Administer - Managing market headwinds
Administer’s Q3 report was in line with expectations. Net sales declined 3.9% y/y, but profitability continued its positive development, with the EBITDA-margin at 5.7%, improving clearly y/y.
Steady performance in a difficult operating environment
Administer reported Q3 net sales of EUR 17.6m and EBITDA of EUR 1.0m, in line with our estimates (EUR 17.5m and EUR 1.1m, respectively). Results came as expected following an October profit warning that lowered net sales guidance and narrowed EBITDA-margin range upwards. Personnel leasing remained the main driver in the sales decline, with Econia’s sales dropping 9.1% y/y in Q3, reflecting the broader 6.5% decline in the Finnish personnel leasing market, as reported by Employment Industry Finland. Administer’s other brands also saw a 1-5% sales decline, in line with the weak general economic development in Finland, as its operations are closely tied to the overall economic activity and macroeconomic conditions. Despite this, Administer defended its margins well and posted its third consecutive quarter with improved profitability y/y, highlighting the effectiveness of its cost-saving initiatives. Given this steady performance amid tough conditions, we see a sustainable turnaround taking shape.
Outlook and estimates largely unchanged
Following the revised guidance in October, Administer expects revenue to range between EUR 74-76m and an EBITDA-margin of 7-9%. We keep our estimates largely unchanged, projecting revenue of EUR 75.0m and an EBITDA-margin of 8.0%. While there are no clear signs of demand improvement in Q4, we expect the acquisition of a majority stake in Kuntalaskenta to push the quarter into growth territory y/y. Although the growth outlook for 2025 remains uncertain, we anticipate a market recovery during the year and forecast moderate growth for the year and expect net sales of EUR 77.2m. Consistent with this higher revenue and operational efficiency improvements, we forecast EBITDA-margin to increase to 9.0% in 2025.
BUY with a target price of EUR 3.0
Despite solid progress in its turnaround, Administer remains valued below peers with 2024E. P/E (excl. goodwill amortization) of ~13x. The solid performance in tough conditions shows promise for the future should market recover and demand situation improve. We retain our TP of EUR 3.0 and BUY rating.