Report
EUR 100.00
For Business Accounts Only
Sales: $ 14.844 Bn (-22.6% vs. -9.2% BS(e));
EBITDA: $ 967.0 M (-41.5% vs. -33.5% BS(e) and -47.5% consensus);
Net Profit: $ -1.12 Bn ($ 414.0 M in 1Q’19 vs. $ -35.0 M BS(e)).
The results came in above the consensus expectations, although below our estimates in EBITDA. Compared to our estimates, the main variations come from Europe (~40% EBITDA) due to lower volumes and prices, and ACIS (~10% EBITDA) due to prices. The rest were in line.
As regards its outlook, MTS foresees a -25%/-30% drop in volume in 2Q’20 vs. 1Q’20, meaning -35%/-40% vs. 2Q’19. Despite this, it expects to reach US$ 400-600 M of EBITDA (our initial forecast was at the low end of this range), enabling US$ 1.4-1.6 Bn of EBITDA in 1H’20. These figures would make the US$~3.2 Bn expected by the consensus in 2020 feasible. Furthermore, MTS lowered its cash needs for 2020 to US$ 3.5 Bn (vs. US$ 4.5 Bn previously), due mainly to lower Capex (US$ 800 M) and taxes (from lower profits). Additionally, it maintains its forecast of reducing working capital by around US$ -1 Bn (depending on the market in 2H’20). This would mean that even against this highly negative operating backdrop, the company would not burn cash in 2020 (depending on working capital levels, it could even generate cash). Lastly, MTS has suspended the dividend (US$ 0.20/sh., ~2% yield), which would have meant a cash outflow of some US$ 300 M.
Following the strong correction from highs in February, which is when Covid-19 began to have an effect (-40%; -10% vs. IBEX), the operating visibility offered and the financial robustness will be sufficient, in our view, for the share price to react positively. We will cut our estimates (-25% in EBITDA’20-22e on average), but even in our negative scenario of U-shaped recovery, our T.P. would stand at levels of €>12.00/sh.(>+20% upside). We maintain our BUY recommendation and place our T.P. Under Revision (previously € 18.50/sh.).
ARCELOR MITTAL: 1Q’20 RESULTS AND CHANGE OF T.P. TO UNDER REVISION (ANÃLISIS BANCO SABADELL)
1Q'20 vs. 1Q'19 Results:Sales: $ 14.844 Bn (-22.6% vs. -9.2% BS(e));
EBITDA: $ 967.0 M (-41.5% vs. -33.5% BS(e) and -47.5% consensus);
Net Profit: $ -1.12 Bn ($ 414.0 M in 1Q’19 vs. $ -35.0 M BS(e)).
The results came in above the consensus expectations, although below our estimates in EBITDA. Compared to our estimates, the main variations come from Europe (~40% EBITDA) due to lower volumes and prices, and ACIS (~10% EBITDA) due to prices. The rest were in line.
As regards its outlook, MTS foresees a -25%/-30% drop in volume in 2Q’20 vs. 1Q’20, meaning -35%/-40% vs. 2Q’19. Despite this, it expects to reach US$ 400-600 M of EBITDA (our initial forecast was at the low end of this range), enabling US$ 1.4-1.6 Bn of EBITDA in 1H’20. These figures would make the US$~3.2 Bn expected by the consensus in 2020 feasible. Furthermore, MTS lowered its cash needs for 2020 to US$ 3.5 Bn (vs. US$ 4.5 Bn previously), due mainly to lower Capex (US$ 800 M) and taxes (from lower profits). Additionally, it maintains its forecast of reducing working capital by around US$ -1 Bn (depending on the market in 2H’20). This would mean that even against this highly negative operating backdrop, the company would not burn cash in 2020 (depending on working capital levels, it could even generate cash). Lastly, MTS has suspended the dividend (US$ 0.20/sh., ~2% yield), which would have meant a cash outflow of some US$ 300 M.
Following the strong correction from highs in February, which is when Covid-19 began to have an effect (-40%; -10% vs. IBEX), the operating visibility offered and the financial robustness will be sufficient, in our view, for the share price to react positively. We will cut our estimates (-25% in EBITDA’20-22e on average), but even in our negative scenario of U-shaped recovery, our T.P. would stand at levels of €>12.00/sh.(>+20% upside). We maintain our BUY recommendation and place our T.P. Under Revision (previously € 18.50/sh.).
Underlying
ArcelorMittal
Provider
Sabadell
Francisco Rodriguez
Other Reports on these Companies
Other Reports from Sabadell
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.