AGRANA cut to HOLD, TP EUR 20.00 - Sweeter Sugar, bitter Fruit
Final 1Q 2019/20 results did not bring a surprise at the bottom line, but showed stronger Sugar earnings, while the Fruit result fared weaker than expected. Management is not yet able to quantify Covid-19 effects and thus still communicates its pre-Covid targets for the current financial year, however with a growing disclaimer. On the back of a swift recovery of sugar prices we reduce our expected segment loss and consequently slightly raise group earnings despite cutting Fruit EBIT. We confirm our TP of EUR 20 and change our recommendation from BUY to HOLD on the back of the recent share price performance (change in analyst responsibility).AGRANA Beteiligungs AG (AGRANA) is an Austria-based company that processes agricultural raw materials. The Company manufactures foods and intermediate products for the downstream food industry, as well as for non-food applications. It operates through three segments: Sugar, Starch and Fruit. The products of the Sugar segment are marketed both directly to consumers through food retailers and to the sugar industry. In the Starch segment, the Company processes and refines mainly corn (maize) and potatoes into starch products. The Fruit segment develops and produces fruit preparations (fruit ingredients) and fruit juice concentrates. The Company operates over 50 production sites globally. The Company's subsidiaries include AGRANA Zucker GmbH, AGRANA Starke GmbH, AGRANA Marketing-und Vertriebsservice Gesellschaft mbH, AGRANA Bioethanol GmbH and Main Process SA, among others. The Company also manufactures animal feed and fertilizers.
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