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PROSEGUR: FY2020 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 843.0 M (-23.4% vs. -23.5% BS(e) and -22.2% consensus);
EBITDA: € 116.7 M (-26.1% vs. -38.8% BS(e) and -30.6% consensus);
EBIT: € 70.7 M (-30.7% vs. -55.2% BS(e) and -39.5% consensus);
Net Profit: € 13.8 M (-55.5% vs. -94.2% BS(e) and -49.0% consensus).
FY2020 vs. FY2019 Results
Sales: € 3.463 Bn (-17.5% vs. -17.5% BS(e) and -17.2% consensus);
EBITDA: € 409.0 M (-23.7% vs. -27.4% BS(e) and -25.0% consensus);
EBIT: € 225.0 M (-31.8% vs. -39.4% BS(e) and -34.5% consensus);
Net Profit: € 59.0 M (-48.2% vs. -58.8% BS(e) and -46.5% consensus).

This set of results showed the impact from the sale of 50% of the Alarms business in Spain (already known, whose impact is excluded from the underlying accounts) and from an unexpected write-off in CASH (one-off, with no impact on cash). Excluding these effects, the results would have been in line with expectations in sales and above in EBIT (+12% vs. BS(e) and +4% vs. consensus), and better than expected in debt (€ 1.07 Bn vs. € 1.14 Bn BS(e), including IFRS16 and the delayed debt for M&A).
Thus, sales fell by -17.5% (in line with expectations), with organic growth of +0.1% and inorganic growth of -4.8%, with a negative impact of -12.8% from the exchange rate (including the hyperinflation effect in Argentina). EBIT fell by -32% (vs. -27.4% BS(e) and -25.1% consensus), with the margin coming in at 6.5% (vs. 7.9% in 2019). Excluding the impact from CASH’ efficiency plans (€-29 M), the drop in margins would have only been -60bps. Net Profit totalled € 59 M (-48% vs. 2019), above expectations (-59% BS(e) and -47% consensus).
By businesses, (i) CASH’s results adjusted for a write-off (without impact on cash and non-recurring) would have been in line with expectations; (ii) Security would have been in line in sales and +9% better in EBIT than our estimate and (iii) in Alarms we see +16% organic growth in sales, although growth in subscribers ex MPA in the last quarter would have been flat given the mobility restrictions imposed by Covid-19 in the markets where it operates (while MPA grows by +9% in one quarter), although FY2020 growth would be in line with our estimates.
NFD rose to € 1.079 Bn, better than our estimate (€ 1.145 Bn BS(e); including IFRS16 and debt postponed by M&A), leaving the debt level at 2.4x NFD/EBITDA (vs. 1.7x at the end of 2019). Working capital fared better than expected (€ +47 M vs. -31 BS(e)), widely offsetting the higher-than-expected CAPEX (€ -278 M vs. 255 BS(e)).
We expect a positive share price reaction, as EBIT and debt came in above expectations. PSG has beaten the IBEX by +4% thus far this year. BUY. T.P. € 3.13/sh. (upside +19.01%).