Sisecam 2Q12 earnings review: Despite lower bottom-line, operational
performance mostly in line
Sisecam posted a TRY 105.1mn net profit in 2Q12, thus below our estimate
of TRY 117.7mn and the consensus of TRY 122.6mn. The deviation between our net
profit estimate and the actual figure mainly stemmed from lower margins and
higher financial expenses than expected. On the revenue side, the company
posted TRY 1412.2mn, essentially in line with our TRY 1395.4mn estimate and the
consensus estimate of TRY 1,411.2mn. Although the top line growth in flat glass
segment did not meet expectations, higher top line growth in glass packaging
compensated for this decline. Meanwhile, the company also posted a TRY 31mn net
loss in 2Q12, which is slightly above our TRY 19mn loss expectation.
On the margin side, the gross margin came in below our expectation due
mainly to lower margins in the flat glass segment. The company’s price hike in
this segment did not meet our and market’s margin expectations and this also
has pressured the Sisecam’s margins. The gross margin decreased to 28.3% in
2Q12 from 30.5% in 1Q12, while the EBITDA margin declined to 19.4% from 21.3%
quarterly, thus below our expectation of 21.0% and the market consensus of
22.2%.
We talked with company officials on Friday following the release of
financials, and received a positive outlook for 3Q12. Accordingly, the first
two months of 3Q12 imply a better top line and margins q/q. Assuming that there
will be no hike in natural gas prices in the remainder of the year, we view
these margin levels as bottom for 2012.
Overall, while the bottom-line came in below both our and market
estimates, we consider operational performance to be mostly in line with our
expectations for the company. We view the 2Q12 financials as neutral for the
share price and reiterate our “Reduce” recommendation for Sisecam with a TRY 2.98
target price.
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