• FX-driven estimate changes
• Direct tariff impact likely minor
• NTM EV/EBIT of just below 7x

What to look for in Q1'25e

In Q1'25e, we expect positive organic growth of 5%, which implies sales of SEK 244m and adj. EBIT of ~SEK 25m, corresponding to a margin of 10.2%. Our updated Q1 estimates therefore imply negative estimate revisions of -7% for Q1 sales and -22% for Q1 EBIT due to FX changes and slightly lower organic growth. We expect Nilörn's order intake to be ~SEK 240m, up 3% y-o-y. For reference, an order intake of SEK 240m is within the historical range.

Unfavourable FX movements drive estimate cuts

We have lowered our '25e-'27e sales and EBIT by 8% and 12-10%, respectively. This is mainly due to the significant strengthening of the SEK against other major currencies (mainly the EUR and the HKD, which is pegged to the USD). We believe that Nilörn's investments in Bangladesh and Portugal should help the company to gain more market share, especially in an environment where supply chains could change (i.e. from China to other countries). In addition, we do not expect a material, direct impact from the currently paused US tariffs. However, a potentially stagflationary environment would be problematic from a margin perspective for businesses that prioritise volume rather than price growth, such as Nilörn. In terms of financial targets, Nilörn should be able to achieve its margin target this year.

Valuation

Our new estimates imply that Nilörn is trading at just under 7x NTM EV/EBIT. We note also that the company is trading at an NTM EV/EBIT level that is 20-25% below the corresponding five-year median.