Van de Velde reports its FY11 results on February 17 before market, followed by an analyst meeting at 10am.
FY11 sales published at the beginning of January reached € 179.9m, up 8.2%. Organic growth amounted to 2.2%,better than the guidance of around 1.5% thanks to good follow-up orders in December.
In November, Van de Velde guided for growth in consolidated EBITDA in line with the expected organic sales growth of around 1.5%. We are counting on € 53.7m consolidated EBITDA, up 2.7% y/y. The REBITDA margin is expected to decline from 31.5% in FY10 to 29.8% in FY11 driven by the growing importance of the retail activity and the fact that it has lower profitability than the wholesale business. Wage and material cost inflation have also squeezed the REBITDA margin.
Assuming € 6m depreciation costs, € 0.9m financial results, € 0.9m profits from associates and € 12.9m taxes, net income arrives at € 36.6m. No one-off costs lead to adjusted net income of € 36.6m, unchangedversus last year.
Ahead of the results, we keep our Hold rating and € 37 target price. Van de Velde is a rock-solid player in a difficult market environment. We like the company for its solid balance sheet, good organic growth track record in a competitive sector and high operating and net margins. However, we believe the stock is fairly priced, recent acquisitions in the retail business still need to show results and cautious consumer spending might continue to hamper growth.