The stock in Valeo has dropped by nearly 8% this morning, after the release of its results and forecasts.
Yesterday evening, the Company announced net revenue of EUR 7.058 million for the first half of 2020; a decline of 28% on a nominal basis, and at stable exchange rates relative to the same duration in 2019. New orders amounted to EUR 5.6 billion.
Operating income amounted to EUR-1,141 million. Net income Group contribution amounted to EUR -1,215 million. This covers non-recurring expenses with a gross value of EUR 622 million. Free cash flow for the year amounted to -€1,049 million.
In the second half of the year, the Group plans a restructuring payment of between EUR 50 and EUR 100 million to intensify the operating cost reduction; an EBITDA of about 10% of revenue, and free cash flow of more than EUR 400 million.
After a 60 percent rise in share prices over three months, Invest Securities downgraded its assessment of Valeo from “buy” to “fair”; which reflects a possible improvement of 7% relative to its share price target of EUR 26 relative to EUR 23.7 previously.
Although the first half of sales of EUR 7.058 million (-28%) were in line, the results were very poor; “the analyst said, noting EBITDA of just EUR 202 million (-83 percent).
The lack of transparency obliges the company to provide very prudent forecast; below our turnaround estimate,’ continues Invest Securities, which lowers its NBI to a more optimistic recovery scenario.
Oddo claims that the company reported results far below the forecast; (EBIT / FCF) for the first half of 2020 reflecting the analyst’s conservative position on the stock market; the price of which (PE 21 20x) seems to be entirely detached from the fundamentals.
Beyond 2020, the substantial exceptional charges / write-downs made in H1 20 (EUR 622 m) and management’s remarks appear to rule out any possibility of a meaningful turnaround in the medium term and a return to previous rates of profitability, “says Oddo.
Despite this release, analysts uphold their Lightening Opinion and their 18 E price target.
In terms of outlook; the Group has stated that it is focused on growth at-10% in the second half (Oddo at-8%) and is targeting results in all countries; EBITDA at about 10% of revenue (against a forecast of about 13 percent e) and FCF outside financial expenses of more than EUR 400 million.
Source: Borsorama
