Deceuninck will publish a 2Q trading update on 12 July before market.
We remind that the company posted a 1.3% revenue increase (to € 118.0m) in 1Q12, broken down in a -4.1% volume decrease, a +6.9% price/mix effect and a -1.5% FX effect.
The company has not issued 2Q or FY guidance.
We forecast 2Q revenue to increase by 2.5% to € 156.1m (CSS € 154.0m), broken down as follows:
- Volume: -3.0% y/y (CSS -3.6%). Note comps are gradually getting easier as 2Q11 volumes were down 6.1% y/y whereas 1Q11 volumes were still up 2.4% y/y.
- Price/Mix: +4.0% y/y (CSS +3.7%)
- FX: +1.5% (derived from a basket of FX rates including Turkish Lira, Russian Rouble, Polish Zloty, British Pound and US dollar). Consensus calls for a 1.0% increase from FX.
For the full year we forecast a 2.4% increase in revenue to € 549.1m with a stable REBITDA margin of 9.2% or a FY12E REBITDA of € 50.6m. One element worth mentioning is the recent decline in the PVC price, which is down about 5% at the end of June from the end of 1Q12 peak (based on Plasteurope numbers) and poised to decline further in the coming months, we believe.
Our View:
We believe 1Q12 volumes (-4.1%) were somewhat supported by better weather although clearly had tougher comps than will be the casefor 2Q12. All in all, weak building markets and hence presumed weakness in volumes might get some compensation for by declining raw materials (PVC) prices and hence we are not too fatalistic about profit margin evolution (we forecast a flat FY12 REBITDA margin). As valuation is quite low, at 3.9x EV/EBITDA12E, we reiterate our Accumulate rating and € 1.30 target price.