Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Arkema. We currently have 12 research reports from 1 professional analysts.
Q2 sales were clearly up by +13% (v: +2%, p: +7%; FX: +1%: portfolio: +3%) to €2,198m and the gross profit margin slightly improved by 40bp to 24.0%. EBITDA rose +9% to €383m and net profit attributable to shareholders came in at €160m after €147m. Operating CF strongly improved from €73m to €242m based on the good operating performance and additionally fuelled by lower NWC outflow (€-50m after €-179m). Due to lower expenditures (€-145m after €-114m), investing CF moved from €-121m to €-106m. Financing CF swung from €-94m to €748m predominantly pushed by €899m net gross debt proceeds despite higher dividends (€-155m after €-143m). For 2017, management has marginally lifted FY guidance, now expecting to achieve between €1,310m and €1,350m (previously: €1.3bn) EBITDA.
Arkema announced its 2023 targets at its investors day. Management aims to generate a REBIT margin of 11.5-12.5% (2016: 9.7%; 2014: 7.5%) and EBITDA (based on recurring EBIT!)/free cash conversion of 35% (2016: 36%). The financial frame consists of ROCE to be at least at 10%, a net debt/EBITDA of <2x and an investment grade rating (2016: S&P: BBB; Moody’s: Baa2).
Arkema was up +14% (v: +5%; p: +5%; portfolio: +3%) to €2,152m and the gross profit margin improved from 22.1% to 23.0% in Q1. EBITDA increased +17% to €340m and net profit attributable to shareholders came in at €137m (€98m). Operating CF (+20% to €73m) was driven by the better operating performance despite the higher NWC outflow (€-179m after €-151m) due to higher receivables against the seasonality backdrop. Investing CF was broadly unchanged (€-97m after €-101m) slightly lifted by divestment proceeds. Financing CF doubled (€-20m after €-10m) seeing a decrease in short-term debt. For 2017, management had already confirmed its guidance of €1.3bn in EBITDA.
Arkema reported +5% (v: +6%; price: +1%; FX: -1%; portfolio: -1%) higher sales (to €1,852m) and the gross profit margin clearly improved from 18.0% to 19.3% in Q4. EBITDA strongly rose +26% to €246m and net profit attributable to shareholders jumped +76% to €86m. Operating CF came down from €380m to €246m, despite the higher operating performance, but NWC inflow declined from €205m to €97m and D/A was also lower. Investing CF moved from €-19m to €-327m burdened by significantly higher acquisition costs (€-337m after €2m) due to the closing of the Den Braven takeover. Financing CF was €-177m (€-57m), which suffered from higher net gross debt repayments (€-147m after €-25m). Management proposes a €0.15 higher dividend of €2.05 (€1.90) per share at the AGM on 23 May 2017. For 2017, management confirmed the achievement of the 2014 target of €1.3bn EBITDA. We expect the publication of the annual report in the coming weeks.
Arkema’s Q3 sales dropped 6% to €1,838m, but the gross profit margin improved from 20.2% to 22.3%. EBITDA went up +5% to €284m and net profit attributable to shareholders rocketed +57% to €96m. 9M operating CF strongly grew (+20% to €575m) due to the higher operating performance, despite a strong increase in NWC outflow (€-86m after €-19m). Lacking the huge cash outflow for the Bostik acquisition, investing CF abated from €-1,616m to €-337m, seeing capex far below D/A. Financing CF swung from €428m to €-79m, primarily due to the strong decline in net gross debt issuance (€26m after €478m). Management lifted FY guidance again, now expecting EBITDA growth in the 9-10% (7-9%) range based on the assumption that energy costs, raw material costs and FX will be in line with current levels. This does not include the announced acquisition of Den Braven. Closing is still expected in Q4 16.
Arkema’s Q2 sales (-7% to €1,952m) suffered from lower prices (-5%) stemming from lower raw material prices, adverse FX developments (-3%) and divestments (-2%), which may have been partly offset by higher volumes (+3%). EBITDA saw a strong increase (+38% to €351m) and net profit attributable to shareholders was up +11% to €147m. Operating CF remained broadly unchanged at €259m after six months of 2016. The better operating performance was mostly absorbed by higher NWC outflows (€-186m after €-67m). Lacking the cash outflow for the Bostik acquisition (~€1.3bn) in the previous year’s period, investing CF declined from €-1,531m to €-222m. Financing CF swung from €484m to €-104m as net gross debt proceeds melted away (nil after €486m). Management lifted the FY guidance and now expects EBITDA growth in the 7-9% range based on the assumption that energy costs and FX will be in line with their current levels. This does not include the announced acquisition of Den Braven for which the close is still expected in Q4 2106.
