Has AFRY Finalized its Transformation? Enjoys Strong Organic Growth

/ November 6, 2022/ ÅF Pöyry / AFRY, Financials, Sweden

AFRY Had Double-Digit Organic Growth in Q3

AFRY signaled it had reached the end of its transformation initiated with the 2019 acquisition of Poÿry. The company reached double-digit organic growth for the first time since the acquisition. Organic growth was +10.2%, a clear sequential acceleration (Q1: +4.5%, Q2: +6.3%).

The good news is that all Divisions had satisfactory growth. The Infrastructure and Energy Divisions showed their recovery. Infrastructure Division, AFRY’s largest business unit, reached an organic growth of 8%, also the first time since the merger. The division benefited from favorable comps (Q3 2021: +0.6%). AFRY highlights the future looks positive with a high order stock and low exposure to the real estate market (4% of revenues). For now, a good quarterly performance does not mean the division is back to growth.

The Energy Division performed well in Q3 2022 (+13.1% organically) after a satisfying Q2 (+7.5%). Like Infrastructure Division, it benefited from favorable comps. Still, Energy Division has struggled for many years, as standalone, and then combined with Poÿry. We would like to think that the division has completed its portfolio repositioning to renewables, nuclear energy, and hydrogen.

We Are Taking the View that AFRY Has Completed its Post-Merger Transformation

As you have probably guessed, the satisfactory double-digit organic growth in Q1 was a good surprise, with two troubled Divisions now back to very decent growth. We are taking the view that AFRY is now back to normality, with all divisions now positioned to drive growth. The company now needs to prove it is less cyclical than in the past. For now, the comparison with its closest competitor, Sweco, still favors its Swedish competitor.

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