Analysis of Viscofan results for 2017

Analysis of Viscofan results for 2017

 

Analysis Department of Bankinter offers analysis of the latest news on the Spanish company:

Viscofan

– Target price: under review

– Close: 52.3 euros

Weak results worse than expected

Key figures 2017 compared our estimates and Bloomberg consensus (BB)

  • Sales : 778 million euros (+ 6.5%) vs. Estimated BKT 773 million euros and 775 million euros estimated BB.
  • EBITDA : 211 million euros (+ 3.5%).
  • Recurring EBITDA : 207 million euros (+ 2.8%).
  • Recurring EBITDA margin : 26.6% vs. 2016 27.5%.
  • Net profit : 122 million euros (-2.4%) vs. 125 million euros estimated BKT.
  • Earnings per share (EPS) : 2,535 euros vs. BKT estimated 2.68 euros and 2,657 euros estimated BB.

Main figures for the fourth quarter 2017

  • Sales : EUR 197 million (+ 2%).
  • Recurring EBITDA : 48 million euros (-7%).
  • EBITDA margin : 24.3% vs. 26.7% in the fourth quarter 2016.
  • Net profit : 30 million euros (-19%).

The dividend for the whole year is 1.55 euros / share  ( pay-out  of 59%) and  net financial debt amounted to 41.1 million euros  from 8.8 million euros in December 2016

The prospects of the company point to revenue growth in the first months of 2018 but increased pressure on costs (commodity prices) and foreign exchange. In stage one of average rate of 1.25, estimates for 2018 increased +4% / + 6% in income; +2% / + 5% and + 2% in Ebitda / + 5% of Net profit. CAPEX down -30% to 75 million euros.

Opinion

The results are weak.  Net profit back -3% and lets expectations despite increased 7% of revenues, which are also below estimates. The negative impact of exchange rates (by  the strong euro , especially against the dollar, the Brazilian real and the yuan) is the main reason for these results. In terms of recurring EBITDA has subtracted almost 2% growth in 2017 and 8% in the fourth quarter 2017.

Moreover,  the margins are narrow  (recurring Ebitda margin 26.6% vs. 27.5% in 2016) due to increased costs, being the consumption starting with the largest increase (+ 12%) by price rise of raw materials. However, it also increases staff costs and other operating expenses (around + 9.5%).

The financial result worse , not only negative changes in exchange rates but also by the increase in financial costs (+ 1.5%) combined with lower financial income (-35%) due to reduced box (-38% to 28 million euros) for the payment of investments (CAPEX). Consequently, profit before tax back -6% to 145 million euros.

The  positive aspect  of these figures is on the side of the  balance  that continues to show strength and remains sanitized by the leverage  being irrelevant: thinking of increasing DFN, the ratios are still very low: DFN / EBITDA 0.2x and DFN / PN 0.05x (equity is increased to 728 + 3% million).

Finally, the  dividend  announced (1.55 euros / share) represents a yield of 3%.

 

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