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FCC: 1Q’21 RESULTS (ANÁLISIS BANCO SABADELL)

1Q'21 vs 1Q'20 Results
Sales: € 1.517 Bn (+2.1% vs. +2.8% expected);
EBITDA: € 254.5 M (+16.5% vs. +11.9% expected);
EBIT: € 158.2 M (+67.4% vs. +39.2% expected);
Net Profit: € 139.0 M (+394.7% vs. +179.9% expected);

Better 1Q’21 Results on the operating level thanks to Cement and Construction with a weaker cash performance. EBITDA came in above our estimates (+16.5% vs. +11.9% BS(e)) given the better performance of Cement and Construction (~6% EV) while Water and Services (82% EV) performed in line with expectations. On the consolidated level, sales came in slightly below estimates (+2.1% vs. +2.8% BS(e)), but margins offset this performance with a +130bps improvement vs. 1Q’20 to 16.8% on the quarter (vs. 16.0% BS(e)), explained by a better performance in Cement (19.4% vs. 16% BS(e)) and Construction (6% vs. 5.1% BS(e)). Net Profit even saw a better performance, totalling € 139 M (vs. € +79 M BS(e)) given the impact from one-offs in financials (explained by € 12 M and positive exchange rate differences worth € 14 M) and higher capital gains from the sale of its concessions in Catalonia in the 4Q’20 (€ 23.4 M vs. € 18 M BS(e)). In any case, excluding these effects, Net Profit would have come in +7% higher.
NFD fell by -7% to € 2.613 Bn (2.6x NFD/adjusted EBITDA vs. 2.7x in 4Q’20), slightly above our estimates (€ ~2.5 Bn; 2.5x NFD/adjusted EBITDA). The drop on the quarter benefited from the € 350 M collection from the divestiture of its stake in 3 concessions in Catalonia in the 4Q’20 and includes a € 280 M seasonal working capital deterioration.
In short, the 1Q’21 results came in above expectations on the operating level thanks to the better performance in the Cement and Construction divisions, which are the least important for the company (6% EV). We believe the lower “quality” of these 1Q’21 results, along with slightly weaker cash performance, should give a neutral/negative slant to the reception, especially bearing in mind the solid recent performance (+11% since the 4Q’20 results; +5% vs. IBEX). In any event, we highlight the underlying performance of the core businesses (Services and Water), which are performing as expected and lead us to maintain our positive view of the stock. BUY. Target Price: € 12.80/sh (upside +17.00%)