* Sales SEK 42m (-15% vs. ABGSCe), EBIT -6.6m (ABGSCe -2.6m)
* We lower total ‘27e-‘28e sales by 4%, see break-even in FY'27e
* Recycling +66% y-o-y, record trial activity and growing pipeline
Q3 results
Sales were lower than expected at SEK 42m (-9% y-o-y, -15% vs. ABGSCe) in a seasonally weak quarter with what management termed a cautious restart after the summer. The miss was largely due to Performance Chemicals (-20% y-o-y, -29% vs. ABGSCe). HT remains affected by the inventory adjustment at its largest customer, although management expects this to be completed by year-end, stating on the call that the customer’s ‘27 volumes will likely be above the current low level. Lightweight underperformed following large Q2 deliveries, while Masterbatch was in line with our estimates. Recycling continues to grow and was up 66% y-o-y to SEK 9.3m (~22% of sales). The gross margin rose to 49% (46%) on better mix and EBIT came in at SEK -6.6m (ABGSCe -2.6m).
Estimate changes
Q3 came in below our expectations, and we consequently lower ‘26e-‘28e sales by 5%/4%/4% and total '26e-'28e EBIT by SEK 11m. We expect the company to reach break-even in FY'27e.
Record activity, sales yet to follow
Commercial activity was at record levels during Q3, with 86 samples shipped (+50% q-o-q), 12 commercial-scale trials (normally ~5) and 164 Recycling projects in early phases. 25 projects are in scale-up, with lead times to serial production ranging from months to years, which makes the timing of growth hard to predict. Management keeps its ambition to double Recycling sales in '26 but calls it a big challenge. Longer-term, Nexam targets an annual group sales run-rate of SEK 300m, albeit with no timeframe given. Management sees ~1/3 of incremental sales dropping through to earnings on the current cost base. The share has returned -36% L3M (vs. peers -19%, OMXSALLS +4%) and is trading at 1.0x-0.9x ‘27e-‘28e EV/Sales vs. peers at 0.9x-0.6x.