Fasadgruppen Q1'26: A temporary freeze on a solid outlook

As we had expected, the start to the year was weak. While the weaker-than-expected Q1 report has led us to make some downward revisions to our short-term estimates, we believe the setback was primarily driven by unfavorable weather conditions rather than any structural weakening in underlying demand. As a result, our mid- to long-term estimates remain largely unchanged. In our view, the strong order backlog and the expected increase in project execution provide a solid foundation for earnings growth going forward, especially in the latter part of the year. Against this backdrop, combined with low medium-term valuation multiples (2026-2027 adj. EV/EBITA of 6–7x), we believe the risk/reward profile remains attractive. As a result, we reiterate our Buy recommendation and target price of SEK 26 per share.

Cold start to the year as we had expected

Fasadgruppen’s Q1 group revenue reached 995 MSEK, corresponding to an organic decline of 11.7%. The negative revenue development in Q1 was, as we had anticipated, largely driven by a cold winter in January and February, delaying project starts within renovation. Furthermore, the company’s UK subsidiary, Clear Line, showed weak revenue performance in Q1, mainly driven by delayed project starts due to longer BSR approval processes for fire safety in higher-risk UK buildings. While we believe that the development in the segment was slow during Q1, we expect these bottlenecks that have affected backlog conversion to ease following earlier regulatory approval for project starts. Fasadgruppen's adj. EBITA declined sharply to 5.1 MSEK, corresponding to a margin of 0.5% (Q1'25: 6.5%), significantly below both our and consensus forecast. The margin contraction was mainly driven by lower volumes, which limit the efficient absorption of fixed costs.

Short-term dip, long-term view intact

In our view, the setback in Q1 was mainly related to very cold weather conditions, which significantly restricted project activity in the quarter. Regarding Clear Line in the UK market, Fasadgruppen commented that it is still negatively affected by regulatory delays at BSR, but the company appeared confident in improved order backlog execution from Q2 onwards. Given this background, we have not made any large changes to our revenue estimates for 2026. Regarding profitability, since Fasadgruppen’s Q1 report was well below our expectations, our short-term earnings estimates have been negatively affected.

We have kept our mid- to long-term estimates largely unchanged. We still believe Fasadgruppen is well-positioned to deliver solid organic growth over the coming years, supported by efficient project execution, continued investments in fire safety remediation in the UK, increasing demand for energy-efficient renovations, and a more normalized macroeconomic environment in terms of inflation and interest rates. Given higher activity levels, we expect a gradual increase in profitability, supported by improved capacity utilization, more efficient absorption of fixed costs, and some operational leverage.

We reiterate our Buy recommendation

We believe that the fair value of Fasadgruppen’s share is SEK 26-32, supported by a combination of earnings multiples (adj. EV/EBITA ~8-9x, adj. P/E ~10-12x), which are based on the company’s historical valuation and peers, as well as our DCF value. Given the uncertain market environment, limited visibility into the ongoing turnaround, and the decline in return on capital in recent years, which increases the risk related to future capital allocation, we still lean towards the lower end of our valuation range. While we have lowered our short-term earnings estimates following the Q1 report, this has not had any material impact on our medium- to long-term estimates. As such, we reiterate our target price of SEK 26 per share and Buy recommendation.