While 2022 sales should bounce back to pre-Covid levels, margins are still burdened by challenging supply chains and cost inflation. However, we expect notable improvements throughout next year.

The availability of chassis and other parts has improved since Q3 this year and looks set to further increase throughout 2023, in our view. Combined with strong order backlog of € 1.36bn and continued high demand, this should boost next year’s sales (+9% yoy to € 1.09bn, eNuW). The resulting positive operating leverage coupled with some price increases and notably lower input cost inflation should allow margins to increase by 3.3pp yoy to 3.6%, in our view.

Additional margin potential from its online store

. While only having launched roughly a year ago, it already accounts for 6-8% of group sales, eNuW. Thanks to the group’s large customer base, excellent reputation, and broad product offering, Rosenbauer should be able to gain market shares. As a result, its online store is seen to outgrow the rest of the group (9% CAGR 2022-24e). With average online margins of 10-12%, this should strongly support our margin expectations (> 5% from 2024e onwards).

Beyond 2023, the electrification of global firefighting truck fleets should accelerate due to regulatory pressure and the resulting early retirement of non-electric firetrucks. Since Rosenbauer is already an established player in this still small market (50% market share in 2022

, eNuW), the company looks well positioned to strongly benefit from this trend. Mind you, margins with electric firetrucks are typically 2-3pp higher compared to non-electric versions.

Additionally, Rosenbauer recently appointed Markus Richter as new CFO. He previously worked as CFO at Engel Austria GmbH, which produces injection molding machines. Sebastian Wolf, the interim CFO and CEO, can now fully focus on his CEO role.

We maintain our positive view on the stock based on Rosenbauer’s strong positioning in an attractive market with structural demand growth but also plenty of margin improvement potential.

Margins should recover in 2023e and beyond thanks to easing supply chain issues and positive product mix effects.

We reiterate our BUY recommendation with an unchanged PT of € 54 based on DCF (terminal growth 2%, terminal EBIT margin 5.8%, WACC 7.5%).