* Better organic growth (-4% vs. ABG -10%)
* Next phase of OEM ramp-up Q1'27, AM back to y-o-y growth
* Share -6% into numbers, trades at 21-11x EBIT '26e-'27e (pre-Q2)
Q2 details
Sales were 11% above our expectations, with sales of SEK 76m down 4% y-o-y organically (ABGSCe -10%). This was driven by a 15% reported decline in aftermarket sales (ABG -30% y-o-y), while system sales grew 20% y-o-y (ABG +26%). AM share of sales was 64% (ABG 58%). According to the CEO, growth in system sales was driven by ramp-up in aircraft production rates and increased content value per aircraft. Sales to the private jet segment was low, and below expectations. EBIT declined ~20% y-o-y to SEK 14m (ABG 13m), as the margin came in at 19% (ABG 19%, 25% Q2'25). Free cash flow of 18m was strong (+2m last year).
Outlook and estimate changes
For Q3, the CEO expects net sales (in USD terms) "modestly below Q2'26", where we have (in SEK terms) Q3 sales of SEK 78m vs. the Q2 outcome of 76m. For FY'26, the outlook (in USD terms) is for similar H2'26 OEM sales as in H1'26 as the next ramp-up in production volumes is scheduled for Q1'27, where we have (in SEK terms) H2'26 sales of SEK 43m vs. H1'26 outcome of 38m. The guidance for AM sales is for 5-15% organic growth FY'26 (we currently forecast +14%). For Retrofit, FY'26 revenue is expected to be flat vs. FY'25 (we have SEK 5m vs. ~3m FY'25). Finally, Private jet projects have been postponed, so management now expects "the weakest year in several years", before expecting a "very strong recovery next year". We currently have SEK 25m in FY'26 sales vs. the L5Y average of ~19m. All in all, we believe that the Q3 deviation on EBIT and our impression of the H2'26+FY'26 guidance vs. ABGSCe would mechanically lower our FY'26e EBIT by 5-10%. However, using current FX rates vs. our latest published note, we note that the USD/SEK would raise sales by 2%, with a greater impact on EBIT (which could have a 2-3x impact on EBIT vs. sales).
Final thoughts
A better-than-expected Q2 report where it was encouraging to hear OEM and AM guidance relatively in-line with expectations, despite the more cautious view on Private jet deliveries. The share has returned -6% L1M, below the broader market (OMXSGI +1%), and trades at (pre-Q2 estimates) 21-11x EBIT '26e-'27e (20x L10Y). There is a conference call at 09:30 CET, link.
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