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Generic: Strong growth, temporarily lower profitability - ABG

Generic Sweden

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

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26% organic sales growth y-o-y
Growth initiatives hurt profitability mid-term
Pricing to act as a tailwind for gross margin in Q3


Q2: Sales growth of 26%, EBIT margin of 15.5% (20%)

There was a similar trend in Generic's Q2 numbers as we saw in Q1, where sales growth was impressive but opex growth was also higher than we have seen traditionally. The company reported net sales of SEK 43.4m (+26% y-o-y, all organic), and EBIT was SEK 6.7m (6.9m). This was 4% above our expectations on sales but 9% below on EBIT. The sales growth was driven partly by existing customers and partly by new agreements being signed. The deviation vs. our EBIT forecast was partly because of a lower than expected gross margin and partly because of higher opex. Price initiatives helped to improve the gross margin q-o-q and we will probably see a further tailwind in Q3 as the price adjustments were made in the middle of the quarter.
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Inderes’ Disclaimer can be found here. Detailed information about each share actively monitored by Inderes is available on the company-specific pages on Inderes’ website. © Inderes Oyj. All rights reserved.