Delignit continues to please with a 16% rise in FY18 EBITDA despite a demanding comparative and one-off contract as well as project start-up costs. Automotive, the major sector, stole the show with revenue up a quarter thanks to strong OEM activity and the maximisation of revenue per vehicle. This momentum, allied with an initial contribution from a potentially transformative OEM motor caravan order, underpins guidance of further double-digit growth in 2019 revenue at maintained EBITDA margin. Finances are healthy (year-end net debt was inflated by a temporary delay in customer receipts), allowing investment (up c 20% in FY18) and a progressive dividend policy.
H218 saw a clear acceleration in revenue (up 21% y-o-y from 8% in H1) and FY18 revenue beat (up 14% against expected at least +8%). As in H1, Automotive was to the fore (revenue up by a third), reflecting high volumes from series supply contracts and demand for system solutions in cargo securing. Technological Applications remained subdued (revenue down 8% in H2) despite higher railway systems sales. Exports were again the driver (up by over a half) in line with strategic expansion. By contrast, there was a marked fall in the H2 EBITDA margin (8.7% vs 9.4% in H217) owing to one-off start-up costs, notably for the caravan model. However, the FY18 EBITDA margin of 9.3%, up marginally y-o-y, met guidance. A near doubling in net debt was largely due to the adverse timing of debtor payments.
A confident statement reflects buoyant target markets, a good order book and increasing invitation to major tenders owing to Delignit’s reputation for development and technology. FY19 guidance is for top-line growth of c 14% and EBITDA margin similar to last year. Longer term, successful business model transition, as shown by the caravan order, supports management’s “vision” of revenue of over €100m at 10%+ EBITDA margin by 2022.
Key ratios appear to be at a significant premium to that of wood processing and automotive supplier peers. For example, management guidance for FY19 gives Delignit EV/EBITDA of c 11x (peer average c 7x). However, evident strong longterm growth prospects could lead to a visible reduction in valuation.