• Report out 25 April at 07.00 CEST
• Q1e sales of EUR 45m +4% y-o-y, EBIT EUR 3.1m (2m)
• 12x-8x '25e-'27e EV/EBIT

Q1 expectations

We expect Cavotec to deliver Q1 sales of EUR 45m, +4% y-o-y and -2% q-o-q. Q4'24 order intake was exceptionally strong for Cavotec, due to several large orders (+52% y-o-y including announced orders, +8% y-o-y excluding). However, we do not fully extrapolate this to Q1e, as order intake tends to fluctuate between quarters and no orders were announced during the quarter. Furthermore, we still expect order intake to grow: we estimate EUR 43m, +7% y-o-y. The company continues to work on its change programme with enhanced cost control, which we expect will yield higher margins y-o-y. For EBIT, we forecast EUR 3.1m for a margin of 6.9% (4.5% in Q1'24).

Minor estimate changes

We only fine-tune our estimates, reducing '25e-'27e sales by 0.6%, and leaving '25e-'27e EBIT intact. Cavotec has so far managed to successfully improve its profitability since the start of its change programmes, and witnessed EBIT growth of +51% in ’24 and EBIT margins of 6.2% in '24 (vs. -3.0%/4.0% in '22/'23). From here, however, we need to see an improvement in volumes and a return to sales growth. We expect Industry, which started its profitability-improving measures towards the end of '24, to start showing signs of improvement during '25e.

Long-term view unchanged

We continue to find the longer-term potential in shore power and industrial electrification appealing, driven by regulations and megatrends. We believe Cavotec has the potential to reach >10% EBIT margins from '27e, provided management is successful with the transformation. The share is trading at 12x-8x '25e-'27e on EV/EBIT and 22x-13x on P/E.