RECTICEL: Solid 2H20 results - Sale of Bedding is the next logical transformation step
Recticel’s solid 2H20 performance with 10% adj EBITDA growth despite an inflationary raw materials environment is another demonstration of the improved pricing power/discipline in combination with ongoing efficiency improvements. The decision to divest Bedding is now formally taken and should free up additional resources to further accelerate growth of the core Engineered Foams & Insulation businesses. We see Recticel gradually transforming in a higher margin company with significantly improved free cash flow generation potential. The Insulation business provides Recticel with an attractive profile for ESG oriented investors. With our SOTP model still leaving upside, we maintain our Accumulate rating and € 13 target 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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