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Q3: recovery in Pasta segment continues
27 Oct 16
Ebro released its Q3 update: sales are up +1.2% and the EBITDA margin is up 200bp yoy and up 30bp on a qoq basis. By division, Rice recorded +0.8% in sales and a 210bp EBITDA margin progression. Pasta recorded +1.8% in sales and a +170bp progression in margins (+130bp on a qoq basis which is very encouraging). For the FY, the group expects a turnover of €2.47bn (slightly lower than our forecast), a €340.7m EBITDA (in line with our forecast) and net profit of €167.6m.
Q2: Another solid quarter
29 Jul 16
Ebro released its H1 update. Revenue grew by 2% (-1.1% in Q2) whereas the EBITDA progressed by 1.7%. The EBITDA margin was up 170bp due to improved profitability of the Pasta segment. By division, the Rice business sales were slightly down in Q2 whereas the EBITDA margin was 180bp higher (and stable on a quarter after quarter basis). In Pasta, sales grew by 5% while the EBITDA margin improved to 12% on the back of a better North America performance. The company warned that the favourable trends in the raw material environment could reverse, therefore the second half of the year might be weaker.
Q1: good start to the year
28 Apr 16
Ebro released its Q1 update. Net sales grew +2.7%, whereas the EBITDA margin was up +140bp. By division, Rice recorded +2.5% growth in net sales and +170bp in the EBITDA margin, driven by good underlying volume trends in Europe and North America. Pasta recorded +3.3% growth in net sales and +200bp in the EBITDA margin, driven by the strong performance of Garofalo as well as a more stable pricing environment in North America and business initiatives to align with current consumer trends in the US (gluten free, low calorie, ancient grains). Advertising spend for period was up 8.2%. Net profit for the period was up +43% thanks to the disposal of a business in Puerto Rico.
Q4 was better than expected
25 Feb 16
Ebro released its FY results. The group's revenue was up 16%, EBITDA was up +9.6%, whereas the EBITDA margin contracted by 70bp. The advertising ratio grew to 3.5% of sales vs. 3.4% a year earlier. By division, Rice's FY revenue was up +13% (+8.6% in Q4) whereas the EBITDA margin increased by 60bp. The strong performance of the division was driven by the very strong results in North America (good category growth, market share gains and raw material cost reductions). In Europe, the performance was affected by rising promotional activity and the consolidation process. Ebro increased its innovation and advertising activity in order to respond to the more challenging European environment. Pasta’s revenue was up 19% (15.5% in Q4), whereas the EBITDA margin contracted by 210bp (to 12.1%) due to significantly higher durum wheat prices. In the US, the company's performance has been impacted by the rise in durum wheat prices as well as a -3% category decline linked to low carbohydrate diet trends. To relaunch its sales, Ebro started to readjust its portfolio to new trends: gluten-free pasta, use of quinoa and low-calorie pastas. In Europe, the company outperformed the market by growing 3.8% vs. a category decrease of 1.5%. The FY net profit was practically flat (-0.8%). Net debt was up +5%.
Q3 update: US pasta lags
29 Oct 15
Ebro released its Q3 update. Sales grew by 11.7% in Q3, EBITDA progressed by 10% (with 10% FX effect) whereas the EBITDA margin contracted by 15bp. By division, Rice's revenue was up +13.5% but the EBITDA margin contracted by 20bp vs. Q2 15, due to higher raw material costs. Pasta's revenue was up by 10.2% with an EBITDA improvement of 50bp vs. Q2 15. Despite a better Q3, the EBITDA margin for the Pasta segment is still 90bp below its 9M 14 level (and will probably finish FY15 with a 240bp gap vs. the FY14 EBITDA margin level) due to the difficult situation in the US where the “low carbohydrate” fashion has pushed the overall Pasta market down by 3.4% and -20% for wholegrain pastas. Net profit for 9M is down 3.8% due to absence of one-off gains such as the divestment of Deoleo. For FY15, Ebro guides for total sales of €2.44bn, EBITDA of €302m and net profit of €142m.
