* Return to high organic growth (+41% vs. ABG +29%) * Middle Eastern conflict behind more cautious FY'26 outlook * Share +5% into numbers, trades at 20-11x EBIT '26e-'27e (pre-Q1)
ANNONS
Q1 details
Note that our latest published estimates are from February, while the USD/SEK has moved roughly 2-3% upwards since then. Sales were 5% above our expectations, with sales of SEK 66m up 41% y-o-y organically (ABGSCe +29%). This was driven by 39% reported growth in aftermarket sales (ABG +28% y-o-y), while system sales declined 2% y-o-y (ABG 0%). AM share of sales was 67% (ABG 64%). According to the CEO, the OEM business is now in a ramp-up phase while inventory adjustments in the aftermarket channel among distributors was now complete. EBIT grew ~150% y-o-y (ABG +172% y-o-y), as the margin came in at 15% (ABG 17%, 7% Q1'25), but would have been 19% when adjusting for one-time cost in the VIP project business and fully taking into account savings actions. Free cash flow of -11m was soft (+4m last year) due to customer payments being deferred into Q2.
Outlook and estimate changes
For Q2, the CEO expects the conflict in the Middle East to impact air travel and aftermarket revenues, but to a lesser extent than the overall industry. For Q2 then, the CEO expects revenue (in USD terms) to grow q-o-q but not reach last year (we have +7% organic growth y-o-y), and that the margin will remain below the 25% ambition (we have 20%). For FY'26, the outlook is for OEM to grow by 45-60% adjusting for currency (ABG +82%), for AM to grow by 5-15% (ABG +30%) and that VIP sales will not exceed 2025 levels (ABG 32m vs. 30m in 2025). All other assumptions intact, the Q1 deviation on EBIT and our impression of the Q2'26+FY'26 guidance vs. ABGSCe would mechanically lower our FY'26e EBIT by ~10-15%. However, using current FX rates vs. our latest published note, we note that the USD/SEK would raise sales by 2-3%, with a greater impact on EBIT (which could have a 2-3x impact on EBIT vs. sales).
Final thoughts
A solid Q1 and rebound vs. the softer Q4'25, while the more cautious growth assumptions for FY'26 were partly expected considering recent weeks' turmoil and negative impact on air travel. That said, production rates are still rising among OEMs and it is encouraging to hear that management still expects to grow AM sales organically and raise margins towards 25% FY'26 (ABG 23%). The share has returned +5% L1M, below the broader market (OMXSGI +7%), and trades at (pre-Q1 estimates) 20-11x EBIT '26e-'27e (20x L10Y).
