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Research Tree provides access to ongoing research coverage, media content and regulatory news on Rexel. We currently have 20 research reports from 1 professional analysts.
Despite low top-line growth in FY19 (although within the company’s previous guidance), Rexel continued to improve the profitability, FCF generation and indebtedness. Moving forward, priorities are likely to be the same, as overall market conditions remains challenging, especially for industrial activity across the US, Germany and China. Our positive stance is likely to be maintained.
During Q3 FY19, Rexel witnessed a sequential slowdown in its top-line growth – soft industrial activity in markets like the US, Germany and China being the key culprit. While management anticipates trading headwinds in the near term, the FY19 financial guidance has been maintained (includes 5-7% increase in adjusted EBITA). No material change in our estimates.
We reiterate our investment case on Rexel (Buy, 39% upside). We believe the stock has corrected more than warranted, as investors’ concerns regarding the macro-economic uncertainties and Amazon’s encroachment on the B2B distribution market have eclipsed the ongoing operational efficiency in the distributor’s business. The current level offers an attractive entry-point for mid-long-term investment, in our opinion.
Rexel’s top-line growth moderated sequentially in Q2, largely due to the weak performance in Europe. Profitability also remained under pressure amidst cost inflation. However, management expects an improvement in H2 19 EBITA growth and, hence, has maintained the full-year guidance. We will incorporate a more cautious view in our estimates.
Rexel’s Q1 FY19 results surprised the market with its sustained strong performance in North America, and a recovery in the European business. Management remains confident about healthy business activity in the rest of the year and has reiterated its full-year financial guidance. No significant change in our target price and stock recommendation.
The Q4 18 results missed our estimates as Europe under-performed. France entered into red territory, joining Germany and the UK (both already there). North America on the other hand held its baton tight, with the eighth consecutive quarter of revenue increase. Furthermore, Rexel confirmed the completion of its disposal plan and has kept its 2019 revenue and adjusted-EBITA outlook unchanged. Given the weaker than expected growth in Europe, we will be lowering our target price. No change in the stock recommendation.
Q3 results came in below our estimates as well as market consensus. Growth momentum in Europe was halted primarily by Germany’s underperformance (resulting from its turnaround efforts), France’s lower than expected growth (led by difficult comparables) and the UK’s continuing contraction (on the back of Brexit-led uncertainty). Offsetting this, the US remained upbeat, benefiting from strong underlying demand. We have lowered our estimates. No change in the stock recommendation.
The company reported its Q2 results which were ahead of our expectations. North America remained in the driver’s seat, with both APAC and Europe extending the support to the top-line momentum. The company-wide turnaround plan has started yielding returns but we expect more in the coming quarters. Management has reduced its disposal target but has kept revenue and adjusted EBITA outlook unchanged. We have tweaked our estimates slightly. No change in the stock recommendation.
Rexel reported Q1 18 results below our estimates as well as industry consensus. The company once again grew in all its operating regions. Growth rates for North America and Asia remained on an upward trajectory, a direct contrast to the European region, where growth momentum softened for the second straight quarter. We remain optimistic on the North American growth story, whereas Europe should remain subdued mainly due to an unfavourable base effect. We have revised our estimates downwards. No change in stock recommendation.
Rexel posted robust Q4 results ahead of our as well as market estimates. The company’s ongoing top-line momentum was once again supported by each of its three operating geographies. Despite favourable macro-economic tailwinds in major operating regions, Rexel’s ongoing efforts to finalise the fine print of an already stated broader strategy seems to be rightly placed. We will be revising our estimates slightly upwards. Our recommendation on the stock remains unchanged.
