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Beat across US, Germany & KazakhstanFerronordic's Q2 sales were SEK 1,558m (+43% y-o-y, +34% vs ABGSCe) and +54% y-o-y organically. EBIT was SEK 68m (+65% vs. ABGSCe 41m) for a margin of 4.4% (ABGSCe 3.6%). This is the highest EBIT print since Q4'22, the last quarter with a contribution from the Russian operations before the divestment. The earnings beat was broad-based across all three segments. In the US, Rudd's equipment sales rose 89% in USD, driven by data center and infrastructure investments, particularly in Volvo's articulated haulers. Encouragingly, Germany remained sequentially profitable, supported by cost control and continued aftermarket strength, while Kazakhstan returned to profit. ND/EBITDA decreased to 3.0x (3.8x in Q1'26), as EBITDA increased (SEK 180m, +45% q-o-q) and net debt decreased from SEK 1,957m to 1,845m. It is the first time since the acquisition of Rudd that leverage is within the target range, and sooner than we had anticipated. All in all, Ferronordic delivered a strong Q2, extending the recovery from a soft Q2'25. Group '26e/'27e EBIT lifted by 16%/8%We raise '26e EBIT across all segments following the convincing Q2 beat. We increase US EBIT by 8%/7%/7% for '26e-'28e, while our German EBIT estimates rise SEK 11m/2m/3m over the same period, as a German recovery in '27e-'28e was already partly incorporated into our forecasts. Group '26e-'28e EBIT is raised by 16%/8%/7%. We share management's positive view on the US construction equipment market, with long-term investments in DC and power plants driving demand across the CE value chain. ValuationPrior to today's report, the share had returned +13% L1M, compared to the +4% of OMXSGI. The valuation presently sits at 10-9x '26e-'27e P/E, which can be compared to our distributor peer group at 20-17x. |