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Imerys published Q3 results above the market expectations due to better-than-expected pricing and well-delivered cost control. The company remains uncertain about the market recovery at present but did confirm that it will be able to achieve the lower end of its EBITDA guidance (in-line with our estimate) considering its ability to keep yoy prices flat or just slightly negative and through active cost management.
Companies: Imerys (NK:EPA)Imerys SA (NK:PAR)
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Q1 23 was marked by lower volumes, offset by increased prices, and management assuring the market that the worse is already behind and that the volume demand is now in recovery mode. However, Q2 saw not just lower volumes, but also decelerating price growth. With ongoing destocking and flat pricing guided by the company, we will downgrade our estimates for FY23.
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Imerys delivered a muted Q1 performance in line with the guidance. Revenues were down 0.9% yoy and the current EBITDA was down by 3.4%. The flat performance was mainly due to a 12% volume decline (especially in RAC) which was offset by an 11% increase in prices. Moving forward, the management expects a demand recovery but this will be partially offset by declining prices, since the energy surcharge component is fading.
Imerys published stronger than expected sales and EBITDA figures, but net income was negatively impacted by a goodwill impairment loss, resulting in 8% miss vs our estimate. However, the outlook for FY23 is better than our expectations and, as guided previously, which will lead to a positive revision in our FY23 EPS. The company also announced a FY22 dividend of €3.85/share vs €1.55/share for FY21, which came as a positive surprise.
Imerys gave a comprehensive and well-quantified presentation during the CMD, clarifying a lot of questions after the press release yesterday morning. In short the management provided conservative guidance and, hence, our confidence in the company’s long-term potential remains intact.
Good Q3 results from Imerys. The company saw weakness in demand across multiple end markets and high cost-inflation yet, due to the unique product offering, it was able to further increase its prices resulting in a positive price/cost mix. The company is confident that it can manage the cost inflation going forward and has reiterated its guidance. Since the results and guidance were in line with our estimates, we do not expect to make significant changes to our model.
After months of study and millions of work hours, Imerys has finally shed some light on its lithium project, backing it up with additional numbers. The announcement was better than we had initially expected as a result of which we have augmented the value of the project by €200m in our NAV. To top it off, additional information provided by the company suggests that more treasure can be excavated by Imerys.
Lithium ‘gold’ provides optionality value to Imerys. Added to its well-established expertise in carbon black and graphite, Imerys may surf on the Li-ion battery explosive demand as a key materials supplier. That would be a complete change in the investment proposition from dull to risk growth. More news is expected before the end of this year and most likely at the CMD on 7 November.
Imerys published strong H1 22 results with 19% growth in sales and 20% growth in net income despite a difficult comparison base. We expect a slowdown in demand in H2 but still good top-line and EBITDA figures due to the company’s strong pricing power and ability to pass on costs to customers. Management has guided for FY22 EBITDA of €810-840m and the divestment of HTS to close by the end of this year.
Companies: Imerys SA (NK:PAR)Imerys SA (0NPX:LON)
Imerys published FY21 results which were better than our expectations. All end markets saw a recovery except for automobile, which suffered from chip shortages. We expect the strong demand to continue in 2022, given the good order book (especially due to supply-chain bottlenecks in 2021). The company has announced a dividend of €1.55/share. For 2022, the recovery in the automotive sector, developments in the talc litigation and the rumoured sale of the High Temperature business will be the focus
Despite high cost inflation, Imerys managed to deliver positive price over cost in Q3, overshadowing market fears. The company is confident it can manage the cost inflation going forward and has reiterated its guidance. Since the result and guidance are in line with our estimates, we do not expect to make any changes to our model.
Imerys published H1 21 results which were better than market expectations. It enjoyed an easy comparison base and outperformed our expectations on the margin front. We expect the strong demand to continue in H2, given a good order book, but cost management will be more challenging. Management has provided us with a guidance that is above our estimates but, given the company’s good H1 performance, we believe the targets are achievable and, hence, we will revise our estimates upwards.
Imerys published FY20 results which were better than expected. It saw a catch-up in volume demand by Q4 and maintained a positive price mix. Well managed opex resulted in an EBITDA margin at 18% in H2, above last year’s level. In FY21, we expect volumes to recover to at least 90% of the FY19 level but margins may remain weak due to increasing raw material costs.
Companies: Imerys SA
Imerys’ Q3 results were in line with our expectations. Market conditions improved, especially in the automotive end market. Revenues were down by 15.7% and EBITDA by 22% however, due to significant cost savings in Q3, the company was able to improve its EBITDA margin by 3.8pp qoq. In Q4, full and partial lockdowns will mostly impact the European business and, overall, the company does not expect things to be as bad as Q2.
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