Interim Report Q3 1 April

Addtech reported modest top-line growth and stronger profitability in Q3 (1 Oct–31 Dec 2025) with net sales SEK 5,556m (+1%) and EBITA SEK 864m (+9%), yielding an EBITA margin of 15.6% (14.4). For the Apr–Dec period, net sales rose 5% to SEK 16,845m and EBITA increased 10% to SEK 2,630m (margin 15.6%), while operating profit was SEK 2,223m (+10%) and profit after tax SEK 1,591m (+14%); EPS was SEK 1.90 (Q3) and SEK 5.70 (period). The group highlighted a strong balance sheet (equity ratio 41%), solid cash flow from operations SEK 2,134m, historically low net debt/EBITDA and ongoing M&A activity (seven closed acquisitions ~SEK 1,025m sales plus a post-period ~SEK 415m deal); FX had a ~-3% headwind in the quarter.

Analysis

Market structure: Addtech’s results signal a win for niche, value‑added industrial distributors in the Nordics — they captured margin expansion (EBITA margin +120bps to 15.6%) through pricing, mix and bolt‑on M&A (SEK ~1.44bn annualised sales added). Losers are low‑value commodity distributors and OEMs exposed to raw‑material price swings and weaker SEK (FX drag -3%); expect modest share gains vs generalist industrial suppliers over 6–18 months.

Risk assessment: Key tail risks are integration failure from aggressive bolt‑ons, rapid leverage increase if acquisitions are debt‑funded (watch net debt/EBITDA threshold >2.0), and a cyclical manufacturing downswing that would cut organic sales >3–5% Y/Y. Immediate market moves (days) will track the webcast; 3–12 month outcomes hinge on post‑deal synergies and FX; 12–36 months determine ROE sustainability (current 29%).

Trade implications: Constructive bias — positive free cash flow (CF/share LTM SEK 11.10) and strong ROE support a 6–12 month long with options overlay to limit downside; credit spreads should compress so Nordic high‑grade bonds benefit if leverage stays low. Pair trades favor Addtech vs broader industrial peers (expect 300–500bps relative EBITA margin outperformance over 12 months) and use call spreads to cap capital at known downside.

Contrarian angles: Market may underprice cash conversion versus EPS (CF/share 11.10 vs EPS LTM 7.65), implying potential for higher shareholder returns (dividend/buyback) not yet priced. Conversely, consensus may be too sanguine about perpetual M&A — if management pays up for scale, ROIC could slide; historical Nordic consolidators re‑rated only after 12–18 months of proven integration, so time your sizing accordingly.

Key Decisions for Investors

• Initiate a 2–3% long position in Addtech (OMX Stockholm – Addtech AB) over 6–12 months; target 15–25% upside, set tactical stop‑loss at -10% and scale up +1–2% only if net debt/EBITDA remains <1.5 and EBITA margin expands to >16.5% by next two quarters.
• Buy a 9–12 month call‑spread (buy ATM, sell +20% strike) sized at 50% of a cash long to lever upside while capping premium; exit on a 20% stock gain or if next quarter organic sales fall >3% Y/Y.
• Pair trade: Long Addtech 2% / Short Beijer Alma (STO: BEIA B) 1.5% as a relative value play—expect Addtech to outperform by ~300–500bps in EBITA margin over 12 months; unwind if the spread narrows by 10% or Beijer posts better-than-expected integration metrics.
• Rotate 3–5% from commodity/exposed industrial distributors into Nordic high‑cash‑conversion industrials like Addtech over 2–6 weeks to avoid market impact; prioritize names with net debt/EBITDA <1.5 and EBITA margin >12%.
• Attend Addtech webcast (10:00 CET on report day) and use management commentary as a trigger: add 1% if they increase acquisition targets or provide quantified synergy timelines; cut to zero if they signal net debt/EBITDA >2.0 or organic sales contraction >3% next quarter.