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Third party research

OrganoClick: Cost savings to cushion volume headwinds - ABG

OrganoClick

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

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* Q3 soft, lower volumes from two major customers* We cut '26e-'27e sales and EBIT by 6% and SEK 6m, respectively* Expect volume recovery to take longer than initially projectedQ3 challenging, but cost savings aheadQ3 sales were lower than expected at SEK 22m (-22% y-o-y and -18% vs. ABGSCe). We had estimated higher sales in all segments, but the loss was mainly driven by NW&FT and GC&MP (NW&FT -15%, GC&MP -31% and FW -4% vs. ABGSCe). The main driver was lower volumes from two major customers due to shifts in delivery plans. On the lower sales as well as less favourable product mix in the quarter, EBIT also came in lower at SEK -6.4m vs. ABGSCe -4.9m. To help improve profitability, the company is implementing ~SEK 14m in cost savings. This will bring the total expected savings (including OrganoWood measures, effective from Q4'25) to ~SEK 18m once the savings have been implemented in full. These savings are expected to take effect gradually during H1'26.Estimate changes and outlookWe lower our ‘26e-‘27e sales and EBIT by 6% and SEK 6m, respectively, as OrganoClick's volume recovery is taking longer than expected. Moreover, we have cut our gross margin estimates and lowered the ‘26e-‘27e opex base to reflect upcoming cost savings, partly offsetting the gross margin reduction. Both NW&FT and FW have faced weak markets, though FW has seen solid growth in Germany in recent quarters, offsetting softness in the Swedish construction market, a trend we expect to continue. For NW&FT, management indicates a turnaround is underway, and we expect a partial recovery in ‘26e driven by launches from existing and new customers. For GC&MP, we expect a return to growth in Q4 as customer inventories normalise.ValuationOrganoClick is currently trading at 2.2x-1.7x '25e-'27e EV/Sales vs. peers at 5.0x-1.3x. Although OrganoClick has secured financing in the near term, we continue to believe that it must demonstrate improved profitability to mitigate long-term liquidity risk.
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