RECTICEL: 1Q sales drop less than expected, focus still on strategic transformation REC BB
Recticel posted a comforting 1Q combined sales performance, down only 6.2% y/y. The company does not offer precise FY20 guidance at this stage, but expects to see a bottom in April with activities progressively recovering thereafter. We believe the investor focus is still on the ongoing transformation. After the recently announced divestments of Automotive Interiors and Eurofoam (for € 210m), we continue to see scope for further strategic transformation and believe the endgame might very well be that Recticel will evolve into a pure Insulation play. Further strategic steps – be it acquisitions in Insulation or divestments of the other parts of the portfolio- will in our opinion gradually unlock the valuation upside that we see in our SOTP model. We reiterate our BUY rating with € 10 share price.Recticel is engaged in the production of a variety of polyurethane foams that are used in the furniture, technical, automotive, bedding and insulation industries. The Flexible Foam Business Line covers the manufacture, conversion and marketing of flexible polyurethane foam. The types of flexible foams are classified as Comfort, Technical Foams and Composite Foams. Co. is also engaged in the manufacture of foams used in mattresses and slat bases. In addition, Co. manufactures rigid polyurethane and phenolic foams for thermal insulation. Co.'s automotive activities include: manufacturing moulded seat cushions, window encapsulation and manufacturing interior trim components.
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