Arkema plans to acquire Den Braven, a leader in sealants for insulation and construction in Europe, for an EV of €485m. As the deal is subject to anti-trust approvals, closing of the deal is expected to take place in Q4 16.
Q1 sales were slightly up (1% to €1,893m) seeing one month of Bostik and some divestments (portfolio: +5%) and higher volumes (+3%), but lower raw material prices and the low point of the acrylic cycle ate up 6%. The gross profit margin improved from 18.25% to 22.1% and EBITDA strongly rose +32% to €291m. Net profit attributable to shareholders more than doubled (€98m after €42m). Operating CF (€61m after €34m) reflected the stronger operating performance, which was partly offset by higher NWC outflow (€-151m after €-110m). In Q1 15, investing CF was characterised by the Bostik payment and CF came back to a more normal level (€-101m after €-1,415m). The same is true for the financing CF (€-10m after €489m), which saw very minimal financing activities. Management confirmed its previously given guidance, expecting EBITDA to grow based on the assumption that energy costs and FX will be in line with current levels.
Bostik was a game-changing acquisition and the figures are dominated by this effect. In Q4, sales clearly improved +23% to €1,760m and the gross profit margin strongly improved from 15.5% to 18.0%. EBITDA went up +23% to €195m and net income attributable to shareholders nearly doubled (€49m after €27m). Operating CF more than doubled (€380m after €162m), driven by higher D/A and, additionally, propelled by a stronger NWC inflow (€205m after €61m), helped by lower inventories and receivables as well as higher payables. Investing CF came up from €-288m to €-19m as the previous year’s quarter was impacted by acquisition costs. Financing CF swung from €907m to €-57m. In the previous year’s quarter, Arkema issued a hybrid bond as a first building block to finance the Bostik acquisition. Management proposes a slightly higher dividend (€1.90 after €1.85 per share) at the next AGM on 7 June 2016. The payout ratio drops from 73.1% to 49.1%. For FY 2016, management is confident it can increase EBITDA, based on the assumption that energy costs and FX will be in line with current levels. The annual report should be available within the next few weeks.
Arkema will receive €73.6m from Klesch Group as compensation for the majority of costs incurred in the arbitration procedure.
Q3 figures remained dominated by the Bostik acquisition as sales strongly ramped up by +32% to €1,946m (volumes: -1%; prices: -4%; portfolio: +29%; FX: +7%) and the gross profit margin increased from 17.9% to 20.2%. EBITDA jumped +65% to €271m and net profit attributable to shareholders more than doubled (€61m after €24m). Operating CF (+31% to €224m) reflects the better operating performance and benefited from higher D/A. Investing CF (€-85m after €-111m) was helped by fixed assets payables (€79m after €-12m) despite higher capex (€-161m after €-107m). Financing CF swung from €128m to €-56m due to the lack of the previous year’s quarter inflow from short-term borrowings and the change of dividends to be paid (balance qoq: zero). In 2015, management expects EBITDA including Bostik in the range of €1,020-1,040m (previously: slightly above €1bn).
Q2 sales went up strongly by +39% (organic: -1%) to €2,106m and the gross profit margin improved from 18.1% to 20.3%. EBITDA ramped up by +35% to €254m and net income attributable to shareholders more than doubled (€133m after €50m). In H1, the operating CF benefited from the far higher operating performance coming in at €254m (€174m). Due to the Bostik acquisition, investing CF swelled from €-271m to €-1,531m, of which €-1,298m is attributable to the acquisition. Financing CF swung from €-107m to €484m due to the net gross debt issuance (€486m after €-25m). In 2015, management expects EBITDA including Bostik to be slightly above €1bn (previously: EBITDA to grow excluding the effect of the Bostik acquisition).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Arkema. We currently have 12 research reports from 1 professional analysts.
Epwin, the low maintenance building products manufacturer, has issued a mixed pre-close trading update. First half revenues and earnings were “in-line” with management expectations (slightly ahead of PG forecasts). Revenues up (principally due to M&A) and adjusted EBIT (modestly down). Overall a solid performance. However, management are mindful that input cost inflation and issues at two of its larger customers present certain headwinds. As a consequence of the weak RMI market and inflationary pressures we are flexing our full year forecasts (FY17 revenue forecasts unchanged, EBIT forecasts reduced by 8%).
