Ferronordic will report its Q1 results on 16 May. Taken together, we expect another challenging quarter burdened by hesitant customers. For Germany, and new equipment sales in particular, we expect sales to contract 9.6% y/y organically, while the US should show a more resilient development (see key charts on North American CE outlook inside this report). While the outlook for 2024 remains uncertain, we argue that Q4 2023 clearly represented the trough quarter, with full contribution from the margin-accretive US acquisition driving a sequential EBIT margin uplift of 520bp. As such, we continue to find the long-term story and trajectory appealing, and we expect a return to organic growth of 8% y/y in 2025. Shorter term, however, Ferronordic continues to face a challenging market and we hence lower 2024E EBIT by 12% to more accurately reflect this. We also expand our valuation interval to 7-11x 2025E EV/EBIT, representing SEK 51-80 per share (61-84) to better reflect the temporarily elevated degree of uncertainty in the market. Marketing material commissioned by Ferronordic.

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