Recall that SNPE and Picanol have signed on 25 July 2013 a binding agreement for the sale by SNPE to the Picanol Group of a stake held by SNPE in Tessenderlo Chemie, representing 27.6% of the share capital of Tessenderlo Chemie for a price of € 22/sh. SNPE, is for 99.9% owned by the French state. Throughthe acquisition of a 27.6% stake in Tessenderlo Chemie, Picanol diversifies it activities, combining its cyclical weaving machine business with Tessenderlo’s counter-cyclical chemical business. We are positively surprised to see that Picanol invests its excess cash in a well known company, which is listed on Euronext Brussels. Also important is thatby taking over the 27.6% stake from SNPE, Picanol takes away the share price overhang in Tessenderlo Chemie which has been there for more than a decade.
Tessenderlo posted lower than expected 2Q results. Revenue declined by 3.7% (+7.5% at constant scope) to € 542.4m (KBCS € 522.7m, CSS € 519.8m). REBITDA declined by 11.6% (-8.4% at constant scope) to € 49.0m (KBCS € 56.0m, CSS € 53.7m). Net result was again impacted by incidentals (at pre-tax level € -49m, KBCS est € -25.0m, CSS € -3.9m) and net result landed at € -36.1m (KBCS € 6.0m, CSS € 16.4m). In its outlook, Tessenderlo hinted that REBITDA for the full year should be around 20% below 2012. If we take the 2012 REBITDA pro-forma adjusted for IAS 19 as a base (€ 160m), this guidance implies a FY13 REBITDA of around € 128m, which is well below our and consensus current forecasts which stand at respectively € 152.0m and € 151.4m. Construction activity is likely to remain weak, impacting PPS, while Kerley is likely to be impacted by softening crop prices asa result of strong crop production this season, with Kerley REBITDA in 2H13 guided below 2H12.
2Q REBITDA for Tessenderlo was below guidance and our and consensus forecasts, with mainly lower than expected results at Gelatin & Akiolis and Kerley which were not offset by a slightly better than expected performance at Inorganics and PPS &Profiles. Significant one-off charges are again a negative surprise. Only the net debt number is a slight positive surprise, but the published number is helped by additional off balance sheet financing. We lower our target price for Tessenderlo from € 25 to € 22 following weaker than expected results and guidance while sticking to our Hold rating.
We reiterate that Picanol itself had very good 1H13 numbers and we were positively surprised that Picanol expects to realise in 2H13 a slight turnover increase in comparison to the stronger 2H12 We increased recently our Target Price to € 29 and maintain our BUY rating.