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Administer - Profitability progress set to continue

Administer reports Q2’24 results on Thursday, August 15th. We expect good profitability and see that the recovery from the seasonal weakness for Econia should turn the company back to growth track. Other business areas are expected to remain stable due to their less cyclical nature.

Sustained profitability with potential sales rebound
Administer managed to enhance its profitability in Q1, mainly driven by a successful cost savings program. Despite this, net sales declined 3.1%, primarily due to a weaker demand situation and seasonal fluctuations for personnel leasing. Looking ahead to Q2, we expect profitability to remain at a good level, supported by cost savings and a modest recovery in personnel leasing. According to Employment Industry Finland, the personnel leasing market saw a 10.4% decline in Q1, which moderated to 6.6% for April and May. This gradual recovery, along with slight growth in other business areas, should result in flat or slightly positive y/y net sales in Q2.

Good performance expected in current market conditions
Following Q1’s downturn, we project Q2 net sales at EUR 19.7m (Q2’23: 19.6m), driven by improved demand and seasonal trends within personnel leasing. We estimate the Q2 EBITDA at EUR 1.7m (8.7%), significantly above Q2’23’s EUR 0.4m (2.3%). The comparison period was affected by one-off installments related to collective agreements, and we expect that Q2 will align more closely with Q1’24 EBITDA (EUR 1.7m/9.1%). Administer’s growth relies heavily on the economic climate and the company is well-positioned to translate growth into improved margins. However, market uncertainty persists, and we are eager to hear any potential comments on the development of the market situation.

BUY with a target price of EUR 3.0
Our estimates remain unchanged ahead of Q2. We expect net sales at EUR 76.8m (Guidance: EUR 76-81m) and EBITDA-margin at 8.1% (Guidance: 6-9%). We retain our BUY rating with a target price of EUR 3.0.

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