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GRIFOLS: 2Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

2Q'20 vs. 2Q'19 Results
Sales: € 1.384 Bn (+9.3% vs. +8.2% expected and +7.2% expected by the market consensus);
EBITDA: € 228.8 M (-41.5% vs. -42.0% expected and -41.0% expected by the market consensus);
EBIT: € 148.1 M (-53.3% vs. -53.0% expected and -56.1% expected by the market consensus);
Net Profit: € 32.2 M (-81.3% vs. -83.0% expected and -82.0% expected by the market consensus);
1H'20 vs. 1H'19 Results
Sales: € 2.677 Bn (+10.5% vs. +9.9% expected and +9.4% expected by the market consensus);
EBITDA: € 579.9 M (-16.8% vs. -17.0% expected and -16.5% expected by the market consensus);
EBIT: € 421.7 M (-23.0% vs. -22.9% expected and -24.7% expected by the market consensus);
Net Profit: € 218.2 M (-23.9% vs. -24.9% expected and -24.4% expected by the market consensus);
2Q’20 results in line on the operating level but with weaker underlying margins. The 2Q’20 EBITDA decreased in line with expectations due to slightly better-than-expected sales and margins in line with expectations(+16.5% vs. +16.6% expected). Note that in the 2Q’20 the company admitted a € -200 M negative impact on gross margin (€ -185 M including EBITDA savings) due to lower plasma procurement (already known), but still excluding this effect, adjusted EBITDA margins fell -200bps to 28% (vs. 30.4% BS(e) and vs. 29% 2020 BS(e) and 31% in the long-term BS(e)). Net Profit also fell -83%, in line with expectations (vs -83% BS(e) and -82% consensus) with a significant increase in minority items (€ -26 M vs. € -27 M expected) due to the consolidation of its 27.2% stake in Shangai Raas for the first time.
Separately, net debt decreased by -5% to € 5.5 Bn (3.8% of NFD/EBITDA adjusted) vs. €~5.6 Bn BS(e) thanks to good performance in working capital (stocks).
In short, the 2Q’20 results were a mixed bag, showing agood performance in sales and debt, but a weaker performance in underlying margins, which would explain the stock’s reaction (-0.1%) vs. IBEX despite its recent performance (-31% vs. IBEX since 1Q’20 results and only +4% since the beginning of the pandemic). BUY. Target Price: € 37.30/sh (upside 45.08%)