H1 update: quarterly improvment in margins
29 Jul 15
Ebro reported its H1 results. Revenue grew by 20.9% whereas the EBITDA progressed by 8% (positive FX effect of 8%). The EBITDA margin was lower by 140bp yoy. By division, the Rice business delivered sales growth of +15.2% whereas the EBITDA margin was 90bp higher. In Pasta, sales grew by 27% while the EBITDA margin was down by 400bp (challenging North America). Profit before taxes dropped by 14% (no more one-off gains linked to the sale of Deoleo’s stake). Net debt increased to €510m (€405.6m in December 2014) due to FX effects (most of Ebro's debt is dollar denominated) as well as the purchase of RiceSelect.
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STABER acquisition strengthens engineering IP
26 Oct 16
Carr’s Group has acquired STABER GmbH for a net consideration of €6.75m (£6.0m). This brings key IP used in the Engineering division’s remote handling products in house. We make minor adjustments to our FY18 PBT and EPS estimates and reiterate our indicative valuation of 161p.
Panmure Morning Note 19-09-2016
19 Sep 16
FIF has delivered FY16 results slightly ahead of expectations. The results attest to FIF’s evolution, over the seven years of the current executive management team’s tenure, into the UK’s leading speciality baked goods manufacturer achieved through a consistent and unrelenting focus around: (1) customer/ consumer needs; (2) new product innovation; and (3) investment in a high quality asset base to drive low cost/efficiency and support operational excellence. The shares have been very strong recently (c.10% in the last month, thereby delivering +20% outperformance relative to the wider stockmarket over the past year) and have pushed beyond our 127p TP. Combining this with the lack of an upgrade to our FY17E PBTA, the shares may therefore pause for breath. We remain however very positive on FIF given: (1) its dominant scale to capture the available long-term growth opportunities; (2) its valuation discount (c.15%) to its small/mid cap peers; and (3) the likely M&A momentum/ optionality as an added investment attraction. We therefore raise our TP to 150p (from 127p), thereby retaining our BUY.
VSA Agri Monthly: July 2015
31 Jul 15
With Australian cattle prices reaching all-time highs and the country agreeing health protocols for the export of live cattle to China, there has been a rash of recent deals in the Australian cattle sector. Has this made it more likely that MP Evans (MPE LN) will finally dispose of its 34.37% stake in the 200,000 head North Australian Pastoral Company (NAPCo)? This month saw Chinese billionaire Xingfa Ma acquire two cattle stations in Australian’s Northern Territory with a combined 40,000 head of cattle in a A$47m deal. This would suggest an adjusted read-across valuation of approximately A$80m for MPE’s NAPCo stake. Although no transaction has yet been announced, the price range for the rumoured acquisition of the 185,000-head S Kidman & Co business, mooted in April, valued MPE’s NAPCo stake on an adjusted read-across basis of up to A$70m.
VSA Agri Monthly
28 Jun 16
VSA Agri Thought for the Month It is hard to forecast the precise impact on UK farming from the recent Brexit vote but we would highlight a few areas: Subsidies: Annual subsides of c£3bn are currently paid to UK farmers. Farming Minister George Eustice has previously said that support would be maintained following a Brexit vote. Farmers will be anxious to see this happen. However, money may be saved through a cap on the maximum payout for the largest farms. Regulation: How will regulations change as we exit the EU Common Agricultural Policy? Farmers will look for regulations to be simplified and more tailored to the UK. Exports: A weaker currency should increase the attractiveness of UK farming exports, offset by any increased cost from raw material imports and any newly imposed trade tariffs. Labour: UK farming is heavily reliant on seasonal agricultural workers, many from other EU states. The UK government has previously looked to encourage the employment of more UK workers on-farm but how will things change for those bringing in workers from abroad?
VSA Agri Monthly
28 Jul 16
VSA Agri Thought for the Month Leading Brexiteer Andrea Leadsom was appointed Secretary of State for the Department of Environment, Food and Rural Affairs (DEFRA) this month. Perhaps one of the most unenviable jobs in the new UK government, given the importance of EU subsidies to the country’s farming sector. Agra Europe estimated last year that up to 90% of UK farms would not survive without them. Given that the EU Common Agricultural Policy has long been criticised by environmentalists and free-market proponents alike, leaving the scheme is likely to be viewed positively by many. But what comes next? We believe we are likely to see some sort of reduction of subsidies (particularly for the largest farms and most uneconomic activities) as well as greater exposure to foreign imports through additional free trade agreements. We feel a focus on technology and a push for “efficiency” will also be high on the agenda, which could provide a boost to AgTech companies developing products in this area.