Industrials

Report by Iron Blue Financials

Following analysis of its FY25 annual report, Ed Steele and Shailja Periwal trim their Sandvik AB score to 23/60 from 25/60, principally reflecting FY25's much reduced level of stripped-out restructuring expense. Ed and Shailja calculate that stripped-out costs represented 4% of PBT adj in FY25 (ex M&A-related items) down from 13% in FY24, whilst stripped-out restructuring costs fell to 2% from 11%. Offsetting, they flag compressed balance sheet bad debtor and inventory impairment provisions, with bad debtor provisioning falling to 3.1% of gross receivables, a 10-year low. The gap between provisions expensed above the line and used or released moderated to 3% of PBT adj. Governance concerns persist: only three of ten directors clearly meet independence requirements, non-audit fees to PwC remain above average at 15%, and whistleblower reports rose 19% to 518 cases with a higher substantiation rate.

Report by Forensic Alpha

At Nexans, supplier financing increased, with payables under third-party bank arrangements rising from €341m at FY24 to €449m at FY25. Receivables securitisation and factoring programmes also grew, from €181m to €201m over the same period. Nordex saw contract assets rise from 37 to 48 days equivalent, offset by a matching surge in trade payables that neutralised cash flow impact. Accor disclosed a notable jump in long-term loans to Orient-Express entities following deconsolidation, while Airbus recorded an increase in receivables past due (from 25% of total receivables to 31%) and a release of provisions amounting to a total of €634m, a large amount of which was via “other risks and charges”.

Report by Forensic Alpha

Forensic Alpha is a machine intelligence system that is able to scan through a company's filings, extracting relevant accounting and governance data. Their technology works by translating unstructured data found in the notes to the accounts and governance disclosures into structured data. They then process that data, searching for the presence of common red flags that are known to be indicators of weak fundamentals and / or imminent problems. 147 new company filings were processed in the past week across Europe. 29 companies saw significant new red flags. While this report focuses on Nordex (Contract Assets, Ageing of Receivables, Related Party Transactions), other stocks highlighted include Hellenic Telecommunications, Ubisoft, Merck KGaA and Hapag-Lloyd.

Energy

Report by Forensic Alpha

Papering over the cracks - longer-term earnings power is being overestimated creating a compelling short opportunity. Forensic Alpha’s 15-page report focuses on the wind turbine manufacturer's lack of development spend vs. competitors and how the growth of Chinese manufacturers puts it at a competitive disadvantage. Furthermore, following the release of Nordex's annual report, Forensic Alpha’s MI system flags several accounting issues / assigns the company the maximum risk score.