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IBERIAN DAILY 06 MAY + 1Q’22 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AMADEUS, FERROVIAL, SANTANDER, TALGO.

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 1Q’22 results to be released over the coming days in Spain.

The Bank of England and the US dragged down European markets
The gains seen at the first half of the session eased after the warnings of slowdown risks from the Bank of England, which cut 2023-24 GDP to -0.24% and 0.25% from 1.25% and 1.0% previously, also weighing on the negative opening of the US market that was aggravated by the strong US debt sales. Thus, in the Euro STOXX, Real Estate and Pharma led gains vs. the worse relative performance of Insurance and Travel & Leisure. On the macro level, in the UK, the BoE raised benchmark interest rates by 25bps for the fourth consecutive meeting up to 1.0% and even though 3 members demanded a rise of up to 1.25%, the communiqué considers that the rises factored in by the market up to 2% in 2023 are excessive. In the US, weekly jobless claims climbed more than expected. On another note, the Senate approved a law that could lead to lawsuits due to the collusion to OPEC countries while it announced the buyback of 60 M barrels to restore the strategic reserves starting in fiscal year 2024. OPEC decided to keep its plan of slight production increases of 432,000 barrels from June. In Japan, Tokyo’s inflation climbed more than expected in April. In US Results Zoetis and Kellogg’s came in better than expected and Royal Caribbean worse.
What we expect for today
European stock markets would open with slight losses, with growth performing slightly worse than value. Currently, S&P futures are down -0.2% (yesterday the S&P 500 ended +0.35% higher vs. the European closing bell). Volatility in the US increased (VIX 31.20). Asian markets are mixed (China’s CSI 300 -2.1%, Japan’s Nikkei +0.6%).
Today in Spain and Germany we will learn March’s industrial output and in the US April’s unemployment rate. In US business results, NRG Energy, Under Armour and Cigna Corp, among others, will release their earnings.

COMPANY NEWS

FERROVIAL. 1Q’22 results below expectations on the operating level due to Construction. Highways continues to improve. BUY
The 1Q’22 results were below expectations in EBITDA (€ 133 M vs. € 139 M BS(e) and € 149 M consensus) due to weaker performance in Construction (€ 36 M of EBITDA vs. € 45 M consensus), stemming from cost inflation and procurement problems. Highways was very much in line (€ 109 M of EBITDA vs. € 108 M consensus), and we once again highlight the solid performance by Managed Lanes (33% of T.P.), both in traffic and tariffs (double-digit growth vs. inflation of around +8%). Cash ex-infra came in better than expected (€ 2.2 Bn vs. € 2.1 Bn BS(e)) thanks to better working capital performance. We expect a neutral/negative reception despite the poor recent performance (-12% in 2022; -2% vs. sector).

AMADEUS, SELL
The 1Q’22 results beat expectations in sales and in adjusted EBITDA (€ 296 M vs. € 267 M BS(e) and € 274 M consensus) due to a higher margin than expected. By divisions, in Distribution (42% sales), sales fell in line with expectations vs. 1Q’19 (-44% vs. -43% BS(e)), hit by the drop in flight bookings (-44%, in line with BS(e)). In IT Solutions (37% sales) the drop was smaller than we expected (-26%), despite the fact that the contraction in passengers boarded was in line with our estimates (-40%), indicating a better per-passenger revenue. Hotels in line. We highlight that the margin has recovered more than expected, reaching 32.3% (vs. 29.5% BS(e)). Lastly, we point out that in the presentation, the company has indicated a strong commercial trend, with market share being gained in all regions, especially in North America.
We expect a positive market reaction to these 1Q’22 Results that came in above expectations, with a favourable margin performance and optimistic comments on market share gain. The share price has climbed +2% vs. IBEX YtD.