Massive Q1 beat on FX gains, guidance reiterated

Summary: Richter posted its Q1/24 results today morning. The Company beat analysts’
estimates across the board, slightly up in terms of revenues (+1%), gross profit (+1%) and
EBIT (+1%), while the net income was much better than expected (+26%). This was
attributed to significant FX gains of HUF 15.2bn (o/w HUF 13.1bn was unrealized). Before
the report, we estimated a positive impact on this line, but in a much smaller extent (+HUF
6bn). Following a change in tax rules, taxes reached HUF 13.7bn (including all taxes in line
with GMT and deferred tax). As a result, net income reached HUF 68.2bn in Q1 vs. the
consensus average of HUF 54.2bn and median of HUF 57.7bn. This represented a very
significant 74% increase YoY. The management fully reiterated its 2024 guidance. They
foresee revenues to come in the range of between EUR 2.15-2.25bn, EBIT in the range of
between EUR 725-750mn.
Key takeaway: Despite the invisible beat in Q1, Richter posted very strong set of results in
all contexts. Ex-FX net was fully in-line with our estimates at HUF 53bn, which continues to
underpin our strong bullish view for Richter. After the company reiterated its guidance, we
leave our forecasts unchanged and maintain our TP of HUF 12,990 and BUY-rating on the
stock. Richter should be re-rated by investors as the company has started to deliver very
impressive financial results. Massive FCF generation leaves room for the management to
acquire assets from Mithra in the next weeks in a fire sale process so we remain very
curious how this lucrative M&A opportunity will play out.