Rexel reported Q3 FY17 results ahead of our estimates (sales were higher but profitability was in line). All numbers are at constant currency and on a same day basis unless specified otherwise. Revenue increased by 5.2% (vs Q2: +2.8%, Q1: +0.6% and Q3 FY16: -3.7%) with a robust performance across all operating geographies. Europe grew by 6.5% (vs. Q2: +3.6% and Q1: +1.2%; c.54% of group revenue), largely led by continued strong consumer demand in France (+9.1% yoy; 35% of regional revenue). While Scandinavia (+9.4%), Germany (+5.5%), Benelux (+10.2%) and Switzerland (+6.5%) also posted robust growth, the UK region slipped again into the red after two quarters of sequential improvement (Q3: -2.4% vs Q2: -0.9%, Q1: -3.2% and Q4 16: -7.9%). This was mainly due to the inability to pass on increased raw material costs and a depreciating GBP. North America grew by +3.3% yoy (vs. Q2: +1.9% and Q1: +1.2%; c.36% of group revenue) on the back of a favourable base effect (Q3 16: -6.0%) and improving demand in the US (+4.3% yoy; 78% of regional revenue). The US once again witnessed positive momentum in the O&G business (Q3: +30% vs Q2: +16.2% and Q1: 10.5%) and Rexel continued its the network expansion strategy. Canada tumbled by 0.4% (vs. Q2: +5.3% and Q1: -2.1%) due to non-renewal of a large wind contract, more than offsetting the favourable O&G demand. APAC also bounced back with 5.1% growth (vs Q2: +1.4% and Q1: -4.8%; c.10% of the group’s revenue), riding on strong consumer demand in China (+9.6% yoy; 36% of regional revenue) and Australia (+10.2% yoy; 41% of regional revenue). The adjusted EBITA margin came in at 4.2% (+17bp yoy), led by an improvement in Europe (5.1%, +23bp yoy) and APAC (1.3%, +24bp yoy), whereas North America clocked a 4.1% margin (-10bp yoy) on account of higher operational expenditure for future growth initiatives (branch opening/counter resets/logistics). Management reconfirmed its full-year financial targets (sales: low single-digit growth, adjusted EBITA: mid single-digit).
Rexel’s 2017 behaviour has left many stakeholders bewildered. The electrical goods distributor entered the New Year in a euphoric mood, riding on Trump’s ambitious infrastructure spending plans (further boosted by proposed tax cuts), and a gradual rebound in copper and crude prices. However, the stock turned turtle this April (slumped c.27% in just four months) despite witnessing better consumer demand and profitability during the year. Investors’ distrust is attributable to multiple factors, ranging from Trump’s unfulfilled promises to a fragile European economic recovery. But the biggest concern emanates from the increasing threat from Amazon. Although Rexel’s stock price has recovered c.15% over the past 45 days, let’s explore how tangible the threat from America’s most prominent e-com player is.
Rexel reported Q4 and FY16 results slightly ahead of our estimates. All the sales growth numbers are at CER and same-day basis unless specified otherwise. In Q4, the company’s revenue growth remained flat (vs Q3: -3.7% yoy) and registered a sequential improvement in all three regions. Europe returned to positive growth territory (Q4: +1.7%, Q3: -1.6%, Q2: -0.9%; 54% of group sales), on the back of strong construction activity in France, Scandinavia and Germany; jointly contributing c.50% of regional sales. The North American region also improved sequentially (Q4: -2% vs Q3: -6.0%, Q2: -4.2%; c.36% of group sales), on the back of a better performance in the US (Q4: -1.5%, Q3: -6.6%, Q2: -3.4%; catalysed by higher copper and oil prices). Similarly, the top line in the APAC region came in at -1.9% (vs Q3: -5.6%, Q2: -3.2%; c.10% of the group’s sales), largely driven by a better performance in Australia (+0.7% yoy, c.38% of regional sales; improved mining activity) and China (-1.9% yoy, c.37% of regional sales; strong industrial automation demand). For the full year, the organic sales came in at -1.9% (vs FY15: -2.1%; our estimate: -2.3%). The FX headwind eroded c.€213m from the top line (depreciation of the British pound and Canadian dollar vs the euro), more than offsetting the c.€59m positive scope impact, and resulting in a reported revenue decline of 2.8% (FY15: +3.5%, our estimate: -3.8%). The gross margin for FY16 improved to 24.2% (+14bp yoy). However, increased operating expenditure (depreciation and wages & salary) and the higher operating leverage pulled down the adjusted EBITA margin to 4.2% (-27bp yoy; our estimate: +4.1%). Management announced a turnaround plan at the recent capital markets day and defined the three strategic priorities listed below: • Accelerate organic growth (low single-digit in FY17 and higher than the market’s in the mid-term) by focusing on two fundamental pillars: a) more customers and more SKUs, and b) accelerating digitalisation. • Increase capital allocation to high-growth geographies (announced a divestment programme worth c.€800m) and reduce the indebtedness ratio to below 2.5x. • Improve operational and financial performance by improving the gross margin and strict cost control. Enhance the performance in high-growth potential areas (seven US regions, Germany, the UK and Australia).
