Event in Progress:
Discover the latest content that has just been published on Research Tree
The preliminary results of 21/07/2021 were already discussed on the same day so we won’t cover it again. What can be added from the conference call of 29/07/2021 (H1 results) is that Wendel and the Deconinck family have additonally purchased shares in the market and their common JV holds now 88.7% of the share capital and 87.8% of the votes. As a reminder, they need 90% in total to be able to delist Tarkett. Just a matter of time indeed.
Companies: Tarkett SA (TKTT:PAR)Tarkett SA (0QSA:LON)
AlphaValue
Revenue and adjusted EBITDA were released and reveal a difficult environment. Revenue only increased +2% to €1.26bn (H1 20: €1.23bn). Sports is the biggest cause with another drop of -16.7%. Adjusted EBITDA grew +6% to €112.7m, but still far from H1 19’s (€127m). Note that the inflation in raws is estimated to have a €130m impact now versus €100m in April.
Tarkett Participation, the JV between the Deconinck family and Wendel (70-30), has finally obtained 86% of the shares and 85% of the voting rights after the public tender. This must be a disappointment as it means the delisting is not an option (90% required for a squeeze-out) and thus Tarkett needs to continue its public reporting as required for any listed company. Costly and must be unwanted.
The Q1 results were weak in general, mainly impacted by cost inflation and negative currency effects. The outlook for the end of the year still remains with a positive free cash flow. The most important news, however, was that the majority shareholder, the family Deconinck, in cooperation with long-time partner Wendel, will plan a bid of €20 per share on the free float (48% of the shares). Since were are in favour of selling, we won’t adjust the target price.
Tarkett was obviously hit hard by the pandemic and especially in North America where the dependency on the most hit commercial segment is highest. However, strong cost management in opex and capex led to a good year in terms of free cash flow generation, even though the net profit was slightly negative due to an impairment in H1. It is therefore mind-boggling that management hides behind the dividend policy not to distribute a dividend.
Companies: Tarkett SA
The Q3 results were slightly better than consensus, the latter having already been updated to reflect the detailed positive profit warning given on 28/09/2020. Europe did ‘well’ while Australia and North-America, and especially the USA, were (significant) laggards. Grower Sports was also heavily impacted by budget cuts.
H1 revenue landed (-12.4%) above our expectation. The full-year EBITDA looks as if it will end up in line or just below our expectations, driven by effective cost management. Free cash flow, as usual negative in H1, looks as if it will end up flat for the full year which is below our expectations. A dividend will depend on whether Tarkett used its government-backed credit line or not by February 2021 (currently undrawn).
A flattish Q1 in terms of EBITDA thanks to effective cost measurements. Free cash flow is protected by cuts in capex for the year. There is no worry on the liquidity side though ongoing talks with the bankers on a waiver of the covenants take a long time. It is Q2 that will bring real clarity on the COVID-19 impact. April is 40% down on sales already, so expect a tough one.
To protect its cash flow generation for 2020 regarding the effects of COVID-19, the management team will, unlike initially proposed in the full earnings 2019 release on 19 February, propose to distribute no dividend this year. Subject to the approval of the Annual General Shareholders meeting on 30 April.
The results for 2019 are average to say the least (organic growth of +0.7%) and a meagre €0.58 EPS (2018: €0.77). On the positive side, the free cash flow before dividend looks massive at €244m (€3.83/share), up from €-33m last year, but half of this counts as window dressing. The shareholder is confronted with a sudden dividend cut to €0.24 (€0.60 promised) but, at last, a healthy net debt ratio in return.
Following this earnings release, we expect to make minor changes to our target price and keep our Buy recommendation unchanged.
Tarkett posted a clearly disappointing performance and there was a somewhat blurred picture concerning free cash flow generation due to factoring, the amount of which is not disclosed in the presentation. Following the conference call and a deeper look into the financial numbers, we estimate the decrease in our target price to be in the range of 7-15%.
A mixed CMD in our opinion: the increased capex guidance means that the company is possibly a bit late in terms of automation and digital investments. Management hardly spoke about ROCE and cash flow generation, which is a shame. It spoke about capital allocation but was not really convincing. The new EBITDA margin target is a bit disappointing, as it is below the previous strategic plan. We expect to increase our target price by 5% to 10%.
With almost 4% organic growth in sales, 10% reported growth, a 50bp increase in EBITDA margin and 20% increase in EBITDA, the company is beginning the year strongly. However, management said that the business environment remains challenging with inflationary raw material and freight costs. In this context, Tarkett is pursuing its efforts to improve the cost structure and to increase prices with the aim of offsetting purchasing cost inflation over the FY19. We expect to keep our forecasts mai
Tarkett missed FY18 consensus significantly Management will come back in June 2019 with new targets. Consensus has priced Tarkett out of its 2020 targets with an EBITDA margin of roughly 10% in 2020. The China-US trade war, as well as Chinese competitors, will have to be carefully watched. Following this disappointing earnings release, we have cut our target price by 9% but we keep a positive recommendation. We believe that the bottom may have been reached, barring any unforeseen events.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Tarkett SA. We currently have 5 research reports from 3 professional analysts.
