Ebro Foods: Hard hit by cost inflation
Ebro Foods posted a very weak set of 3Q18 results with EBITDA down 24% YoY, leading it to guide for FY18 EBITDA of c. Eur305m, which is 8% below Bloomberg consensus and 9% below our previous estimates. After a weak 1H18, Ebro had pointed to a profitability recovery in 2H18. However the message is now grimmer. The poor evolution was again blamed on higher costs, especially for rice (Eur54m), although pasta also was affected (c. Eur13m). In rice raw materials were mostly to blame with the CEO guiding for a hit of c. Eur34m on costs due to higher prices in the US in local and aromatic varieties. Also in the US logistics, staff and packaging products were said to be the cause of another c. Eur15m cost deviation. Ebro’s CEO says the company is already working to recover profitability via price increases and adjustments to production. In Freeport, Texas, Ebro is cutting production by c. 50% and abandoning some private labels and other low profit businesses, with management hoping to return this unit to positive EBITDA in 2019 vs. a forecast small loss in 2018E. We reiterate our Neutral rating but lower our FV from Eur 19.50 to Eur 17.30 having incorporated the revised guidance and rolling over our FV.Ebro Puleva is a food manufacturing group based in Spain. Co. is engaged in the manufacture and marketing, export and import of sugar, rice, dairy products, and products destined for agriculture development and human and animal consumption. Co.'s brand names include: Panzani®, Ronzoni®, American Beauty®, Skinner®, Lancia®, Catelli®, Healthy Harvest®, etc. in pastas and sauces, Mahatma®, Sucess®, Carolina®, Lustucru®, Taureau Aile®, Oryza®, Bosto®, Reis-Fit®, Riceland®, Danrice®, Risella®, Brillante®, Nomen®, La Cigala® and La Fallera® in the rice sector, Puleva®, Ram® and El Castillo® in the dairy sector, and Azucarera® and Sucran® in the sugar sector.
Haitong is the first international Chinese investment bank and our goal is to be the primary channel for capital flows into and out of China. During 2015 the Senior Management Team in London was expanded significantly to focus on this objective and to provide a full-service cross-asset markets business coupled with sector-focused investment banking. We work closely with our world-wide network of offices to bring a true depth of understanding to all client situations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.