Rexel reported Q3 FY16 results slightly below our estimates. All the sales growth numbers are at CER and same-day basis unless specified otherwise. The company’s revenue decreased by 3.7% (vs Q2: -2.3%, Q1: -1.4%; our estimate: -2.7%), largely due to the ongoing slump in copper-based cable prices (-0.9% yoy) and sluggish industrial activity in North America (slump in oil & gas prices and stronger dollar). The region clocked a 6.0% revenue decline (vs Q2: -4.2%, Q1: -4.4%; our estimate: -3.7%; c.35% of group revenue), pinned down by the subdued performance in both the US (-6.6% vs Q2: -3.4%, Q1: -3.6%; our estimate: -3.0%) and Canada (-4.0% vs Q2: -7.1%, Q1: -7.4%; our estimate: -6.0%). Europe was down 1.6% (vs Q2: -0.9%, Q1: +0.3%; our estimate: -2.2%), as a result of sluggish construction activity in France (-1.1%, c.35% of regional revenue) and the UK (-6.4%, largely due to the 78% drop in photovoltaic equipment sales; c.14% of regional revenue), more than offsetting the positive sales growth in Germany (+0.2%; c.11% of regional revenue) and Scandinavia (+1.6%; c.13% of regional revenue). Challenging macro-economic conditions in China (-11.2% lfl; reduced industrial demand from the wind industry; c.35% of regional revenue) and Australia (-2.6% lfl; ongoing slowdown in mining activity; c.38% of regional revenue) kept APAC in the red zone (Q3: -5.6%, Q2: -3.2%, Q1: +0.2%; our estimate: -1.9%). Despite the positive scope impact of €9.1m, the reported revenue declined by 5.6% (vs Q2: -2.2%, Q1: -1.9%; our estimate: -2.3%) due to currency headwinds (-1.6% yoy; depreciation of GBP vs the EUR). Better gross margin (+41bp yoy; on the back of better product mix and pricing action) failed to stem the EBITA margin erosion (-51bp yoy at 4.0%; our estimate: 4.3%) due to lower operating leverage. The company continued to optimise debt financing and expects the effective interest rate to reduce further to 3.4% in H2 FY16 (vs 3.7% in H1 FY16). Management confirmed the full-year performance target at the lower end of February’s guidance (organic sales of -3 to +1%; EBITA margin of 4.1% to 4.5%).
Rexel reported Q2 FY16 results ahead of our estimates. All the sales growth numbers are at CER and same day basis unless specified otherwise. The total revenue remained under pressure with a decline of 2.3% (vs Q1 16: -1.4%, Q4 15: -2.9%), largely due to the ongoing slump in cable prices (-1.3% impact yoy) and sluggishness in the North America’s industrial sector (Q2 16: -21% yoy, Q1 16: -36%). The region clocked a revenue slump of 4.2% during the quarter (our estimate: -2.8%; accounts for c.34% of group revenue). Despite an improved performance in Scandinavia (Q2 16: +3.5%, Q1 16: -0.1%; our estimate: +0.5%) and flat growth in France (36% of region’s sales), Europe slipped back into the red zone (Q2 16: -0.9% vs Q1 16: +0.3% and our estimate: +0.2%; accounts for 56% of group revenue), largely on the back of a dismal performance in the UK (-6.4% yoy; reflecting an 80% drop in photovoltaic equipment sales after the change in tariff regulations; contributes 14% of region’s sales) and Germany (-2% yoy; contributes 11% of the region’s sales). Furthermore, the challenging macro-economic conditions in China kept Asian growth in negative territory (Q2 16: -7.2%, Q1 16: -1.6%, Q4 15: -1.0%; accounts for c.5% of group revenue) while the Pacific region clocked a revenue growth of +1.4% (vs Q1 16: +2.3%, Q4 15: +1.0%; c.5% of the group revenue). However, a positive calendar and scope effect (2.4% and 0.5% respectively) more than offset the FX headwinds (-2.8%; depreciation of USD and GBP vs EUR), leading to a reported revenue decline of 2.2% (vs Q1 16: -1.9%, Q4 15: 3.2%; our estimate: -2.5%). However, the reported EBITA margin came in at +4.5% (+30bp vs our estimate), on the back of an improved gross margin in Europe (+17bp yoy), Asia-Pacific (+92bp yoy) and continuous opex reduction activity in North America (-15bp yoy as a percentage of sales; reflecting ongoing branch network optimisation programme). Furthermore, the company realised lower financial expenses due to early bond redemption (Q2 16: €43.7m vs €69.8m in Q2 15; worth €650m maturing June 2020) and refinanced at lower interest rate (-160bp vs earlier issue), resulting in a +184% increase in the net income from continuing operations. While management remains cautious about the Brexit impact and industrial activity levels in H2 16 (North America and China), it remains bullish on an improvement in the French construction activity. The company also reconfirmed the FY16 guidance (organic growth: -3% to +1%; EBITA margin: +4.1% to +4.5%).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Rexel. We currently have 20 research reports from 1 professional analysts.
