Group-level sales and EBITA were SEK2 409m and SEK253m relative to our SEK2 216m and SEK220m forecasts. Organic growth was 0%, better than our forecast of -3%. The beat was due to strong sales in DM, beating our forecast of SEK1 421m by 14%, amounting to SEK1 624m (1 212), corresponding to 34% growth y/y. The stronger-than-expected sales naturally resulted in a higher margin, leading to a 34% beat on DM EBITA. The organic growth in DM was -1% y/y, better than Q4’s -6% and our estimate of -8%. Demand remains stable within manufacturing, while the development within AEC differs between markets. The AEC market has improved from low levels in the US, while the European AEC market is weakening from higher levels. We interpret it as the overall market conditions for DM will remain roughly unchanged for the next few quarters. After suffering from integration focus in Q3, the US-based manufacturing-focused TeamD3 had a strong Q1 – partly due to seasonality.

PLM and PM roughly matched our expectations, although the 2% organic growth in both Divisions was somewhat below the 4% we expected. Both markets are stable, and Addnode has a healthy demand, especially from current customers. At the same time, customers are cautious in investing in new larger projects (typically R&D projects in PLM and digitalisation projects for municipalities and authorities in PM), dampening the growth potential. Nevertheless, both Divisions delivered solid EBITA, roughly matching our expectations. We believe the overall market environment will remain unchanged for the next few quarters and then gradually rebound, driven partly by lowered interest rates.

Based on the raised forecasts, we increased our Base Case to SEK 117 (110). We leave our overall sales growth and EBITA assumptions roughly flat, increasing sales by 0-1% and EBITA by 1-2% in 2024 and 2025. While the share is trading in line with our Base Case and peers, the quarter highlights Addnode’s impressive track record of integrating large acquisitions. Although we include some future M&A in our forecasts, future larger acquisitions are a potential trigger for further increases of our Base Case.