BEKAERT : Weak 1Q top line but cost control seems to save the bottom line for now
1Q consolidated sales dropped by 10.7% which was slightly weaker than our -9.4% forecast. The commentary of a stable leverage at 2.1x suggests a relatively resilient 1Q underlying EBITDA on the back of cost control, profit improvement & mix initiatives. We have decided to up our FY20 underlying EBIT forecast by 8%, still anticipating a 20% decline y/y and a margin falling back 50bps to 5.1% (vs the medium term target of 7%). Despite the fairly low valuation multiples and increased confidence in the contribution from cost control and profit improvement initiatives, overall visibility remains low and we maintain our conservative Hold rating for now.Bekaert is a global technological and market company engaged in advanced solutions based in steel wire transformation and coatings as well as an independent manufacturer of drawn steel wire products. In addition, Co. teams up with customers and suppliers globally to develop, implement, upgrade, and protect both current and future technologies. Co.'s business activities are put in practice along two main axes: Product Innovation and Process Innovation. Product Innovation helps Co. better serve its customers, while Process innovation enables Co. to increase operational effectiveness, minimizing its impact on the environment.
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