Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on HERA SPA. We currently have 8 research reports from 1 professional analysts.
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M&A and cost efficiencies support results, offsetting lower regulated earnings
21 Mar 17
The Italian multi-utility company has presented its FY16 results with revenue relatively flat at €4,460m (-0.6%), which was weaker than expected mainly due to the lower allowed WACC under the new regulatory parameters in Italy and the lower revenues from electricity and gas sales from the fall in commodity prices. However, both top- and bottom-line earnings were better than expected with EBITDA reaching €916.6m (+3.6%) and net income €207.3m (+14.8%), driven mainly by lower COGS and a reduction in the financial expenses. The net debt of the company has also decreased at a faster rate than expected, reaching €2,558m (-3.5%), while equity has increased by 2.4%. The group’s gearing level has therefore improved to slightly below 100%, while the net debt/EBITDA ratio has also improved to 2.8x. The proposed dividend is €0.09/share, in line with last year’s and expectations.
From a weak top-line to a strong EPS performance
10 Nov 16
Hera has published its 9M 16 results with revenues falling 3.1% yoy to €3,105m, but EBITDA increased by 1.6% yoy to €650.6m, operating profit rose +3.8% yoy to €329m, pre-tax profit rose 9.5% yoy to €239.1m, and net income increased by +13.8% yoy to reach €142.2m. On the revenue side, lower revenues were affected by the downward revision of the WACC and lower commodity prices. However, a margin improvement has been achieved through lower gas imports and reduced costs in commodity purchases, which increased EBITDA levels. Moreover, lower provisions in relation to landfill have boosted the operating profit, while lower financial expenses due to lower debt and financial costs (-2.5% yoy) and higher income from associates have supported the pre-tax profit increase (+9.5% yoy). In the end, a relatively flat tax payment, which implies a lower tax rate, and lower minority interest have helped net income to reach double-digit growth.
Resilient performance with bottom-line double-digit growth, despite lower allowed WACC
28 Jul 16
Hera has provided strong half year results despite revenue falling 2.7% yoy to €2,152.7m, mainly driven by lower revenues on regulated services due to regulatory changes and lower volumes sold due to mild weather. However, EBITDA increased by 2.4% yoy as margins improved due to lower material and operating expenses. Along the same path, a slight decrease in depreciation levels pushed operating profit towards a 5.1% yoy increase, reaching €257.4m. In addition to this, lower financial expenses and a decrease in minority interests have boosted the bottom-line performance with a 12.8% yoy increase in net income to reach €121m. Net debt has fallen by 1% ytd to €2,624m, mainly due to a similar decrease in outstanding debt.
Strong bottom line despite negative impact from regulatory changes; waste underperforms
11 May 16
Hera has provided weak revenues as they decreased 5.8% yoy to €1.23bn, missing market expectations. However, a 13.4% yoy decrease in COGS has stabilised the EBITDA to €278.4m (+0.4% yoy), while a 12.6% decrease in financial expenses and a 4.8% fall in minority interest have boosted the net profit to €91.2m, a 5.3% yoy increase, beating expectations. Operating cash flow continues on its strong trajectory as it increased by 35% yoy due to an improvement in working capital, which was used to cover the 13% increase in investment and higher than expected debt payments. The financial structure continues in its positive trend as equity improved 3.73% ytd, while net debt has been reduced 5.6% ytd, pushing the gearing to below 100% (0.96x). All planned targets and strategies of the company have been confirmed.
The positive trend continues supported by a diversified approach
23 Mar 16
The group has provided a positive set of results for 2015, but within expectations. Revenues increased 6.7% yoy to €4,817m, slightly above expectations. EBITDA was in line with expectations at €884.4m, representing a 1.9% yoy increase. Nevertheless, a 3.7% yoy increase in depreciation and provisions meant EBIT remained near the previous year’s level at €442.2m (+0.2% yoy), which is lower than forecasts. Despite this, an 8.7% decrease in financial expenses and a 7% decrease in taxes (with a decrease in the tax rate from 41% to 36%) have allowed attributable net profit to increase by 9.5% yoy to €180.5m, while on an adjusted basis, net attributable profit reached €188.1m, corresponding to a 15.4% yoy increase which is slightly better than expected. Higher income from associates and JVs and a decrease in minorities due to the full acquisition of Romagna compost and Akron have positively affected net income. Net debt remained relatively stable at €2,652m, which is better than expected, as operating cash flows remained strong despite negative working capital change, but was still able to finance fully capex, dividend payments and part of the multiple M&A operations and minority buy-backs. A dividend of €0.09/share has been proposed. Guidance is maintained within the scope of the 2016-19 business plan presented in January.
