* Q3e: sequential step-up in organic growth and margin
* M&A the main driver behind our EBITA upgrades
* Two new acquisitions end the three-year M&A hiatus
Q3e: sequential step-up in organic growth and margin
For Q3e, we expect Nolato to report net sales of SEK 2,543m, up 9% y-o-y (6% organic, 1% M&A, 2% FX). We see a sequential step-up in organic growth (from +4% in Q2), partly due to the start of the sales ramp-up in Medical within the new Hungarian facility, and partly due to rising PMIs supporting improved growth in Engineered. On the adj. EBITA margin, we expect a slight improvement compared to Q2 (10.5% vs. 10.3%). Despite Q3 normally being seasonally weaker, we highlight that Q2 saw abnormally high central costs that should normalise, as well as temporary raw material costs that were not yet fully offset with higher prices. Management assessed that the company had taken two-thirds of the raw material cost timing effects in Q2, while the remaining third is expected to come in Q3. This results in Q3e EBITA of SEK 268m.
EBITA revisions driven mainly by M&A
Since new CEO Anders Björklund came on board immediately following the Q2 report, Nolato has completed two acquisitions that add 2% to our '26e EBITA and 5% to '27e-'28e. Apart from this, organic revisions and updated FX assumptions have a minimal impact (within +/-1%) on our estimates.
Ending the three-year M&A hiatus
Prior to the two acquisitions announced in August and September, Nolato's last completed acquisition was in Q2'23, i.e. three years ago. The company has long highlighted its strong balance sheet, which we have argued should be put to use. As such, we see this as a welcome return to M&A, which has historically been an important pillar of Nolato's earnings growth. Finally, the share currently trades at 12.4x '27e EV/EBITA, compared with its 5Y average f12m EV/EBITA of 14.6x, and it currently offers FCF yields of 5% per year for '27e-'28e.