1H11 earnings were broadly in line
Sales amounted to € 561m (KBC: 563), clean EBIT amounted to € 217.9m (KBC: 218.6, CSS 221.4), reported net profit was € 243.7m (KBC: 239.7) and clean net profit amounted to € 123.5m (KBC: 136.8). The difference between reported and clean net profit and our estimates for these items has to do with incomplete information on the impact from the sale of the Borco stake and the associated Buckeye units. There were exceptional items on 8 places in the P&L!
The divisions showed minor deviations
Clean EBIT per division was as follows: CEMEA 41.5 (reported) vs. 40.1 (KBC) & 40.9 (CSS); OEMEA 72.4 vs. 71.8 & 73.7; Asia 93.6 vs. 95.4 & 95.2; North America 16.9 vs. 17.1 & 18.5; Latin America 13.7 vs. 14.6 & 14.4; Not Allocated -20.2 vs. -20.4 & -21.2.
Guidance repeated:
Management repeated FY 2011 guidance of EBTIDA of between € 600-640m and the target for 2013 of EBITDA of between € 725-800m.
CF and balance sheet:
There are no major surprises in the balance sheet. WC is € -53m vs. € -69m last year. Net debt declined to € 1,256m from € 1,432m at year-end, in spite of capex related to expansion, due to proceeds from the sale of the Borco participation.
Market conditions are reassuring:
management expects demand for oil to remain strong, they see encouraging signs in chemicals, and they even noticed some positive signs in biofuels although uncertainty in that segment still prevail.
Conclusion:
We are neutral on the 1H11 results as clean EBIT was in line with expectations, the balance sheet looks pretty normal, and management made reassuring comments on market conditions. Growth in the years ahead will be driven by expansion projects that are currently under construction. We do not expect to make large changes to our estimates and TP. Consensus may have to move down 1-2% on clean EBIT.
Estimates under review.
Analyst meeting at 10.30 CET. Webcast at www.vopak.com