La Doria - Tough times ahead
La Doria has reported a good set of FY19 results, with like-for-like growth of 3.8% and EBITDA margins up 10bp. The outlook for 2020 is more subdued: increased costs in the red line will cause EBITDA margins to suffer although they are still expected to be up, while the Sauces business is now expected to see EBITDA margins decline due to increased raw material costs. As expected, management has published its new rolling three-year business plan, which is strategically in line with the prior plan, which provided for €138m of investment. Although it is still early days, La Doria is complying with all government directives regarding the COVID-19 outbreak. So far, there has not been any adverse impact, and demand has in fact increased both domestically and internationally. Our fair value reduces to €13/share from €14 previously as we cut our EBITDA forecasts to reflect the updated guidance.La Doria is a food product manufacturing company based in Italy. Co. specializes in the manufacture and production of foodstuffs, particularly tomato-based products (canned tomatos and ready-to-serve sauces), and other canned products such as pulses and fruit. The main products are peeled tomatoes, chopped tomatoes, tomato puree. Co. mostly sells its production to Italian and European retail groups such as GS Euromercato, Sainsbury, Tesco and Safeway; these companies distribute La Doria products under their own labels. Other lines include canned beans, vegetables, and pasta products.
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