EUR 200.00 For Business Accounts Only

FLUIDRA: WITHDRAWS ITS 2020 GUIDANCE THAT WILL BE UPDATED WITH THE 1Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

The company has just announced that although sales had started the year off well through Feb’20, the slowdown resulting from the confinement measures have led it to withdraw its guidance’20 (EBITDA of € 240-260 M / -4% vs. consensus and +5% vs. our estimates). According to FDR, the situation is unpredictable and an accurate assessment of the impact is impossible. Thus, in the 1Q’20 results release (13/05) the company will provide more information. For now FDR has stated that the commercial pool business (7% of sales), linked to tourism, will be hit (although no specifics are given). FDR reiterates that it has a strong financial position with a NFD/EBITDA’19 ratio of 2.6x, it has liquidity (cash plus credit lines) totaling €~406 M (~35% NFD) and that it has no refinancing needs over the next 12 months or significant maturities until 2023.
For the time being, FDR will take the following measures: (i) FDR has suspended possible dividend payments until further notice, the Board has cut their wages by -30% and the Management Committee by -20%. As for dividends, no payment was expected against 2019 Results (to be paid in 2020), and the company was studying to resume the dividend payment against 2020 Results (to be paid in 2021; DPS’20e € 0.14/sh., BS(e), 1.6% yield), and thus, this does not mean the cancellation of any dividend payments in the short-term. (ii) FDR will carry out temporary redundancy plans based on demand and it will partially complete the wages of the employees affected. (iii) FDR is studying the possibility of postponing CAPEX and reducing OPEX with the exception of priorities. No further details were given.
News of little impact, as it is expected to some extent. We will wait for the company to provide further details but we do not rule out a cut of around -20% to EBITDA’20 and return to stability in 2021, with an impact of around -10% maximum on the valuation (bringing our T.P. to levels of € 9.00/sh.). Still we would not see attractive upside potential from these levels. The stock has fallen from highs in line with the IBEX, which in our view is already factoring in the COVID-19 risk. We do not expect a significant market reaction beyond that caused by the slightly negative slant of this news.