• SAP’s European operations are roughly 2x Lecta’s: Lecta’s
    Q4 19A EBITDA margin expanded by 129 bps y/y to 8.5%. This compares to SAP’s 10.0% over the same period.
  • FY 19A volumes declined by 12% y/y: This compares to the 11% decline for industry European deliveries. The volume decline was impacted by the decision to stop CWF production on Condat’s Line 8 (France) ahead of the conversion to specialty as well as ERP implementation issues at its mill in Garda (Italy).
  • Specialties to see further growth: Demand in self-adhesive, metallized, coated 1-side and thermal papers are expected to grow by 2-4% p.a. through to 2023.
  • Gearing was a problem, until recapitalization: FY 19A net debt increased by 18% y/y, with net debt/EBITDA climbing to 7.0x.
  • Recapitalization completed on 4 February 2020: Key benefits include deleveraging (by c. EUR 300m with debt to equity conversion); 36% reduction in interest costs; longer dated maturities and improved incremental liquidity.  
  • Organization efficiency program to continue into 2020: Lecta will align its CWF capacity to market demand, while developing their Specialty Paper business. FY 19A headcount declined by 3% y/y, with average cost per employee declining by 1% to EUR 58k p.a.
  • COVID update weak relative to guidance provided by peers: “The consequences of Covid-19 are expected to affect 2020 Group sales and Ebitda”. The Group could have to temporarily close one or several sites because of restrictions imposed in certain countries; limitations of suppliers to manufacture and deliver raw materials, or reductions in demand.
  • Conference call: 27 April at 3pm.

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