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29 Feb 2024
Pasta fuels EBITDA beat; deleveraging stronger than expected
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Pasta fuels EBITDA beat; deleveraging stronger than expected
- Published:
29 Feb 2024 -
Author:
Ruiz Francisco FR -
Pages:
10
10% EBITDA beat thanks to Pasta
Q4 numbers came 10% above consensus and at the higher end of the guidance thanks to stronger contribution from the Pasta business. Rice performed in line with expectation with 3% EBITDA growth and a 38bp improvement in margin as a result of lower cost of inventories. Pasta was the surprise with a better mix and lower raw material prices leading to a 16.5% EBITDA margin in Q4.
Deleveraging above expectations
Ebro has started to reduce the high level of inventories, with a positive working capital impact in FCF of EUR160m in the year. Additionally, the company has factored in EUR15m of real estate disposals and another EUR30m is expected in H1 24. This has significantly reduced net debt by EUR190m to 1.5x ND/EBITDA. The company has increased dividends this year by 10% and does not rule out a higher remuneration if there is no MandA (the CEO reiterated that current opportunities are at very expensive multiples).
Calm year ahead
The company has not communicated many details on 2024, guiding to a more stable year with slight increases in EBITDA, though this is very dependent on harvest and commodity prices. FY24 will be the last year of high capex; while working capital is still high compared to historical levels a material reduction is not expected.
We slightly adjust our estimates. Outperform reiterated
We slightly increase our EBITDA 2024e on better Pasta numbers. EPS is revised 3%/4% downwards on higher minorities (Garofalo, among others). Our TP is unchanged at EUR20. We maintain our Outperform rating based on the solid results, the strong deleveraging and attractive valuation.