|25Mar20 17:30||GNW||Measures related to Covid-19|
|13Feb20 06:30||GNW||FOURTH QUARTER SALES & FULL-YEAR 2019 RESULTS|
|17Oct19 06:30||GNW||Rexel: THIRD-QUARTER 2019 SALES|
|01Aug19 07:30||GNW||Rexel: FREE CASH FLOW CONVERSION UNDER IFRS 16|
|30Jul19 06:30||GNW||Rexel: FIRST-HALF 2019 RESULTS|
|30Apr19 06:30||GNW||Rexel: First-Quarter 2019 sales|
|28Mar19 20:04||GNW||Rexel Reinforces the Operational Dimension of the Group’s Executive Committee|
Trading below its 5-year PE low, compelling entry point
Companies: Somero Enterprises
Results ahead; forecast upgrades, special dividend, yielding 7% SPSY has announced a strong set of results, with EBITDA and PBTA some 6% and 4% respectively ahead of our forecasts, following a succession of upgrades and some notable wins during 2019. Reflecting the strong momentum, and with forecasts well supported by firm contracts which exist independently of the current global crisis, the company is (1) trading ahead of expectations in the current year, and (2) with strong cashflow, feels confident to announce a special dividend this morning to be paid in June. With meaningful upgrades to the current year, and new, progressive, forecasts for FY2021E, the current outlook is strong at a time when this is rare for a mid-cap company; while key opportunities developed over the past eighteen months continue to be highly promising. SPSY provides advanced technology solutions for banknote, product authentication, and secure lottery transactions as a highly specialised operator, working in fields which offer valuable respite from Covid 19. Cash of $US14.3m is ahead of our expectations and some 13% ahead YoY. Well-invested and with well-controlled costs (and high gross margins), today's results provide further support for our fair value assessment, which in turn is far ahead of the current share price.
Companies: Spectra Systems
US & German manufacturing PMI hits lowest readings since 2009, UK manufacturing PMI heads below 50, BorgWarner expects material financial impact from customer production halts
Companies: AVON CGS HAYD HEAD HILS JHD RNO SCPA TWD TRI ZTF SOM GHH
3 weeks ago, we thought the coronavirus would be a Chinese/Italian phenomena impacting global supply chains, but not triggering full/partial lockdowns across large swathes of the planet. How things have changed.
The Indian Government and Reserve Bank of India has announced several relief packages to combat the adverse impacts of COVID-19 and the lockdown implemented last week. The lockdown encompasses all non-essential industries and has resulted in OPG's industrial customer shutting down operations and reducing their short-term demand levels. As a result of the current market uncertainty, we are withdrawing our forecasts from the market and move our recommendation to Under Review until macroeconomic conditions stabilise. We believe OPG's strong portfolio of customers from diverse industries will enable it to quickly revert to normal operating levels once the situation improves.
Companies: OPG Power Ventures
Breedon is effectively moving to a (temporary) lockdown position on all its sites save Hope cement plant (which will produce to storage) and those in the Republic of Ireland where the principal customer is central and local government and as such will continue to operate until directed otherwise. Crucially, the group is in a strong financial and liquidity position with undrawn facilities of £220m and £60m in cash whilst any unwind of working capital from here is likely to actually generate cash. Moreover, the planned £155m cash outlay on the Cemex assets to be acquired is almost certain to be delayed beyond the coronavirus period due to the associated stalling of the TUPE process and IT migration. This position seen against a cash ‘burn' of probably no more than £15m per month (gross of any government support schemes and noting employee cost is the largest single constituent of fixed overheads) is comfort indeed for shareholders. We are withdrawing our forecasts for 2020 (formerly £200.7m of EBITDA, £113m underlying PBT and 5.6p EPS) and beyond on the simple basis that we cannot predict either the depth or duration of the coronavirus impact. Nonetheless we are happy to retain a Buy on the basis that: (a) there will be no structural damage done to the group's operational, asset or financial base as a result of coronavirus, (b) it should see a rapid scale-up when normality returns and (c) management can be relied on to re-assert relative growth versus its peers which has been a hallmark of Breedon's history to date. For long term investors these are opportune times.
