First impression Zinzino, Q1 2022: Solid gross profit but profitability under pressure further down the income statement

Equity research Zinzino

Today, Zinzino published its interim report for the first quarter of 2022. Below are our first impressions, including outcome and deviations from our estimates made on 11 April 2022.

• Total revenue for the first quarter amounted to SEK 334,4 million, corresponding to negative growth of 0,3 per cent. Our forecast was for SEK 331 million. The war in Ukraine has hampered development, and expansion plans into Russia are cancelled.
• Gross profit was SEK 99.3 million, corresponding to a margin of 29.7 per cent. Our expectation was 29.3 per cent. That indicates that the company can still handle rising costs, such as freight.
• Reported EBITDA amounted to SEK 25.8 million, corresponding to an EBITDA margin of 7.7 per cent. The EBITDA result fell by 30.8 per cent, compared to the same quarter last year. Our estimate was SEK 33.4 million.
• Reported operating profit amounted to SEK 20.2 million, corresponding to an EBIT margin of 6.0 per cent. The EBIT result fell by 36.9 per cent, compared to the same quarter last year. Our forecast was SEK 28.7 million.
• Earnings before tax were SEK 19.9 million, compared to our forecast of SEK 28.3 million. Earnings per share amounted to SEK 0.454. Our forecast was SEK 0.66.

In conclusion, we are happy to see that the company manages to deliver a gross margin slightly above our expectations. However, higher than expected operating expenses, excluding depreciation and amortisation, are weighing on profitability further down the income statement.

We intend to publish a research update report on Zinzino shortly. Read our initiation of coverage report from 11 April here.

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