Jubilee today reports its Q3 and third quarter operational results from its expanding operations in Zambia (copper) and South Africa (chrome and PGM). South Africa is on a growth trajectory with record chrome production of 409kt in the quarter (Q2 FY2024 381kt) and a monthly record in March of 145kt and production YTD of 1.13Mt (0.94Mt). Jubilee is well underway to its annual target capacity of 2,1Mt/yr especially with the new 300kt/yr chrome plant at Thutse expected to be operational in August
Companies: Jubilee Metals Group PLC
WHIreland
Trinity has announced a c28% reduction to its 2P reserves following a YE23 review. Despite the decrease in the Company’s 2P reserves, Trinity’s core business remains robust, with a reserves/production ratio of >12.5 years at YE23. Whilst there is significant potential for growth within the current portfolio, this will be difficult to unlock from the current balance sheet and we believe further financing will be required. We update our target price to 76p (from 202p), a c85% premium to the curren
Companies: Trinity Exploration & Production Plc
Cavendish
I3 has announced the sale of the majority of its royalty interests in Canada, for US$24.8m cash. This allows the company to fully repay amounts drawn on its debt facility and create a working capital surplus, giving I3 significant additional funding flexibility going forward
Companies: i3 Energy Plc
Zeus Capital
Companies: BILN ELCO NXQ CUSN ATG
• The Nong Yao-13 exploration well in the new Nong Yao D area that was targeting multiple zones has encountered >30 feet of new oil play across several new shallow intervals which have not been produced elsewhere on the concession. These reservoirs are believed to be recurring across the Nong Yao D area. • The drilling result confirms that oil has successfully migrated into this area of the block (a factor that was seen to be a risk in the Nong Yao D area) and open the opportunity for further a
Companies: Valeura Energy Inc.
Auctus Advisors
NextSource is uniquely positioned to build a leading vertically integrated position, ex China, in the supply of Lithium-ion battery anode material which is essential for the Energy Transition. The company is commissioning phase 1 of its world-class Molo graphite mine in Madagascar and is in the final permitting process for its first Battery Anode Facility (BAF) to be located in Mauritius. The company is backed by Vision Blue, established by Sir Mick Davis, former CEO of Xstrata. On our calculat
Companies: NextSource Materials Inc
Capital Access Group
DEC reported FY23 results which were in line with expectations and announced the acquisition of joint venture assets from Oaktree along with an updated capital allocation framework.
Companies: Diversified Energy Company PLC
Dowgate Capital
Companies: 88E RNO TRIN KRM EXR BOOM
Chariot, Energean, Touchstone Exploration, Longboat Energy, Hartshead Resources, BP, Helix Exploration, PetroTal, Pantheon Resources, Caspian Sunrise, Petrofac, DNO ASA, Valeura Energy, Aker BP, Var Energi Source: FactSet, weekly change 08/04/24-12/04/24 Oil rose as Israel braced for a possible attack from Iran, a development that would threaten major disruptions in a region that accounts for a third of the world’s crude output. An assault is expected to come as soon as the next 48 hours, which
Companies: HHR TXP LBE CHAR
CPH2 has released FY23 results with the company completing the period with a slightly lower cash outflow from operations and a higher cash balance than forecast. Looking ahead, with a new and improved technical and engineering team, the company has committed to completing Factory Acceptance Testing of its first MW scale electrolyser, the 0.5MW MFE110, within the next three months. In our view, this will be a major milestone for the company which will demonstrate that its unique technology can be
Companies: Clean Power Hydrogen PLC
Companies: PLL TLG HZM SAV KAV KP2 SVML
SP Angel
Union Jack has released an update on its Wressle asset, reporting maturing production from Wressle-1, alongside progress for significant further development activities on the field going forward.
Companies: Union Jack Oil Plc
Pharos Energy reported FY23 results on 27 March. Group net production of 6,508 boepd (FY22: 7,166 boepd) was in line with guidance, assisted by successful development drilling in Vietnam and exploration successes in Egypt. Pharos’s strong cash generation resulted in a stronger balance sheet, with net debt reduced to US$6.6m (from US$28.9m at the end of 2022) and cash balances totalling US$32.6m. This left the group free to return more cash to shareholders, including a 10% increase in dividends,
Companies: Pharos Energy PLC
Progressive Equity Research
Shore Capital
Hunting has released its Q1 trading statement, reporting a strong period for OCTG and Subsea, steady growth in Advanced Manufacturing, and a softening in Perforating Systems.
Companies: Hunting PLC
Share: