Duell - Leverage risk in focus
Duell will report its FY 2025 results on Thursday, 16 October. We expect the market to have remained soft and sales and profitability to be down y/y. Our interest in the report lies in the company’s leverage position and the outlook for FY 2026.
Nordics weakness to weigh on performance
During the first nine months of FY25, Duell’s net sales grew by 2.9% (+1.4% in comparable FX), driven by strong growth in Rest of Europe, especially in Q1 and Q2. Conversely, the Nordic market has remained challenging, with YTD sales down 2.3% as weak consumer sentiment has persisted and activity slowed further during the seasonally important Q3 summer quarter. The slow Q3, following a weak winter Q2 season in the Nordics, resulted in two consecutive soft sales periods and elevated inventory levels. Despite improving weather conditions towards the end of Q4, we expect demand in the Nordics to have stayed soft, as indicated by the June guidance cut, weak new vehicle registrations and subdued consumer confidence.
Covenant headroom in focus
After the lowered guidance in June, Duell expects FY25 organic net sales (comparable FX) to be flat or lower y/y, and adj. EBITA to fall below last year. We estimate FY25 net sales of EUR 126m (2024: 124.7m) and adj. EBITA of EUR 4.7m (2024: EUR 6.3m). We expect continued weakness in the Nordics to offset growth in Rest of Europe and sales to decline y/y in Q4. We also estimate Q4 adj. EBITA to decline, reflecting the soft market conditions and seasonal dynamics, which suggest likely discounting to clear inventory levels. We forecast net debt of EUR 17m, implying ~3.0x net debt/adj. EBITDA, which we expect to remain within covenant terms. While the company does not disclose the covenant threshold and inventory execution carries some risk, we believe a potential breach would likely be manageable through lender negotiations.
ACCUMULATE with a TP of EUR 4.8
Based on our 2025-2026E estimates, Duell currently trades at 7-5x EV/EBITDA and 8-6x adj. P/E. We view the valuation as modest, although risks related to the balance sheet remain elevated. We keep our TP of EUR 4.8 and rating at ACCUMULATE.