Companies: Epwin Group
The acquisition of four French companies gives Keywords Studios strong capabilities across all major European languages for localisation and voice-over recording. The transactions boost our FY18 EPS by 5%, although some investment in integrating the entities will be required. The expanded offering should also support organic growth, through helping secure more centrally procured, multi-language contacts.
Companies: Keywords Studios
The interim update indicates that, despite H117 being broadly in line with expectations, market conditions remain difficult. Cost inflation continues to be a significant issue and, with market volumes broadly flat, the benefit of price rises has been eroded. This leads us to downgrade estimates across the forecast period. This results in a 7.8% cut to PBT in FY17 followed by 9.3% in FY18. Importantly, today’s statement indicates that the dividend remains unaffected with the shares yielding 7.1% with good earnings and cash cover. The balance sheet remains un-stretched, even after the impact of today’s cut to numbers Net Debt/EBITDA remains low at 0.6x. The shares had already started to discount weaker trading conditions and the recent customer issues, declining from 125p in May to last nights close of 94p. On new forecasts Epwin trades on just 7.2x FY17 earnings.
Companies: Epwin Group
The group has announced positive Interim results, with a return to profitability helped by an increase in exploration and production activity as well as improved operational efficiency. Revenue guidance has been eased slightly with profit forecasts maintained. There continues to be good operational momentum, although the Tanzanian situation continues to overshadow the shares and makes a target valuation problematic.
Companies: Capital Drilling
Paysafe’s H117 results show that organic constant currency growth is moderating to low double-digit rates, after an exceptional period of growth in 2016. Profitability was strong during the period, helped by the strong growth and margins of the Asia Gateway business. The sale of Asia Gateway and the acquisition of MCPS will both help reduce the group’s exposure to online gambling, and MCPS will strengthen the group’s position in bricks and mortar payment processing.
Companies: Paysafe Group
We update this table which we first published in early January and highlight the continued progress of the biggest AIM companies so far this year and activity in general. The latest AIM Statistics show that there are 963 companies currently, with 28 new issues year to date raising £441m. What’s more, this momentum has been maintained since June. This demonstrates that despite, the uncertainty surrounding the UK economy, generally investors continue to be active in the AIM market. In Share News & Views we comment on Cohort, ECSC*, Porvair, Quarto*, SQS* and Xafinity.
Companies: BMS CRPR ECSC EUSP FDM PCF PPIX QRT SNX SPRP SQS TCN W7L
The past fortnight has seen a number of records broken in the technology sector, both in the UK and abroad. FDM* share price set a record, going past the £10 mark, after beating market expectations. Sage made its biggest ever acquisition. Samsung set a record for net profit in a quarter, making it the world’s most profitable company. Apple’s cash pile grew to a record US$262bn. Google’s record US$2.7bn fine meant it had a rare decline in profitability. GetBusy* had a strong debut on AIM, increasing 22% on its first day, adding to the track record of recent tech company listings in London.
Companies: BBSN ECSC EUSP FDM PPIX QRT SPRP SQS SNX
BAE Systems reported a good looking set of H1 results, showing an improvement in revenues and EBITA margin (and the IFRS accounted operating profit margin), but also a modest increase in the order backlog versus FY16. Growth came from all divisions not only in terms of sales, but also EBITA. With increased operating cash flow in a usually-seasonally-weak half-year and higher EPS (+13.8% yoy), the group was able to increase the distributed interim dividend and has confirmed the FY guidance in an improving market environment.
Companies: BAE Systems
Marshalls, the UKs leading provider of landscaping products, continues to deliver superior growth. Interim results show revenues +8% to £219m (PG est. £215m), driven by a 17% jump in Domestic revenues. Initially most investors will focus on the top-line. However, we are equally impressed with the margin expansion (13.6% vs 12.8%), which reflects operational gearing, increased capital intensity and expansion in the contribution from (higher margin) new products. Given the stronger than expected 1H17, we are raising our FY17 PBT estimate from £50m to £51m and re-iterate our BUY stance on the stock.