Companies: Breedon Group
At Recruitment, there is a significant variance between customer segments, with food currently strong. Staffline is well placed to benefit from its strong candidate database.
Companies: Staffline Group
The latest body armour contract for the US Defense Logistics Agency is for up to $333m, to be delivered over 3.5 years for a legacy product. Avon had identified it as an incremental value-creating opportunity which, when won, would trigger the contingency consideration of up to $25m for the Helmets and Armor business acquired at the start of 2020. We have increased our FY21 EPS estimates by 13% following the award of the first delivery contract. Avon operates in defence and dairy markets that should be relatively resilient as they are deemed essential in the US, UK and Italy.
Companies: Avon Rubber
Despite a promising start to the year, Filta has inevitably been impacted by the widespread closure of sports venues, universities, restaurants and other similar sites across its key markets, in order to control the spread of COVID-19. This has led to a material reduction in trading. Given the lack of certainty around when such restrictions will be eased, or how quickly consumers will return to normal habits once they are, visibility in the business is very limited at this stage. As such, we withdraw our FY20E forecasts and move our rating to Hold, until such visibility improves.
Companies: Filta Group
The Group has announced interim results, which include the impact of the decision to cease its Thin Film operations, and also extensive Board changes. In view of the Stratasys transaction we remain restricted and can therefore provide factual comment only. Interim results show an IFRS loss before tax of £52.3m and an adjusted loss before tax of £15.0m. A separate announcement covers management succession that will see the Chairman, SID, CEO and CFO leave the Group.
SMS has the morning issued an update to the market in relation to Covid-19. SMS has, with immediate effect, temporarily halted all non-essential field engineering activity, including the installation of smart meters. Essential emergency field engineering work will continue and SMS has increased safety procedures in place to ensure the protection of employees, supply chain and consumers. Whilst this short-term halt in installation activity will have some impact on profitability in the current year, SMS benefits from sustainable and predictable (upwards only) index-linked annually recurring meter rental and data service revenue (£73.2m at end February 2020) which is totally unaffected by the current environment. Whilst the short-term impact on profitability is difficult to quantify precisely and will depend on the length of time installation activity is halted, the full 2m smart meter order book will remain to be completed in its entirety once installation activity recommences. The longer-term prospects for SMS are thus unaffected in our view and the business comfortably has the balance sheet resources and expertise to see it through this difficult period.
Companies: Smart Metering Systems
Unscheduled trading statement indicates an adverse impact from C-19 on the business. In the absence of guidance, we reduce our FY20 FD EPS by 52% from 12.0p to 5.8p. The high public sector exposure around the world is positive.
Companies: RPS Group
discoverIE’s year-end trading update confirms that coronavirus-related disruption in China is expected to modestly affect FY20 earnings. While trading elsewhere has been as expected, with good order wins, efforts to contain the virus in Europe and North America could reduce demand and introduce supply constraints over at least the next quarter. We have revised our forecasts to take a more cautious stance in H121 before factoring in a recovery starting in H221.
Companies: Discoverie Group
FY19 Results: in line with January Trading Update
Companies: Keywords Studios
For fighter pilots, it is a minimum requirement. But having 20/20 ‘visual acuity’ (correct term) does not necessarily mean you have perfect vision (as convention assumes); instead, it indicates sharpness and clarity of vision at a distance. It is measured by a Snellen Chart, which displays letters of progressively smaller size and whereby 20/20 means that the test subject sees the same line of letters at 20 feet that a person with normal vision sees at 20 feet (or 6 metres; but 6/6 simply didn’t catch on).
Companies: ABBY BDEV BWY BKG VTY CRN CSP CRST GLE GLV INL MCS PSN RDW SPR TW/ WJG