Sweden's Axfood Q3 EBIT beats on volume growth

Overview

• Sweden grocery retailer's Q3 revenue grew 1.9% yr/yr, slightly missing analyst expectations

• Q3 EBIT beat analyst expectations as operating margin improved to 4.9%

• Company said City Gross turned profitable and volume growth drove earnings improvement

Outlook

• Company says market is characterised by falling food prices, cost pressure and intense competition

• Axfood sees value for money as a key factor for consumers, but notes rising interest in quality and convenience

• Company plans to continue investments in efficiency and competitiveness to support profitable growth

Result Drivers

• VOLUME GROWTH - Co said quarterly growth was largely driven by higher sales volumes as household purchasing power increased

• CITY GROSS PROFITABILITY - Co said City Gross reported positive earnings in Q3, less than two years after acquisition, due to like-for-like sales growth and operational efforts

• EFFICIENCY INVESTMENTS - Co said investments in technology, AI, automation and logistics boosted efficiency and contributed to earnings growth

Company press release:

Key Details

*Applies to a deviation of less than 1%; not applicable for per-share numbers.

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 4 "strong buy" or "buy", 2 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the food retail & distribution peer group is "buy."

• Wall Street's median 12-month price target for Axfood AB is SEK275.00, about 1.8% above its October 21 closing price of SEK270.10

• The stock recently traded at 21 times the next 12-month earnings vs. a P/E of 20 three months ago

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)