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ALMIRALL: 3Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'20 vs. 3Q'19 Results:
Sales: € 187.8 M (-9.5% vs. -8.9% BS(e) and -8.4% consensus);
EBITDA: € 52.4 M (-25.5% vs. -25.9% BS(e) and -30.0% consensus);
EBIT: € 22.2 M (-41.6% vs. -44.7% BS(e) and -53.9% consensus);
Net Profit: € 14.7 M (-58.5% vs. -59.4% BS(e) and -66.4% consensus);
9M'20 vs. 9M'19 Results:
Sales: € 613.8 M (-3.7% vs. -3.6% BS(e) and -3.4% consensus);
EBITDA: € 189.6 M (-19.8% vs. -20.0% BS(e) and -21.2% consensus);
EBIT: € 97.5 M (-29.9% vs. -30.7% BS(e) and -33.2% consensus);
Net Profit: € 57.1 M (-41.3% vs. -41.7% BS(e) and -44.2% consensus);

The 3Q’20 results were in line with expectations, with the company reiterating its 2020 guidance. EBITDA fell in line with expectations (-26% vs. -26% BS(e) and -30% consensus), with sales falling -9% as expected (vs. -9% BS(e) and -8% consensus) and slightly higher EBITDA margins (27.8% vs. 27.5% BS(e) and 26% consensus), due mainly to lower R&D costs (-22% vs. 3Q’19). No surprises on the Net Profit line (-46% vs. -56% consensus and -47% BS(e)), with the operating performance carrying over. Net debt performed solidly, falling -1% to € 369 M ex-pension plans (~1.4x NFD/EBITDA vs. € 363 M BS(e)) thanks to highly-contained capex. Following these 3Q’20 results, the company reiterates its 2020 guidance (EBITDA between € 230-250 M vs. € 231 M BS(e) and € 238 M consensus), which it should meet rather easily. We stress that if ALM were to repeat the same EBITDA level from this quarter in 4Q’20 (that is, without assuming greater recovery of the business), it would stand in the middle of the 2020 guidance range. We expect a neutral or slightly positive share price reaction given its recent performance (+1% in absolute terms and +6% vs. IBEX since the 2Q’20 results). BUY. T.P. € 17.00/sh. (upside +71.54%).