<a id="bm-comp-fd90d1fb-ef3d-4126-813f-8a0e94998a07" name="bm-comp-fd90d1fb-ef3d-4126-813f-8a0e94998a07" class="BMCustomAnchor"></a><table><tr><td bm-component-id="fd90d1fb-ef3d-4126-813f-8a0e94998a07" style="vertical-align: top; width:100.000000%;"><ul><li>A surprising sequential margin decline in Q4...</li><li>... but we see no structural issues behind it</li><li>EBITA lowered by 5-3%, share now at 13.2x '26e EV/EBITA</li></ul></td></tr></table><a id="bm-comp-6b8aa348-b5a6-4049-b20d-1324adf0afd2" name="bm-comp-6b8aa348-b5a6-4049-b20d-1324adf0afd2" class="BMCustomAnchor"></a><table><tr><td bm-component-id="6b8aa348-b5a6-4049-b20d-1324adf0afd2" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3">An unexpected sequential margin drop</h3><p>Nolato reported Q4 sales in line with IR consensus (2% below ABGSCe), but saw a substantial and unexpected sequential adj. EBITA margin drop of 1.3pp to 10.4% (ABGSCe 11.9%, cons. 11.6%). This follows four consecutive quarters of q-o-q margin expansion, and thus it caught us off guard. This was driven by: 1) start-up costs for new medical products in the US, 2) an unusually large winter holiday impact, and 3) higher COGS related to precious metal prices, while Nolato's price hikes to its customers come with a lag effect. Although there may be some lingering margin headwinds into the coming quarters as well, we stress that we see these factors as temporary and from a long term perspective, we argue they do not impact Nolato's ability to reach its 12% EBITA margin target.</p><h3 class="bm-h3">EBITA lowered by 5-3%, of which -2pp from FX</h3><p>We lower our EBITA estimates by 5-3% for '26e-'27e, of which -2pp per year stems from updated FX assumptions. The remainder stems from lowered margin assumptions for Engineered Solutions.</p><h3 class="bm-h3">Share trading at 13.2-11.5x '26e-'27e EV/EBITA</h3><p>The Q4 numbers were disappointing, but carry no structural implications on Nolato's profitability, in our view. The share is now trading at 13.2-11.5x '26e-'27e EV/EBITA vs. its historical average multiple of 15.2x, and it currently offers FCF yields of 5-6%. Finally, we highlight that we see accelerating organic growth from Q3'26e driven by the ramp-up of the new expansion in Hungary, which the company reiterated on the conference call is progressing according to plan.</p></td></tr></table>