Sales was 8% short of our expectations and amounted to SEK1,107m (955). The organic growth was -4% y/y. While slightly below our expectations, considering the soft momentum in the sector recently – including several profit warnings – we believe that -4% organic growth is quite a solid number, nevertheless. According to management, Hanza’s broad and strong customer base – with a significant share of relatively stable sectors like defence, mining, agriculture, and energy – has limited the downturn. In addition, Hanza highlights the importance of avoiding certain cyclical sectors such as automotive and consumer discretionary. Adjusted EBITA was SEK74m (89), corresponding to an EBITA margin of 6.7% (9.3). Our forecast was SEK76m and 6.4%.

As seen in Q2, Hanza also sees strong new sales in Q3, following a greater need for cost-efficient manufacturing in the softer economic environment. The deal flow includes a deal with a German company worth over EUR10m per year at full capacity, where the production will take place in the Central Europe cluster. Also, Mitel – a Canadian Telecommunications company – signed a MIG deal with Hanza during the quarter that is expected to generate SEK60m annually. The deal came into place thanks to Orbit One and is a backshoring deal, where Mitel moves production closer to the end customer.

We raise our Base Case slightly to SEK 75 (73) following slightly cut short-and-mid-term forecasts and an impressive performance of Hanza considering the market environment. We keep our positive view and see substantial upside potential if the 2025 targets are reached. After trading at a 25-30% discount on EV/EBIT in our Q2 Update, Hanza is now trading on par with the peer median. Following the recent strong relative performance in Hanza’s operations, we believe a faded discount is reasonable. Given that Hanza continues to outperform, we believe there is a case for the company to trade at a premium to the peer median.