EUR 100.00 For Business Accounts Only

IBERIAN DAILY 10 MAY + 1Q’23 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, ENCE, FCC, FLUIDRA, IAG, NH HOTELES, REPSOL, ROVI.

At the end of today’s report, and during the entire results season, we will include a presentation with previews for the 1Q’23 results to be released over the coming days in Spain.

Fears about the cycle grow
The European stock markets fell yesterday following the poor imports data in China, which cast doubt on the pace of recovery since the change in healthcare policy. Within the Euro STOXX, Travel & Leisure, Household Goods and Media went against the grain, posting gains, whereas Real Estate and Retail saw the biggest losses. On the macro side, from the ECB, P. Lane, M. Kazaks and P. Kazimir left the door open to further rate hikes even after June, and high rates for longer. In the US, little progress was made in seeking an agreement on debt ceiling at the meeting between J. Biden and Republican congressmen (K. Mc Carthy), who will meet again on Friday to continue negotiating. In Mexico, both general and core inflation slowed in April as expected. In Russia, president V. Putin on Victory Day again threatened the West, linking the future of the country to the Ukraine war. In Japan, from the BoJ, K. Ueda insisted that the yield curve control policy will be ended and that balance sheet reduction will begin after inflation sustainably reaches its 2% target. In US business results, Fox and Electronic Arts came in better, whereas Duke Energy was worse, among others.
What we expect for today
European stock markets would open flat with a slight bullish slant, but awaiting the inflation data, which could help to erase the rate cuts expected by the market for 2H’23. Currently, S&P futures are up +0.10% (the S&P 500 ended -0.02% lower vs. the European closing bell). Volatility in the US increased (VIX 17.71). Asian stock markets are falling (China’s CSI 300 -0.65%, Japan’s Nikkei -0.39%).
Today we will learn in Germany April’s final inflation, and in the US, April’s inflation and May’s mortgage applications. In US business results, Walt Disney and STERIS, among others, will release their earnings.


COMPANY NEWS

FLUIDRA. 1Q’23 Results above our expectations but annual guidance maintained. BUY.
Our first impression is that the 1Q’23 results were better than expected: € 554 M of sales (-16.9% vs. -20.9% BS(e)); € 99 M of adjusted EBITDA (-41.6% vs. -46.4% BS(e)). The drop in sales and EBITDA is derived from the inventory purge in the distribution channel and a very demanding comparable basis. Since the company reiterates its guidance for full year earnings (€ 2 Bn/€ 2.2 Bn of sales and € 410 M/€ 480 M of EBITDA vs. € 2.15 Bn and € 441 M, respectively, BS(e)), and given that 2Q is the most seasonally relevant quarter, we believe that the market impact will be limited. The stock has risen by +12% YTD.

ROVI. 1Q’23 results beating expectations on the operating level, but with weakness in heparins. Guidance’23 maintained. BUY
The 1Q’23 results beat expectations on the operating level (€ 67 M of EBITDA vs. € 53 M BS(e) and € 58 M consensus), with better performance in sales (-2% vs. -7.5% BS(e) and -6% consensus) and margins (33% vs. 28% BS(e) and 30% consensus). On the positive side we highlight the stable sales in third-party manufacturing (~48% of sales; +2.4%), and on the negative side the sharp drop in sales of low molecular weight heparins (29% sales; -20% vs. 1Q’22). The performance was very much in line in net cash (€ +19 M to € 74 M), and the company maintains its guidance’23 of revenues falling in the low end of the -10% to -20% range (vs. -2% BS(e) and -11% consensus). We do not rule out the possibility of a negative reaction following the stock’s good performance (+18% on the year; +6% vs. IBEX).