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INDRA: FY2019 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'19 vs. 4Q'18 Results:
Sales: € 916.0 M (-1.5% vs. +1.5% BS(e) and +1.9% consensus);
EBIT: € 94.0 M (+11.9% vs. +13.7% BS(e) and +9.2% consensus);
Net Profit: € 56.0 M (-13.8% vs. -1.4% BS(e) and -8.9% consensus);
FY2019 vs. FY2018 Results:
Sales: € 3.204 Bn (+3.2% vs. +4.1% BS(e) and +4.2% consensus);
EBIT: € 221.0 M (+11.1% vs. +11.8% BS(e) and +9.9% consensus);
Net Profit: € 121.0 M (+0.8% vs. +7.6% BS(e) and +3.5% consensus);
The results came in below expectations in sales (given the double-digit decline in transport and traffic as a result of the complicated comparison vs. 4Q’18) and in line in the rest of headings, where we highlight the positive cash generation (€ 246 M in 4Q’19) and order intake growth (+11%, exceeding € 4.5 Bn, 1.4x sales, the company’s record). The 4Q’19 sales fell -1.0% in local currency (+5.1% Minsait and -8.8% T&D) due to the difficult comparison in transport and traffic. 4Q’19 EBIT reached € 94 M (+11.7% or +32.4% if we exclude the positive one-off of € 13 M in 4Q’18) with a margin of 10.3% (vs. 9.1% in 4Q’18), leaving EBIT’19 at € 221 M (+10.7%) with a margin of 6.9% (vs. 6.4% in 2018). We stress positive the cash generation in the 4Q’19 of € 246 M (vs. € 240 M BS(e)), leaving the FCF’19 at € 8 M (€ 139 M excluding WC). NFD’19 came in at € 552 M (+14% vs. 2018, as it includes the acquisition of SIA), meaning 1.8x NFD/EBITDA.
As for the 2020 targets, the company expects mid-single-digit sales growth (vs. +2.2% BS(e) and +3.8% consensus), >+15% EBIT growth (above € 225 M, vs. € 254 M BS(e) and € 246 M consensus) and >€ 150 M of FCF (vs. € 173 M BS(e)) including WC. We highlight that the guidance does not include the impact from SIA, which would add around 2% to sales and around 2.7% to EBIT.
We expect a positive impact from a set of results that not only reduces the uncertainties weighing on the company’s cash generation capacity but also provides guidelines for 2020 that are above the consensus’ estimates and (slightly) above ours. Moreover, we believe that EBIT is growing at healthy rates, with a positive impact on its two main divisions. BUY. T.P. € 11.50/sh. (+22.34% upside).