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Equity research HANZA: First impression Q1 2024

7 May 2024

This morning, HANZA reported its Q1 2024 earnings. Below are our first impressions of the report.

  • Earnings (EBITA) were SEK 67m (88), about ten percent lower than we had expected. However, we had not included a positive revaluation effect of SEK 20m in our forecast, hence the adjusted results appear significantly weaker than we had estimated. The deviation compared to our forecast seems to mainly stem from low profitability in the newly acquired Orbit One unit.
  • In Q1, sales increased by 18 percent, falling notably short of our expectations. Excluding acquisitions and currency effects, sales contracted by six percent, a performance weaker than our anticipated decline of around one percent.
  • HANZA says lower volumes have affected primarily Other markets segment, including Orbit One. It sees weaker orders from some customers but expects a recovery already during autumn. HANZA comments that the integration of Orbit One is progressing smoothly.
  • Sales in Main markets were more in line with our expectations, but volumes and profitability were affected by a recent Finnish strike.
  • Overall, it was a financially messy quarter for HANZA, in our view, on the back of the acquisition and general market headwinds. Bottomline, sales and earnings disappointed us but given HANZA’s track record and outlook we see reason to remain optimistic on a gradual recovery of growth and margins towards its financial targets. Still, signs of better profitability in Orbit One will likely be a key driver for investor sentiment going forward.
  • We predict a negative share reaction. We will review our earnings estimates and expect negative revisions primarily for 2024 given expected near-term headwinds.

In the table below, we compare the Q1, 2024 reported sales and earnings vs our estimates.

Read our latest update on Hanza here

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Equity research HANZA: First impression Q1 2024