Year-end report 2025

Storskogen reported Q4 net sales of SEK 8,723m, up 2% y/y, with adjusted EBITA of SEK 816m (‑4%) and an adjusted EBITA margin of 9.4% (9.9). For FY 2025 net sales were SEK 33,097m (‑3%, organic +2%) and adjusted EBITA SEK 3,117m (‑3%), while operating profit rose to SEK 2,391m and profit for the period to SEK 1,199m (vs SEK 116m prior year), producing basic EPS SEK 0.63. The group completed multiple platform and add‑on acquisitions and one divestment (annual sales SEK 278m), launched a SEK 100m buyback programme (SEK 91m executed in Q4, remainder completed after period), and issued SEK 1,000m of bonds at 265 bps + Stibor 3M due 2030. Cash flow from operations weakened vs prior year, and management highlights resumption of M&A activity while maintaining focus on organic growth.

Analysis

Market structure: Storskogen’s Q4 shows modest top-line resilience (+2% Q4, -3% FY with +2% organic) but margin pressure and weaker operating cash flow (SEK 2,451m FY vs SEK 3,098m prior). Winners are cash-generative, low-leverage Nordic industrials/services operators and credit investors who can pick up higher coupons; losers are roll-up models with rising financing costs and lower organic EBITA where acquisition-driven growth masks integration risk. The SEK 1,000m bond at 265bps+Stibor and completed buybacks signal active capital deployment but increased fixed-cost sensitivity to Stibor moves.

Risk assessment: Tail risks include a 200–300bp Stibor shock that would materially raise interest expense (each 100bp ≈ +SEK10–15m annual cash out on SEK1bn at-risk, plus refinancing risk on add-ons), integration failures on resumed M&A, or covenant breaches if cash flow continues to fall. Immediate risks (days–weeks) center on market reaction to the webcast and any guidance changes; short-term (3–6 months) around FY2026 organic EBITA trajectory; long-term (12–36 months) execution on platform integrations and leverage paydown. Hidden dependency: earnings are sensitive to small-margin services and add-on churn; divestments can move year-on-year comparables sharply.

Trade implications: Favor quality over roll-ups: establish a directional hedge via short Storskogen equity exposure (or buy puts) sized 1–2% portfolio with target -20% in 6–12 months and stop +12%. Pair-trade: go long 2–3% in higher-quality Nordic industrials (e.g., Atlas Copco ATCO-B.ST) and short Storskogen to capture quality spread. Credit play: if access exists, buy protection on crossover/high-yield Nordic credit (or avoid new unsecured debt), and underweight Nordic small-cap M&A roll-up ETFs.

Contrarian angle: The market may underprice successful accretive bolt-ons and the signalling value of buybacks/dividend (SEK0.11) — if organic EBITA stabilizes (+100–150bps) over two quarters, re-rate upside of 10–25% is plausible. Conversely, reaction is likely underdone on credit risk — a 150bp widening in credit spreads would hit equity more than the headline numbers imply. Trade with tight triggers: add longs only on confirmed organic margin inflection or buyback acceleration; otherwise prefer short/hedged exposure.

Key Decisions for Investors

• Establish a 1–2% portfolio short position in Storskogen Group AB (Stockholm-listed, Storskogen) via outright short or buy a 6–12 month put spread (e.g., -15%/-30% strikes) targeting a 20% downside in 6–12 months; set stop-loss at +12% from entry and reduce if organic EBITA improves >100bps over two consecutive quarters.
• Implement a pair trade: long 2–3% in Atlas Copco (ATCO-B.ST) to capture quality/FCF premium vs short 1.5% Storskogen to exploit margin/credit divergence; rebalance after quarterly results or if relative performance moves by 8%.
• If credit instruments are available, buy 3–5 year protection on Nordic high-yield/crossover credit (or iTraxx Crossover exposure) sized to hedge ~25–50% of the equity short; exit if spreads tighten >100bps or Storskogen announces deleveraging >SEK500m within 6 months.
• Avoid adding unhedged long exposure to roll-up/mid-cap M&A names in the Nordic services sector for the next 3–6 months; only re-enter on confirmed organic EBITA recovery ≥+150bps or after a >15% share-price decline with unchanged credit spreads.