2016-19 business plan revealed: growth, efficiency, and M&A
12 Jan 16
The group has confirmed its growth strategy, mainly to reinforce the network part of the business, backed by the following points to be achieved by 2019: • €1.03bn in EBITDA (an additional 1% increase compared to the previous objective and a 4.5% CAGR); • Capex and financial investment €2.2bn (5% increase); • Net debt/EBITDA ratio of 2.9x; • To achieve at least 2.3m energy customers. The new business plan includes the integration of the lower regulatory WACC revised under the new parameters for the model (a decrease of €25m in EBITDA): +Water 5.3% (-70bp), Gas distribution 6.1% (-80bp), and electricity distribution 5.6% (-80bp)+, as well as the reduction in renewable subsidies for electricity generation (-€30m in EBITDA). Adjusted for both expected reductions, the new business plan includes an additional 6.7% growth in EBITDA from its previous objective. The dividend policy is unchanged with a floor of €0.09 per share (minimum) under a 70% payout ratio. However, if the results are better than expected, the dividend policy may be revised.
N+1 Singer - T. Clarke - Strong conclusion to FY16, record order book
28 Mar 17
After significant upgrades at the time of the full year update (PBT forecast +43% FY16; +14% FY17), today’s results are c.4% ahead of our expectations at the PBT level and show strong growth on the prior year (PBT +48%). All regions achieved positive growth in revenue. The outlook statement refers to a still growing order book (£350m at the end of February vs. £330m at the year end) and the strength of recent trading, with London & the South East and Scotland said to be particularly positive. The Group has reiterated its ambitions to improve margins, but we have not incorporated this into our forecasts at this stage. We have nudged up our FY’17 forecasts (PBT +5%) and introduced FY’18 forecasts that imply 2% PBT growth. Despite the well justified bounce in the share price, the shares still trade at a significant discount to the peer group (7.6x FY17 PE, 4% yield).
N+1 Singer - Severfield - Strong H2 drives upgrades; CEO temporarily steps down due to ill health
28 Mar 17
Severfield’s trading update highlights that trading during H2 was strong and the Group now expects results to be ahead of expectations. Cash flow performance has been similarly strong with net funds at the year end also expected to be ahead of expectations. The strong performance was driven by both a better than expected revenue performance and better than expected growth in the operating margin. We expect to increase our FY16 PBT forecasts by c.9% to around £19.5m. In addition, we are disappointed to see that Ian Lawson (CEO) has taken a temporary leave of absence due to physical ill health. John Dodds (non-executive Chairman) will step up to Executive Chairman on an interim basis and Alan Dunsmore (FD) has agreed to assume the role of CEO on a similar basis. This should ensure the continuity of the business whilst Ian is recovering. The outlook for Sevefield remains positive and the Group has reiterated its medium term target to double PBT from £13.2m in FY16 by FY20. We remain positive on Severfield (one of our best ideas for 2017) and continue to see clear potential for it to outperform its medium term targets.
N+1 Singer - Morning Song 22-03-2017
22 Mar 17
Carador Income Fund (CIFU LN) Premium rating restored, high levels of refinancing activity | Cello Group (CLL LN) Outlook getting brighter – watch Pulsar | Eckoh (ECK LN) Largest ever US secure payments win | eg solutions (EGS LN) Full year results in line | Futura Medical (FUM LN) Licensing deal for CSD500 in Portugal | Verona Pharma (VRP LN) Global agreement with QuintilesIMS to support development of RPL554 | Xaar (XAR LN) 2016 results slightly ahead, reduced visibility in 2017
28 Mar 17
ClearStar* (CLSU): Building a background for growth (CORP) | Sound Energy (SOU): TE-8 results (HOLD) | LiDCO* (LID): 2017 should be a transformative year (CORP) | Proteome Sciences* (PRM): FY 2016 in line. Moving towards breakeven (CORP) | Fulcrum (FCRM): Significant market potential, rising margins and a strong balance sheet (BUY) | Mortgage Advice Bureau (MAB1): Strong and growing intellectual property (BUY) | 7digital* (7DIG): Open offer result (CORP)