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Third party research

Ework Group: Gross margins increasingly in focus - ABG

Ework Group

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

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Weak market coupled with portfolio rebalancing headwinds
We lower '25e-'26e EBIT by 4-3%
Poised for improved margins, 11x '25e EV/EBIT


Market remains subdued

The subdued market for Nordic consultants continued in Q4, putting pressure on utilisation and hourly rates. Most of Ework's peers, including Knowit, B3, CAG and TietoEVRY, reported organic revenue declines of around 10% y-o-y. As such, Ework's Q4 sales growth of -11% y-o-y does not stand out, but it should be noted that 7pp of this was due to the company's decision to phase out margin-dilutive contracts. We therefore believe that Ework navigated the choppy waters well in Q4, with gross margins remaining on a positive trajectory amid an improving customer mix. This dynamic - poor top line with improving margins - is likely to continue in H1'25e, before easier comps contribute to positive growth in H2e. Nevertheless, Q4 EBIT declined by 7% y-o-y due to lower sales volumes, partly offset by recent cost savings. The wide divergence between end-markets continued, with automotive, life sciences and financial services showing healthy growth, while public sector and telecom remained subdued.
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