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IBERIAN DAILY 28 FEBRUARY + 4Q’21 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACERINOX, BBVA, CAF, EBRO FOODS, REPSOL, VIDRALA.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 4Q’21 results to be released over the coming days in Spain.

This week will continue to be marked by Russia-Ukraine war conflict
The performance of stock exchanges last week was marked by Russia’s invasion to Ukraine and the resulting hike in volatility that was partially eased by the announcement of sanctions by the different western leaders (and thus, NATO’s non-intervention) and by the fact that president V. Putin left in the end the door open to negotiate with Ukraine. With this in mind, European stock markets saw a negative performance, where the Ibex35 ended with drops >-1.2%, whereas in the Dax falls exceeded -3.2% and in the Euro STOXX 50 -2.5%. Drops prevailed in all Euro STOXX sectors last week, where Utilities and Real Estate were the best-performing sectors, whereas Banks (with drops close to -10%) and Retail ended with the worst relative performance. On the macro side, in Germany, the 4Q’21 GDP fell less than expected while in France February’s preliminary inflation climbed significantly more than expected. In the euro zone, February’s economic climate index rose above expectations. In the US, January’s personal outlays and the core deflator of personal income rose more than expected as well as January’s preliminary durable goods orders. In Mexico, the 4Q’21 GDP rose unexpectedly. In US results, Pinnacle, Evergy and Sempra Energy came in better than expected, among others.
What we expect for today
European stock markets would open with losses of more than -3.0% in view of the escalating risk with Russia putting its nuclear deterrence forces on alert after the EU and US excluded come Russian banks from the SWIFT banking system, as well as the freezing of assets from the Russian CB, and all this despite the start of talks between Ukraine and Russia today at the Belarus border. Currently, S&P futures are down -2.1% (the S&P 500 ended -+0.24% higher vs. the European closing bell). Volatility in the US fell (VIX 27.59). Asian markets are mixed (China’s CSI 300 -0.14%, and Japan’s Nikkei +0.19%).
Today in Spain we will learn February’s preliminary inflation. In US business results, Viatris and Nielsen, HP Inc, among others, will release their earnings. Debt auctions: Germany (€ 6 Bn in 6 & 12M T-bills) and France (€ 5.4 Bn in 3, 6 & 12M T-bills).

COMPANY NEWS

ACERINOX. 4Q’21 Results in line with expectations. Positive outlook. BUY.
The results were in line with expectations in EBITDA (€ 318 M vs. € 311 M BS(e) and € 315 M consensus), but below in margins (16.1% vs. 17.7% expected), meaning ACX would be offsetting the substantial inflation in energy and transport costs through prices. As for the outlook, the comments made by the company are positive for the first half of the year, and it expects 1Q’22 EBITDA to beat the 4Q’21 figure (which would mean reaching >30% of the EBITDA’22 forecast by the consensus). In short, the results were robust, with a solid outlook (in both the traditional business and in special alloys), which would confirm the strong current dynamic in the sector. Conference all at 10:00 (CET).

CAF. FY2021 Results in line with expectations but still hit by delays in Solaris. BUY
At Friday’s closing bell, the company released FY2021 Results very much in line in EBITDA (+1% vs. BS(e) and +0% vs. consensus), but still hit by the shortage of components in Solaris and slightly worse in NFD (+6%) although better than the consensus (-4%). The 2022 guidance aims to (i) increase sales above market levels (~+3% CAGR’21-25 on average vs. 5% BS(e) and +8% consensus), (ii) >1x BtB (0.9x BS(e)) and (iii) increase margins (vs. +40pbs BS(e) and consensus). As the guidance is not highly ambitious and the supply tension in Solaris continues we would foresee a neutral or slightly negative market reaction, although the share price has underperformed the IBEX by -7% YtD.

VIDRALA. Poor 4Q’21 results. BUY
The 4Q’21 results came in below expectations, hit harder than we expected by cost inflation. Sales on the quarter (on a standalone basis) grew +10%, but EBITDA fell -46%, and thus the margin over sales fell significantly (-16pp). The extremely sharp rise in energy costs, which the hedging was unable to contain, is the reason behind this deterioration. Logistics costs also rose substantially.
In its outlook for the coming quarters, the company mentions that glass demand remains very strong and that it is adapting prices to offset increasing costs, and thus it expects double-digit sales growth (+7% in 2022 BS(e)), but margins over the coming quarters will inevitably be affected negatively.
Although the results are poor, we think they are largely priced in, as the share price has plunged -30% since its July’21 high. We will have to lower our estimates for 2022, but we think the deterioration in profitability levels will not be structural, and that margins should return to normal in the mediums term, given that bargaining power in the industry is strong.