• Some positive signs in Germany, but market still weak
• '25e-'26e EBIT raised by 11-12%, driven by Germany
• Take-aways for Ferronordic from Volvo CMD in the US

Cost cuts bearing fruit, and positive signs on new orders

Ferronordic reported a Q3 adj. EBIT of SEK 32m, notably above ABGSCe and FactSet consensus at SEK 10m and SEK 22m, respectively, largely driven by improved profitability in Germany thanks to continued cost cuts. The German market remains weak, but there are positive signs as the company flags for increasing orders. Net debt came up to SEK 1,792m (compared to 1,671m in Q2), for a ND/equity of 121%. We are optimistic on Ferronordic's US expansion opportunities in the long-term, but in the near-term we argue that the focus needs to be on first decreasing leverage. The share is trading at 12-9x '25e-'26e EV/EBIT, while our distributor peer group trades at 14-13x.

EBIT raised by 11-12% for '25e-'26e

We raise '25e-'26e EBIT by 11-12%, mainly driven by Germany where we find increased confidence to model a lower cost base going forward. With higher net debt than expected though, we raise our estimated net financials.

Take-aways from Volvo's CMD on 14 Nov in the US

ABGSC was present at Volvo's CMD last week in Virginia, USA, and our key take-aways as it relates to Ferronordic were that Volvo Construction Equipment (VCE) specifically mentioned its intentions to consolidate its US dealer networks into a few well-trusted, high-performing dealers, and we assume Ferronordic to be one of these. Moreover, VCE announced the launch of 80 new machines, and specifically highlighted the new line of excavators with 15% better fuel efficiency. We find this interesting given Ferronordic's own comments about seeing substantial potential for market share gains on excavators. Finally, VCE outlined its ambition to reach 30% market share in North America on its flagship products, articulated haulers (compared to 60% in Europe) although we do not have the current market share figure for NA.