Tessenderlo FY adjusted EBITDA guidance lowered to -15-20%
Tessenderlo lowered FY adjusted EBITDA guidance from a 5-10% drop to a 15-20% decline, mainly due to weaker than expected performance in Bio-valorization and Agro segments. The new guidance range is at midpoint about 12% below our forecast and 11% below consensus. We will adjust our model accordingly. Whilst business conditions in many of the group's end markets are challenging, Tessenderlo is still generating sizeable FCF (we remind FCF was close to €100m in 1H). The company is using its solid balance sheet and FCF to buy back own shares. Despite the disappointing earnings momentum, we consider valuation to be attractive and reiterate our Accumulate rating, albeit with a lowered target price (from € 32 to € 28).Tessenderlo Group is engaged in providing solutions for food, agriculture, water management and use and re-use of natural resources. Co. has three operating segments: Agro, which is engaged in the production and marketing of crop nutrients (liquid crop fertilizers and Sulfate of Potash) and crop protection products; Bio-Valorization, which combines Co.'s activities in animal by-product processing, comprised of Akiolis (rendering, production and sales of proteins and fats) and PB Gelatins (production and sales of gelatins); and Industrial Solutions, with activities including the production and sales of plastic pipes systems and water treatment chemicals.
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