Swedencare organic growth slows to 2% as full-year target looks unlikely
Key Facts
Swedencare said in its third-quarter 2026 earnings report that currency-adjusted organic growth slowed to 2%, from 15% in the same period a year earlier, weakening its prospects of meeting its full-year ambition. Management said double-digit organic growth for the full year was "no longer a likely target", marking a shift from the level it had been pursuing. Organic growth during the quarter fell short of the chief executive's expectations, with factors including production, deliveries and some veterinary brands weighing on the group's performance. Nevertheless, quarterly revenue rose to 732.2 million Swedish crowns, compared with 712.9 million crowns in the third quarter of 2025. The revenue increase was accompanied by a decline in the operating margin, while the organic slowdown came against much stronger growth in the corresponding quarter last year.
According to the company's report, earnings before interest, taxes, depreciation and amortisation totalled 150.1 million crowns in the third quarter, the measure the group uses to present its underlying operating profitability. The EBITDA margin fell to 20.5% of revenue, from 21.7% in the corresponding period a year earlier, despite higher quarterly sales. On the bottom line, Swedencare reported a profit after tax of 28.7 million crowns for the same period. Operating activities generated cash flow of 96.3 million crowns, according to figures the company released with its quarterly results. The period thus saw continued profitability and operating cash generation, alongside a decline in underlying operating earnings as a share of revenue compared with a year earlier.
Management attributed part of the weaker performance to an inspection at a production facility, whose impact on production was greater than it had anticipated in its initial assessment. The facility received approval, but the inspection process nevertheless affected production during the period, according to the company's explanation of its quarterly results. Management added that European veterinary brands performed below expectations towards the end of the quarter, adding to the factors weighing on group growth. Some brands also faced supply chain problems that delayed deliveries and disrupted sales. Those problems also affected online sales at some brands, which suffered from supply disruptions, Swedencare said in its explanation of the slowdown.
Other operations within the group recorded growth above the overall rate, with the Europe segment delivering organic growth of 11% in the third quarter. The Production segment also posted organic growth of 11%, despite the impact management said the facility inspection had on production during the period. The ProDen PlaqueOff brand continued to grow by more than 30%, according to the quarterly report, standing out among operations that maintained a strong pace of expansion. The brand's growth exceeded that of both the Europe and Production segments, as well as the group's currency-adjusted organic growth rate. Growth in the Europe segment coincided with weaker-than-expected performance at European veterinary brands towards the end of the quarter, highlighting a divergence between the segment's overall result and those brands' performance.
The first-half report had shown currency-adjusted organic growth of 7% in the second quarter of 2026, before it slowed in the following quarter. The company reported revenue of 670.0 million crowns at the time, below the level achieved in the third quarter. Revenue therefore increased from the previous quarter, while currency-adjusted organic growth moved in the opposite direction in the latest period. Management had attributed the earlier growth shortfall to a new customer postponing deliveries linked to its launch, according to its explanation published with the second-quarter results. That explanation for the previous quarter differs from the factors outlined in the latest results, which included the impact of the facility inspection, veterinary brand performance and supply problems.
Over the medium term, Swedencare aims to raise its EBITDA margin above 26%, according to its published financial targets. The third-quarter margin of 20.5% remains below the level the group seeks to exceed over the medium term. The targets also include keeping the ratio of net debt to EBITDA below 2.0 times, on a pro forma basis adjusted for leases. The company allows flexibility in its leverage target to accommodate acquisitions within the financial framework it sets for managing its balance sheet. Swedencare listed a webinar to present its quarterly results on 21 October 2026 at 10:30 Central European Summer Time.