2Q revenue increased by 2.6% to € 156.3m which was very close to our € 156.1m forecast and slightly better than consensus (€ 154.0m). The revenue growth can be broken down as follows:
Volume: +2.3% (KBCS -3.0%, css -3.6%). Note comps were gradually getting easier as 2Q11 volumes were down 6.1% y/y whereas 1Q11 volumes were still up 2.4% y/y.
Price/Mix: +0.1% (KBCS +4.0%, css +3.7%). The lower than expected price/mix effect is mainly attributable to the changed geographical mix (see below : significant revenue decline in Western Europe with higher average prices partly due to a higher portion of coloured profiles).
FX: +0.1% (KBCS +1.5%, css +1.0%).
Revenue declined by 11.5% in Western Europe (€ 55.7m), while growing in all other regions: CEE +6.2% to € 46.7m (growth mainly on the back of Russia), Turkey +14.3% (+18.5% at constant FX) to € 34.5m and US +27.9% (+15.5% at constant FX) to € 19.5m.
Deceuninck offers no precise guidance for 2012 but (unsurprisingly) mentions that the economic environment remains challenging. We will finetune our forecasts but make no major changes to our current FY assumptions which include 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.
2Q12 revenue was close to our forecast but the breakdown was slightly surprising, with stronger than expected volumes and weaker than expected price/mix (geographical mix related). Given the improvement in the volume trend (despite a deteriorating mix) and declined raw materials (PVC) prices we are not too fatalistic about profit margin evolution (we forecast a flat FY12 REBITDA margin). Valuation is quite low, at 3.9x EV/EBITDA12e, so we reiterate our Accumulate rating and € 1.30 target price.