The FY17 prelims confirm Fulcrum has progressed to its growth phase as it develops the top line. FY17 results were significant with PBT growth of 51%, DPS growth of 111%, a net cash balance of £12.6m and a 39% increase in the order book. We expect PBT growth of 14% and 9% in FY18 and FY19 as it evolves into a multi-utility infrastructure service provider and grows its annuity income. EBITDA margins are set to expand from 19.3% in FY17 to over 21% by FY20 and the cash position will finance a growing dividend with the yield expected to reach c5% by FY20. We initiate with a buy recommendation and price target of 66p.
Companies: Fulcrum Utility Services
Clarkson reported underlying EPS of 57.5p, up 9% YoY despite the challenging conditions in the shipping market. The interim dividend was increased by 1p to 23.0p per share and the final tranche of the Platou loan note was paid off. These results were in line with our forecasts, which we leave unchanged. However, now that the balance sheet is debt free and with cash generation at the pace we anticipated, we expect market attention to turn toward the potential for a very material increase in distribution, subject to growth investment, even ahead of a return to more benign market conditions which Clarkson should be fully able to leverage. We reiterate our Buy recommendation and 3,000p per share Target Price.
Rotork is taking decisive steps to determine its future size and shape. The company is not in a holding pattern awaiting a new CEO. Executive chairman Martin Lamb has taken the reins and end-market dynamics are driving a rethink in regards to innovation and the company’s operating footprint. In addition, there is a considerable opportunity to drive aftermarket activity, with the benefits of improved visibility and profitability that should provide. In the short term, management’s FY17 expectations have been maintained with stronger H2 delivery in sight; margins are expected to improve to a similar level to FY16.
LoopUp—The provider of conference calls and online meetings is seeking to join AIM. 2015 revs of £9.2m and EBITDA of £1.02m | Bacanora Lithium— To list on AIM around 28 Sep as holding company for TSX listed Bacanora Minerals at £100m market cap | Aura Energy—ASX listed uranium developer (ASX:AEE) expected to join AIM 6 September | Autins Group plc - The acoustic and thermal insulation specialist now looks to join AIM late August
Companies: PEG COG IKA OMI EZH MMH UBI CIRC EPO
OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m. | Wilmcote Holdings plc—Sch1 from the Company established with the objective of creating value for its investors through the acquisition and subsequent development of target businesses in the downstream and specialty chemicals sector. Offer raising £15m at 120p with market cap of £25m. Expected 17 August 2017 | Andes Energia PLC—Sch1 on admission the Company will change its name to Phoenix Global Resources plc will be an Argentinian independent oil & gas exploration and production company, offer TBC but market cap to be £844m and admission date 10 August 2017 | Verditek PLC—Sch1 update from holding company in the clean technology sector with subsidiaries operating within what it considers are emergent and fast growing sectors (industrial treatment of solids, air purification, water de-odourisation, zero emission, low cost energy), offer raising £2.75m at 9p with market cap of £16.9m. Admission 10 August 2017 | Xpediator Plc—Sch 1 from the holding Company for an integrated freight management business operating in the supply chain logistics and fulfilment sector across the UK and Europe with a strong presence in Central and Eastern Europe. Offer details TBC, expected Admission early August 2017 | Altus Strategies—African focused natural resource Company. Offer raising £1.1m at 10p with market cap of £10.7m. Expected 10 August 2017
Companies: ADL SEE GMR HSP MPH FIPP FFWD ACT FFX
Q2`17 results. Revenues excluding the sold Performance Products division increased by 14.1% to €219m. The gross margin improved from 17.3% to 21.6%, EBITDA remained stable at around €14.1m. The EBITDA margin however declined from 7.4% to 6.4%, The EBIT margin increased from 0.6% to 1.9% mainly attributable to lower depreciation. Our EBIT does not include the income from equity investments which is part of the financial results. The income increased from €1.8m to €2.6m. Net losses before discontinued operations increased from €6.8m to €9.5m and, including discontinued operations, from minus €46.8m to minus €3.3m. In the first half year revenues increased by 14.7% to €435.3m and the gross margin improved from 18.9% to 20.7%. The EBIT margin reached 2.4% compared to 1.7% in 2016. Net losses after minorities improved from €46.8m to €3.6m. Over the full year the company will still report a net loss because of positive income from the sale of the Evanston (USA) production site in 2016 and the redemption of the corporate bond (write-off of capitalized refinancing costs and early prepayment penalty).
Companies: SGL Carbon