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Bergs Timber

Timber pure-play

Bergs Timber is the only listed timber pure-play in Sweden. It sells sawn and processed wood products. ~80% of the group’s products are exported, mainly to the UK, US and other European countries. In January 2018, the company announced its intention to acquire Norvik Timber, a transformational acquisition that will approximately double the group’s production capacity and revenues. Norvik Timber is a vertically integrated group with sawmills, production of processed wood products like windows, houses and furniture, and distribution of own and third-party products.

Historically, Bergs Timber has been a typical sawmill group with a high degree of commoditised wood products. Going forward, however, the group’s strategy is to increase focus on value-added processing and perform complementary acquisitions. Combined with strong macroeconomic fundamentals, industry consolidation and improvement programs there should be room for earnings uplift over the coming years. The acquisition of Norvik Timber will transform the group into a more vertically integrated player with potential for margin improvement and a higher degree of earnings stability.

The primary end-market for the group’s products is the building and construction industry. As a result, demand for the group’s products is cyclical and depends on global economic developments. Due to a high degree of commoditised products, the group’s earnings are highly sensitive to the market prices of its products. An increase in the price of saw logs could have negative impact the group’s earnings since it is the most important input factor in its operations. ~80% of the group’s products are sold in foreign currencies like GDP, EUR and USD. Currency fluctuations is therefore another major risk factor.

SEKm 2018 2019e 2020e
Sales 3064 3383 3369
Sales growth (%) 151,9 10,4 -0,4
EBITDA 307 345 312
EBITDA margin (%) 10 10,2 9,3
EBIT adj 236 260 224
EBIT adj margin (%) 7,7 7,7 6,7
Pretax profit 214 248 217
EPS rep 0,77 0,6 0,51
EPS growth (%) 407,2 -21,4 -15,7
EPS adj 0,8 0,6 0,51
DPS 0,1 0,1 0,1
EV/EBITDA (x) 5,2 4,5 4,5
EV/EBIT adj (x) 6,8 6 6,3
P/E (x) 3,9 5 5,9
P/E adj (x) 3,7 5 5,9
EV/sales (x) 0,5 0,5 0,4
FCF yield (%) -5 9,9 17,3
Dividend yield (%) 3,4 3,3 3,3
Net IB debt/EBITDA 1,9 1,5 1,2
SEKm 2018 2019e 2020e
Sales 3064 3383 3369
COGS -2021 -2537 -2553
Gross profit 1044 846 816
Other operating items -737 -501 -504
EBITDA 307 345 312
Depreciation on tangibles -71 -84 -88
Depreciation on intangibles 0 0 0
EBITA 236 260 224
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 236 260 224
Other financial items 0 0 0
Net financial items -15 -12 -7
Associated income 0 0 0
Other EO items -7 0 0
Pretax profit 214 248 217
Tax -26 -42 -43
Net profit 188 206 174
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 188 206 174
EPS 0,77 0,6 0,51
EPS Adj 0,8 0,6 0,51
Total extraordinary items after tax -6,5 0 0
Tax rate (%) -12,1 -17,1 -20
Gross margin (%) 34,1 25 24,2
EBITDA margin (%) 10 10,2 9,3
EBITA margin (%) 7,7 7,7 6,7
EBIT margin (%) 7,7 7,7 6,7
Pretax margin (%) 7 7,3 6,4
Net margin (%) 6,1 6,1 5,2
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 151,9 10,4 -0,4
EBITDA growth (%) 278 12,4 -9,5
EBIT growth (%) 554,7 10,3 -13,8
Net profit growth (%) 646 9,6 -15,7
EPS growth (%) 407,2 -21,4 -15,7
Profitability 2018 2019 2020
ROE (%) 25,9 18 13,3
ROE Adj (%) 26,8 18 13,3
ROCE (%) 20,6 14,3 11,2
ROCE Adj(%) 21,2 14,3 11,2
ROIC (%) 19,2 12,7 10,2
ROIC Adj (%) 19,2 12,7 10,2
Adj earnings numbers 2018 2019 2020
EBITDA Adj 307 345 312
EBITDA Adj margin (%) 10 10,2 9,3
EBITA Adj 236 260 224
EBITA Adj margin (%) 7,7 7,7 6,7
EBIT Adj 236 260 224
EBIT Adj margin (%) 7,7 7,7 6,7
Pretax profit Adj 220 248 217
Net profit Adj 195 206 174
Net profit to shareholders Adj 195 206 174
Net Adj margin (%) 6,3 6,1 5,2
SEKm 2018 2019e 2020e
EBITDA 307 345 312
Net financial items -15 -12 -7
Paid tax -26 -42 -43
Non-cash items 0 0 0
Cash flow before change in WC 266 291 262
Change in WC -435 -77 5
Operating cash flow 236 216 267
CAPEX tangible fixed assets -273 -114 -88
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow -37 102 179
Dividend paid -9 -34 -34
Share issues and buybacks 0 0 0
Other non cash items -412 -11 0
Decrease in net IB debt -458 57 145
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 191 194 194
Definite intangible assets 0 0 0
Tangible fixed assets 771 815 815
Other fixed assets 8 8 9
Fixed assets 970 1017 1018
Inventories 653 615 632
Receivables 377 437 408
Other current assets 0 0 0
Cash and liquid assets 74 180 325
Total assets 2074 2249 2383
Shareholders equity 1052 1235 1374
Minority 0 0 0
Total equity 1052 1235 1374
Long-term debt 238 340 410
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 7 6 6
Short-term debt 416 363 293
Accounts payable 361 306 299
Other current liabilities 0 0 0
Total liabilities and equity 663 693 2074
Net IB debt 580 523 378
Net IB debt excl. pension debt 580 523 378
Capital invested 1639 1763 1759
Working capital 669 746 741
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1012 1033 1033
Net IB debt Adj 580 523 378
Market value of minority 0 0 0
Reversal of shares and participations 0 0 0
Reversal of conv. debt assumed equity 0 0 0
EV 1592 1555 1411
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 221,5 156,5 145,5
Capital invested turnover (%) 283,7 198,9 191,4
Capital employed turnover (%) 275,1 185,7 167,8
Inventories / sales (%) 14,3 18,7 18,5
Customer advances / sales (%) 0 0 0
Payables / sales (%) 8,7 9,9 9
Working capital / sales (%) 14,7 20,9 22,1
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 55,1 42,3 27,5
Net debt / market cap (%) 57,6 50,6 36,6
Equity ratio (%) 50,7 54,9 57,7
Net IB debt adj. / equity (%) 55,1 42,3 27,5
Current ratio (%) 142,1 184,1 230,4
EBITDA / net interest (%) 2005,9 2999,7 4336,3
Net IB debt / EBITDA (%) 189 151,5 121,1
Interest cover (%) 1531,2 2087,7 3114
SEKm 2018 2019e 2020e
Shares outstanding adj. 341 341 341
Fully diluted shares Adj 341 341 341
EPS 0,77 0,6 0,51
Dividend per share Adj 0,1 0,1 0,1
EPS Adj 0,8 0,6 0,51
BVPS 3,09 3,62 4,03
BVPS Adj 3,09 3,62 4,03
Net IB debt / share 1,7 1,5 1,1
Share price 2,95 3,03 3,03
Market cap. (m) 1007 1033 1033
Valuation 2018 2019 2020
P/E 3,9 5 5,9
EV/sales 0,52 0,46 0,42
EV/EBITDA 5,2 4,5 4,5
EV/EBITA 6,8 6 6,3
EV/EBIT 6,8 6 6,3
Dividend yield (%) 3,4 3,3 3,3
FCF yield (%) -5 9,9 17,3
P/BVPS 0,96 0,84 0,75
P/BVPS Adj 0,96 0,84 0,75
P/E Adj 3,7 5 5,9
EV/EBITDA Adj 5,2 4,5 4,5
EV/EBITA Adj 6,8 6 6,3
EV/EBIT Adj 6,8 6 6,3
EV/cap. employed 0,9 0,8 0,7
Investment ratios 2018 2019 2020
Capex / sales 8,9 3,4 2,6
Capex / depreciation 382,9 135,7 100
Capex tangibles / tangible fixed assets 35,4 14 10,8
Capex intangibles / definite intangibles N/A N/A N/A
Depreciation on intangibles / definite intangibles N/A N/A N/A
Depreciation on tangibles / tangibles 9,2 10,3 10,8

