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

2Q'20 vs. 2Q'19 Results
Sales: € 694.7 M (+2.7% vs. -6.9% expected);
EBITDA: € 6.5 M (-52.2% vs. -73.4% expected);
EBIT: € -8.1 M (€ -1.3 M in 1H'19 vs. € -12.88 M expected);
Net Profit: € -31.2 M (€ -7.6 M in 1H'19 vs. € -23.4 M expected);
1H'20 vs. 1H'19 Results
Sales: € 1.35 Bn (-0.8% vs. -5.6% expected);
EBITDA: € 20.1 M (-11.5% vs. -24.2% expected);
EBIT: € -7.3 M (€ -3.1 M in 1H'19 vs. € -12.08 M expected);
Net Profit: € -38.5 M (€ -15.3 M in 1H'19 vs. € -30.7 M expected);
Better 2Q’20 Results on the operating level and cash. The 2Q EBITDA came in slightly above expectations (€ 6. 5 M vs. 3.6 M BS(e)) thanks to the good sales performance (+2.7% vs. -6.9% BS(e)) and slightly higher margins (0.9% vs. 0.6% BS(e) and vs. 2.1% in 1Q’20). However, Net Profit losses came in above expectations (€ -31 M vs. € -23.4 M BS(e)), due mainly to higher taxes (€ -6.6 M vs. € +1.1 M BS(e)) despite EBT losses.
Good news in cash, with only € -16.4 M cash burn on the quarter (vs. € -80 M BS(e) and € -191 M in 1Q’20), mainly explained by the better performance of working capital, which generated around € 9 M on the quarter vs. € -64 M of cash burn BS(e) and vs. € -85 M in 2Q’19. Thus, NFD rose by +12% up to € 152 M (vs. € 215 M BS(e); ~2.4x NFD/EBITDA).
In summary, better 2Q’20 Results on the operating level and cash, where we foresee a positive reception bearing in mind the recent share price performance (-44% since the beginning of the pandemic; -14% vs. IBEX). In any event, we maintain our recommendation and T.P. as we see relevant risks in the company, mainly stemming from the closure of legacy projects that reduce the cash performance visibility and our change of stance will depend on the delivery in terms of positive recurring free cash flow (not expected until 2020). The company will hold a conference call at 9:30 (CET), where we expect details on the business prospects in the 2H’20 and on the debt refinancing process. SELL. Target Price: € 0.60/sh. (-0.08% potential)