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ALMIRALL: 4Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 193.6 M (-10.1% vs. -9.0% expected and -5.7% expected by the market consensus);
EBITDA: € 48.7 M (-28.1% vs. -16.4% expected and -18.2% expected by the market consensus);
EBIT: € 17.7 M (-50.6% vs. -23.2% expected and -38.5% expected by the market consensus);
Net Profit: € 17.2 M (+100.0% vs. +111.3% expected and +133.7% expected by the market consensus);
FY2020 vs. FY2019 Results
Sales: € 807.4 M (-5.4% vs. -4.9% expected and -4.0% expected by the market consensus);
EBITDA: € 238.3 M (-21.7% vs. -19.2% expected and -20.5% expected by the market consensus);
EBIT: € 115.2 M (-34.1% vs. -29.2% expected and -34.3% expected by the market consensus);
Net Profit: € 74.3 M (-29.8% vs. -29.2% expected and -29.7% expected by the market consensus);
4Q’20 results and 2021 guidance below expectations. The quarter’s EBITDA fell more than expected (-28% vs. -17% BS(e) and -23% consensus) due to lower sales (-10% vs. -8% BS(e) and -5%) and margins (25.2% vs. 28.5% BS(e) and 25.4% consensus) than expected, mainly as a result of higher SG&A expenses. Thus, in cumulative terms, ALM hit the halfway point of its EBITDA’20 guidance range (€ 238 M vs. guidance range of between € 230 M and € 250 M). Better performance in Net Profit (+4% vs. +7% BS(e) and +3% consensus) thanks to a lower tax rate in the US (13% of sales). Brilliant performance in net debt, which was reduced by -17% to € 307 M excl. pension plans (~1.3x NFD/EBITDA vs. € 355 M BS(e)) thanks to good working capital performance (€+40 M in 4Q’20) and low Capex levels.
The company has cut the dividend’20 slightly to € 0.19/sh.; (-4% vs. 2018 vs. +1% consensus and BS(e); 1.6% yield) and 0.20 expected) and has announced a guidance’21 of between € 215 M and € 235 M of EBITDA (€ 279 M BS(e) vs. € 251 M consensus) with medium single-digit growth in sales (vs. +4.4% BS(e) and +6.7% consensus), which excluding the impact from deferred revenues (€ 17 M in 2021 BS(e)) and other revenues (€ 10 M in 2021 BS(e)) would mean LfL EBITDA growth rates of +10% at the midpoint of the range.
Thus, weak 4Q’20 results and 2021 guidance below expectations that are seeing a positive reaction (+2% vs. IBEX) despite its recent performance (+9% in 2021; +8% vs. IBEX), which we believe is explained by the discount at which it is trading to peers (9x EV/EBITDA’21 vs. ~11x peers) and by its positive medium-term prospects (robust underlying demand after the normalisation of the health systems and favourable pipeline performance; 27% of the T.P.). Conference call at 10:00 (CET), where we expect further details on the hypotheses assumed in its forecasts for 2021 and on the business performance in the first months of the year. BUY. Target Price: € 17.00/sh. (upside 43.22%)