4Q FY17 results – weak end to a tough year, but FY18E outlook remains solid
DO&CO announced its 4Q FY17 results yesterday. Overall, the company delivered a rather weak end to a tough year, reporting a 15% EBITDA miss, chiefly on the weak results in International event catering, but also weaker results in other segments. The main reason for the miss in the Airline catering segment was the weaker-than-expected performance of both the non-Turkish and non-British locations, in our view, with the loss of the contract with Ukraine International and a sharp fall in demand from NIKI. Despite the weak end to FY17, DO&CO has a strong pipeline for FY18E, with new clients, like Lufthansa, Thai Airways and Air China, as well as the rollout of two new kitchens in Los Angeles and Paris in 2Q FY18E, and the expansion of its New York and London locations. Therefore, we are still comfortable with our revenue forecast of EUR 962m for FY18E, +5% yoy, and our broadly flat EBITDA margin (10.2% vs. 10.1% in FY17). The company disclosed its first guidance for the capex for the kitchen at the third Istanbul airport, amounting to up to USD 50m. According to our sensitivity analysis, this serves as a downside risk of up to EUR 4.6/share for our price target (PT) of EUR 74.
Do & Co AG is a foodservice company. Co. maintains three business divisions. Its Airline Catering division provides gourmet food for passengers of airline companies such as Austrian Airlines, Turkish Airlines, Air France on long-haul flights. Co.'s flying cooks prepare fresh meals on-board. The International Event Catering division provides services such as handling the menu and the provision of food for sporting events, including tennis and golf tournaments, skiing events and Formula One Grand Prix races. The Restaurants, Lounges & Hotel division operates three restaurants; five restaurants with bars and one at the Casino Baden, and three bakeries under the Demel brand.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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