Translation: Original comment published in Finnish on 2/6/2023 at 5:00 am EET.
Purmo will report its Q4 result on Thursday at around 8:15 am. Purmo has already provided comments on both Q4 development and 2023 outlook, which means we already know that Q4 was weak and that the market outlook for 2023 is negative. Thus we are mainly interested in the company's 2023 guidance. We estimate that the 2023 adjusted EBITDA will be slightly weaker than last year.
We expect Q4 turnover to have decreased pushed by radiators
The turnover of Purmo’s radiators segment decreased by over 15% already in Q3, and it said it expects volumes to fall more in Q4 than in Q3 due to both lower construction activity and distributors' destocking, which is emphasized at the end of the year. Therefore, we expect the turnover of radiators to decrease by over 20%, even though price increases support turnover. In the indoor climate solutions segment, we expect turnover to continue at about 20%, but the company's total turnover to drop by 7%.
Result will drop clearly from the comparison period
Prior to the Q3 report, Purmo lowered its guidance and provided segment-specific performance estimates for Q4 in the Q3 report. In its analyst call at the beginning of January, Purmo also mentioned that Q4 had largely been in line with their expectations, i.e. previous estimates were valid. In terms of the radiators segment, Purmo believes that the volume drop will lead to a clear decrease in adjusted EBITDA in Q4, while in indoor climate solutions the result is expected to be at the level of the comparison period. Our adjusted EBITDA estimate for the Group is EUR 14 million which means the adjusted EBITDA for the full year would be EUR 91 million while the company guidance is EUR 88-96 million. Consensus estimates seem to be on the same levels.
Market outlook for 2023 is negative and we expect the result to fall
Both Purmo and its peers have already reported that the radiator market will continue as difficult also in 2023 and negative volume development is expected for the whole year. Demand is also expected to decline in indoor climate solutions in 2023 due to the decrease in greenfield construction activity. This year, we expect a decrease of approximately 4% in turnover and adjusted EBITDA to decline by 5% to EUR 87 million. In October, Purmo launched an efficiency program, which aims at a EUR 15 million EBITDA improvement by the end of 2023 and a cumulative improvement of EUR 40 million by the end of 2024 which will support gradual earnings development but also cause one-off costs. We believe that Purmo will keep the dividend of EUR 0.36 unchanged, although the weakening result and relatively high gearing create a negative risk in terms of the amount of dividends.
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Purmo Group
Purmo Group är verksamt inom komfortlösningar för inomhusklimat i Europa. Bolaget tillhandahåller värme- och kyllösningar till bostadshus och lokaler, inklusive radiatorer, handduksvärmare, golvvärme, konvektorer, ventiler och kontroller. Verksamheten är indelad i ett flertal affärsområden och lösningarna används exempelvis inom industrin samt bland fastigheter. Kunderna återfinns på global nivå med störst koncentration inom Europa. Produkterna riktar sig till företagskunder och privatpersoner.
Read more on company pageKey Estimate Figures09.12.2022
2021 | 22e | 23e | |
---|---|---|---|
Omsättning | 843,6 | 904,0 | 872,4 |
tillväxt-% | 25,68 % | 7,16 % | −3,50 % |
EBIT (adj.) | 73,7 | 58,4 | 54,6 |
EBIT-% | 8,73 % | 6,46 % | 6,26 % |
EPS (adj.) | 1,78 | 0,79 | 0,77 |
Utdelning | 0,36 | 0,35 | 0,35 |
Direktavkastning | 2,54 % | 4,91 % | 4,91 % |
P/E (just.) | 7,96 | 9,03 | 9,25 |
EV/EBITDA | 24,30 | 7,02 | 9,69 |