Masterplast - Sales Below Guidance Run Rate, Margin Pressure And FX Gains

Sales below guidance run rate, margin pressure and FX gains

• Masterplast released third quarter results this morning, showing weaker-than-expected sales (albeit 9% above difficult y-o-y comp) and q-o-q drop in margins adjusted for inventory changes. Notably, we see significant risk of missing updated 2022 guidance on sales (roughly +10% q-o-q required vs. -10% q-o-q hist. avg.) and EBITDA level, while net profit is only above run rate thanks to one-off FX gains of EUR 2.3 mln. Consequently, guided EBITDA margin seems out of reach given lower EBITDA margin (10.4% vs 11.8% guidance, L9M exactly at 11.8, but Q4 seasonally weak).
• Quarterly sales were down 4% q-o-q, but up 9% on the year thanks to lighter comps in industrial applications (initial healthcare delivery booked in 2021Q2) with Hungary and thermal insulation being drivers of growth through 20%+ growth each. Geographically, notable sales increase came from Germany (+26% q-o-q, %15% y-o-y) and Ukraine (+99% q-o-q, -21% y-o-y) in the quarter, while recently established Italian subsidiary recorded 59% drop q-o-q in sales, a result to keep an eye on going forward. Export sales came flattish on the quarter, Company noted weaker sales in UK, Czech Republic, increase in Greece, Portugal, France. Nonetheless, Hungary remains core sales country with ever-growing share, now at 46%. Segment-wise no significant changes occurred in the quarter, main segment thermal insulation systems recorded 9% drop q-o-q vs. record Q2, still up 29% y-o-y, therefore we look past a weaker quarter. Geo and product mix points to lower own-production in sales for the quarter, underpinning lower margins.