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Main shareholders

Bergs Timber

Main shareholders Share capital % Voting shares % Verified
Norvik hf 64.7 % 64.7 % 8 Jun 2018
Danica Pension 4.9 % 4.9 % 18 Apr 2019
Åke Bergh 3.1 % 3.1 % 31 Mar 2019
Niklas Sjöfors 2.9 % 2.9 % 31 Mar 2019
Setra Trävaror AB 1.8 % 1.8 % 31 Mar 2019
Per Anders Bendt 1.3 % 1.3 % 31 Mar 2019
Swedbank Försäkring 1.2 % 1.2 % 31 Mar 2019
Nordnet Pensionsförsäkring 0.8 % 0.8 % 31 Mar 2019
Islandsbanki Hf 0.7 % 0.7 % 31 Mar 2019
Per-Åke Bergh 0.5 % 0.5 % 31 Mar 2019
Source: Holdings by Modular Finance AB

Insider list

Bergs Timber

Name Quantity Code Date
Patrik Ivarsson - 20 336 SELL 28 Mar 2019
Patrik Ivarsson - 5 239 SELL 18 Mar 2019
Peter Nilsson + 50 000 BUY 11 Mar 2019
Patrik Ivarsson - 7 425 SELL 25 Oct 2018
Patrik Ivarsson - 9 000 SELL 15 Oct 2018
Christina Marianne Brav + 7 000 BUY 11 Oct 2018
Anders Marklund + 25 000 BUY 5 Oct 2018
Norvik hf. +170 000 000 BUY 8 Jun 2018
Patrik Larsson + 1 000 BUY 28 Feb 2018
Sampsa Auvinen + 500 000 BUY 1 Sep 2017

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