EUR 100.00 For Business Accounts Only

IBERPAPEL: FY2020 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 35.3 M (-25.3% vs. -23.2% expected);
EBITDA: € 8.88 M (+9.7% vs. -4.3% expected);
EBIT: € 4.27 M (-18.0% vs. -2.0% expected);
Net Profit: € 3.1 M (-32.2% vs. -22.1% expected).
FY2020 vs. FY2019 Results
Sales: € 152.88 M (-28.4% vs. -27.9% expected);
EBITDA: € 19.13 M (-48.3% vs. -51.4% expected);
EBIT: € 6.67 M (-74.6% vs. -71.5% expected);
Net Profit: € 4.24 M (-80.4% vs. -78.3% expected).

Poor 4Q’20 results, but with EBITDA above expectations (+14% vs. BS(e)). As a result of Covid-19, sales fell by -25% on the quarter, -3% below our estimate, with paper sales dropping by -5% below our estimate (in our view this would be mainly due to lower volumes sold; -27% vs. 4Q’19), whereas Energy sales came in as expected (€ 7 M; -24% vs. 4Q’19). In cumulative terms, sales fell -28% vs. FY2019, as a result of lower paper sales (-21% BS(e)), a significant drop in paper prices (-9% on average BS(E)) and lower energy sales (due to lower generation and remuneration).
The quarter’s EBITDA came in at € 8.8 M, beating our estimate of € 7.8 M (vs. € 8.1 M in 4Q’19), with the EBITDA margin coming in at 25% (vs. 17% in 4Q’19). In cumulative terms, EBITDA fell -48% vs. 2019. The quarter’s EBITDA came in at € 3.1 M (vs. € 3.6 M BS(e) and € 3.9 M in 4Q’19; € 4.2 M in cumulative terms; € 21.7 M in FY2019).
The company reported € 33 M of net cash vs. € -48 M in 9M’20 and € 79 M at the end of 2019, with ~-22 M of investments (BS(e)) on the quarter (mainly for new facilities of pulp manufacturing and energy generation).
At the conference call held after the earnings release, the company was cautious on the performance of the sector in the 1Q’21 although it expects a recovery in the 2H’21 at the latest. The increase in pulp prices (+15% short fibre vs. 2019) could be a catalyst for paper demand. On another note, the company outlined it is studying the possibility of selling exceeding pulp from the new facility to third parties, as until the installation of the new MG paper machine (the project is on a standstill for the time being) it would have idle capacity.
We believe that even though results were better than expected in EBITDA, the message conveyed at the conference call provide an unspecific 2021 guidance that could result in a neutral market reaction. The share price has shed -15% vs. IBEX since the beginning of the pandemic due to Covid-19 (Feb’19). BUY. T.P. € 26.10/sh. (upside +48.72%).