JPM | Industrial Strength Morning Messages: Positive overnight (AIR, GEA), in-line Akzo, Kone like Schindler, Epiroc to OW, Sandvik to N

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JPM | Industrial Strength Morning Messages: Positive overnight (AIR, GEA), in-line Akzo, Kone like Schindler, Epiroc to OW, Sandvik to N

term guidance since 2023 - and while the Group is aiming for €12-13bn of Adj EBIT with the mid-point

below consensus, the mix of ACA better at €10bn has pleased investors. As per David’s note below, the €5bn SBB over 3

years is pretty inconsequential in the context of AIR’s market cap (c1% p.a.) but it is a move in the right direction and the

balance sheet + FCF offers scope for more in the future. We have upped our numbers by 2-3% over the forecast period

(mainly reflecting the SBB) and hope that post this event (and some downward adjustment to the upper end consensus

forecasts) that the decks are cleared and the attractive valuation (alongside long term order backlog, under supplied market etc

etc) can take the shares higher.

• AKZO NOBEL: Q2 RESULTS - ANALYST FIRST TAKE (HERE): Our Take: 2Q organic sales growth of +2% YoY

(volumes flat; price: +3% YoY; mix: -1% YoY) is lower than JPMe of +3% YoY due to the unfavorable product mix, which

wasn’t reflected in our estimates. 2Q adj EBITDA is in line with JPMe and 1% better than company consensus with 5%

organic YoY growth driven largely by net cost savings and positive net pricing (adj gross margin +70bps YoY and adj

EBITDA margin +40 bps YoY). Other items below adj EBITDA are mixed with adj EPS miss vs. JPMe (due to higher than

expected tax rate and net financing costs), FCF beat vs. JPMe (on better working cap) and reported EBIT miss (due to higher

than expected restructuring costs). Company has guided to 3Q adj EBITDA of ~€390m (implied modest organic YoY growth,

per our calculations), which is 6%/3% higher than JPMe/Bloomberg consensus with FY26 adj EBITDA guidance unchanged.