* Sales +15%, EBIT +86% y-o-y
* Record Rudd margin since acquisition (10.2%)
* '26e EBIT raised by 16% following the Q3 beat
Rudd riding end-market tailwinds
Ferronordic continued to notch new highs following a convincing Q3 beat, driven by a strong performance for Rudd. Sales increased 15% y-o-y (+3% vs. ABGSCe) and EBIT 86% (+49% vs. ABGSCe). Earnings comps turned sequentially more difficult, albeit still at fairly undemanding levels. The group posted a margin of 5.7% (3.9% ABGSCe, 3.5% Q3'25), the highest since the days of the Russian operations, driven by Rudd which delivered its highest ever-margin (10.2%) since the acquisition. The aftermarket in both the US and Germany remained strong, similar to Q2, in addition to a higher share of rental conversion (margin-accretive) in the US fleet. We note that conversions are typically larger towards the end of the year than the start. Rudd end-markets such as public infrastructure and road construction were stable, with DC and power infrastructure driving the incremental equipment sales.
'26e/'27e EBIT raised by 16%/3%
We raise '26e EBIT by 16% following the clean Q3 beat. Our estimates are raised by 3-4% for '27e-'28e, as our forecasts already assume a long-term earnings improvement. Net profit of SEK 79m (-13m in Q3'25) was boosted by a SEK 37m FX gain (-22m) and a tax charge of only SEK 2m, due to US tax loss carryforwards.
Summary and valuation
By systematically increasing aftermarket penetration and benefitting from tailwinds in the US market, Ferronordic has managed to deliver five consecutive quarters of solid earnings growth. With gearing at 2.8x, now clearly below the 3.0x ceiling for the first time since 2023, there is increased potential for strategic M&A ahead, in line with company strategy. Prior to today's report, the share had been flat L1M, compared to +3% for OMXSGI. The share is trading at 10-8x '27e-'28e P/E, which can be compared to our distributor peer group at 17-15x.