Swedencare organic growth slows to 2%, annual ambition seen as unlikely
Key Facts
Swedencare said double-digit annual organic growth had become unlikely after its currency-adjusted organic growth slowed to 2% in the third quarter of 2026. The company recorded growth of 15% in the corresponding period of 2025, according to its quarterly financial report. Management described its full-year ambition as "no longer a likely target", revising its assessment of the prospects of achieving it as year-end approaches. Organic growth for the period through September was 6%, compared with 9% in the corresponding period a year earlier. The third-quarter slowdown coincided with a weaker pace of growth over the nine months and operational disruptions affecting production, supplies and European veterinary sales.
Swedencare's third-quarter revenue totalled 732.2 million Swedish crowns, according to the company's official disclosure for the period. The figure fell short of a consensus forecast of 762 million crowns compiled by Modular Finance from 5 analysts, Investing.com reported. The shortfall against estimates extended beyond revenue to earnings before interest, taxes, depreciation and amortisation. This measure came in at 150.1 million crowns in the quarterly results, against expectations of 162 million crowns, according to the website. Both sales and operating earnings thus fell below the levels analysts had expected for the period, as management reassessed its annual organic growth ambition in light of the third-quarter results and nine-month performance.
Investing.com attributed the setback to production disruptions, weak European veterinary sales and supply chain problems, factors that accompanied slower growth across the group. By contrast, the Europe and production divisions each achieved organic growth of 11% in the third quarter, according to the company's report. Growth in the European division coincided with weak sales in its veterinary business, while the production division recorded an increase despite disruptions to operations. At the product level, growth in the oral care product ProDen PlaqueOff exceeded 30% over the same period. These results showed differences between divisional and product performance and the group's overall results, as it ended the quarter with slower growth and management no longer considered its annual ambition likely to be achieved.
Swedencare's third-quarter net profit rose to 28.7 million Swedish crowns from 22.2 million crowns in the corresponding period. The improvement in bottom-line profit coincided with a decline in the earnings before interest, taxes, depreciation and amortisation margin to 20.5%, according to the quarterly report. The company recorded a margin of 21.7% in the third quarter of the previous year, reflecting lower operating profitability relative to revenue. Over the medium term, Swedencare aims to "achieve an earnings before interest, taxes, depreciation and amortisation margin exceeding 26%", according to its financial information page. That target puts the profitability level the company seeks above the margin recorded in both the current and comparison periods.
On liquidity, cash flow from operating activities totalled 96.3 million Swedish crowns in the third quarter, according to Swedencare's disclosure. These cash flows coincided with an increase in the ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortisation at the end of September. The ratio stood at 3.0 times on 30 September 2026, compared with 2.7 times on the same date in 2025. Net debt thus rose relative to the adjusted operating earnings measure the company uses to present its indebtedness, despite the improvement in quarterly net profit. The results combined positive operating cash flow with higher relative indebtedness, alongside the decline in operating margin that accompanied slower third-quarter growth.
Swedencare also faces an upcoming leadership transition after announcing that Chief Executive Håkan Lagerberg will leave his role. The company's report set the third quarter of 2027 as the latest date for his departure, alongside the release of the period's results and the revised assessment of its annual growth ambition. The next financial event on the company's calendar is the publication of its year-end and fourth-quarter report, scheduled for 10 February 2027. That disclosure is due before the announced deadline for Lagerberg's departure and covers the remaining quarter of the current financial year as well as its full-year results. The company approaches that milestone after quarterly results that combined higher net profit, slower organic growth and a lower operating margin, with its medium-term profitability target still in place.