Μυτιληναίος: Τι περιμένουν από το εξάμηνο του ομίλου οι αναλυτές της Optima Bank

Mytilineos || Under review | CP EUR 8.05

1H20 results preview – Satisfactory performance is expected driven by the power division 

Facts: Mytilineos is scheduled to release its 1H20 results tomorrow, before the opening of the market, followed by a conference call in the afternoon at 15:15 UK time. We expect turnover of EUR 861m (-13% YoY), EBITDA of EUR 141m (-19.5% YoY) and net income of EUR 61m (-25% YoY). On a 2Q20 basis, we forecast revenues of EUR 328m (-31% YoY), EBITDA of EUR 61m (-27% YoY) and net income of EUR 24.6m (-23% YoY).

1H20/2Q20 Group Key P&L Forecasts

EUR m

1H19

1H20e

Y-o-Y change

2Q19

2Q20e

Y-o-Y change

Turnover

991

861

      -13%

477

328

-31%

EBITDA

175

141

   -19.5%

83

61

-27%

EBITDA margin

17.7%

16.4%

 

17.5%

18.5%

 

Net income

81.6

61.0

  -25%

31.9

24.6

-23%

Source: Optima Bank, The Company            

Comment: Below is an analysis per division:

Metallurgy & Mining: The impact of covid-19 on already modest alumina/aluminium prices, shaping lower by 30% and 13% respectively in 1H20, was partially offset by reduced cash costs and somewhat stronger USD. Specifically, taking into consideration aluminium hedged prices in 1H19 and a lower billet premium by c.USD 160/ton, we calculate 1H20 revenues of EUR 218m, down 25% YoY. On the other hand, a significant reduction in key raw material costs (especially natural gas) and the implementation of a new cost cutting programme suggest a decline in refinery cash costs by 30% and in smelter cash costs by 21%. Overall, we calculate total EBITDA of EUR 54m (EUR 32m aluminium, EUR 21m alumina, EUR 1m recycled aluminium) from EUR 92.5m in 1H19 (EUR 63m aluminium, EUR 30m alumina).

Power & Gas: Regarding the power plants, despite the steep decline of wholesale prices by c.38%, the combination of high utilization rate (51%) and healthy spark spreads (over EUR 15/MWh) driven by significantly lower LNG prices is estimated to have enhanced thermal generation EBITDA by 50% YoY to c.EUR 40m. Adding the growing RES and positive contribution from electricity retail and gas trading we reach total EBITDA of EUR 66.5m, representing a 32% YoY increase. For revenues we estimate a modest 4% YoY decline at EUR 443m, due to growth of electricity retail and natural gas trading activities.  

EPC & Solar PV: Delays in EPC projects caused from disruptions in supply chains as a result of the global lockdowns, imply a mediocre performance for the EPC business. On the other hand, the first solar PV sale (a group of operational solar power parks in Northern & Central Greece totaling 47MW were sold for total consideration of EUR 45.8m) in a number of projects currently developed by Mytilineos for the purpose of sale after its operation should have supported division performance, demonstrating the scope and the potential of the new activity. Overall, we forecast turnover of EUR 200m (-15% YoY) and EBITDA of EUR 21m (-40% YoY). 

Below the EBITDA, we assume flat depreciation expenses at EUR 46m, c.10% lower financial expenses at EUR 19m (despite the repurchase of the EUR 300m bond) on refinancing and effective tax rate of 20% from 21% in 1H19.

ConclusionDespite the challenging environment, the rebound of aluminium prices in 3Q20, the continuation of the good performance of the thermal power plants during summer and the normalization of works in EPC projects indicate a very satisfactory performance for the group until the end of the year (we expect EBITDA in the range of EUR 250-270m). Furthermore, the company maintains a very strong liquidity which allows the continuation of the investment programme, while due to low cost operations is well placed to benefit from a recovery of the global economy. In this context, we retain our positive view for the stock. We will revert soon with new estimates and valuation.