Infrea: Growth improves but profitability falls short - ABG
* Sales +1%, adj. EBITA -28% vs. ABGSCe, +6% org. growth * Last quarter as stand alone * Share price pegged to Netel
ANNONS
Growth improves but profitability falls short
Infrea delivered Q3 sales slightly above our expectations, but weaker profitability. Sales were SEK 520m, 1% above ABGSCe, with organic growth of 6% vs our estimate of -3%. Adj. EBITA was SEK 28m, 28% below ABGSCe, corresponding to a margin of 5.4% vs our 7.5%. Our Q3’25 comparatives include Water & Sewage, divested in Q4’25; on a continuing operations basis, adj. EBITA declined 3% and the margin fell from 5.8%. Growth was driven by Land & Construction, where sales rose 10% organically to SEK 344m. However, adj. EBITA fell to SEK 0.1m from SEK 10m, vs ABGSCe of SEK 15m, reflecting low utilisation and project write-downs. The adjusted margin was 0.0% vs our 4.4%. Paving Services performed better, with sales up 2% to SEK 183m and adj. EBITA increasing 35% to SEK 28m, vs our SEK 24m. Its adjusted margin reached 15.1% vs our 13.0%. Reported EBITA of SEK 5m included SEK 23m of adjustments: SEK 14m of merger costs, SEK 4m of remediation costs and SEK 5m of losses at Upplands Markentreprenader. A further SEK 16m goodwill impairment weighed on EBIT. Operating cash flow declined to SEK 23m from SEK 53m.
Estimate changes and outlook
Management provides no formal outlook. Improved order intake supports activity ahead, but low utilisation and project execution remain challenges in Land & Construction. Further restructuring measures have been initiated, including redundancies and planned machinery disposals at Siljan Schakt in Q4. Paving Services continues to report high activity, with working capital expected to improve in Q4.
Final thoughts
A mixed report, with stronger organic growth and continued improvement in Paving Services outweighed by weak Land & Construction profitability. The merger with Netel is expected to complete on 4 November, with 3 November the last trading day for Infrea. Until then, Infrea's share price is pegged to Netel's, so we do not expect a stock-specific reaction.
