3 EBIT of SEK -16m, below ABGSCe at SEK 20m and FactSet consensus of SEK 26m, mainly reflecting weaker-than-expected earnings in Investment Management, including negative fair value adjustments within BSI and restructuring costs. Corporate Finance performed slightly ahead of expectations, supported by improving transaction activity in Spain and France. Although organic AUM flows remain negative, management announced SEK 40m in annual cost savings from 2027, supporting a gradual improvement in profitability despite continued market uncertainty.
We trim our estimates despite the announced cost savings
Following the Q3 earnings shortfall, we lower our '27e-'28e EBIT by 2% and 10%, respectively, mainly reflecting a slower recovery in Investment Management and softer transaction-related revenues. Although Catella's announced savings should support profitability, the timing of an earnings recovery remains unclear, given continued net outflows and subdued fundraising activity. We now forecast EBIT of SEK 187m in 2027e and SEK 244m in 2028e, with the larger cut to 2028e reflecting our more conservative view on the pace of the recovery.
A year of transition ahead
Although Catella has taken steps to improve efficiency, considerable work remains before a sustainable earnings recovery can materialise. Restructuring costs and one-offs continue to weigh on reported earnings, while restoring organic AUM growth requires a more competitive product offering and new investment strategies, which take time to develop and launch. We view 2027 as an important transition year, and we expect cost savings to support profitability, although improvements in fundraising and underlying earnings are likely to take longer to materialise.