- Q4 21A snapshot: EBITDA +116% y/y & +22% q/q to USD 177m (CRe: USD 189mn vs. consensus: USD 209mn). EPS in the green at USD 0.11/share (CRe: USD 0.11/share vs. consensus: USD 0.13/share). Net debt decreased by 5% q/q to USD 1,946mn (CRe: 2,088mn) & net debt/EBITDA of 3.7x.
- Big miss on DWP volumes (27% lower than CRe): SAP indicated that 100kt (18kt in NA & 88kt in SA) of DWP volumes were backlogged due to logistic constraint, with an EBITDA impact of USD 30mn (implied DWP margin of 31%).
- Despite a tough inflationary environment, Europe (8% of EBITDA) did well for the EBITDA margin to remain in the green at 2.0%: In LC, Revenue: +40% y/y & +10% q/q; EBITDA: -8% y/y & -14% q/q; EBITDA margin: 2.0% (CRe: -2.0%) -110bps y/y & -60bps q/q. Graphic Paper volumes were slightly better than expected, but with a miss on Packaging and Specialty volumes.
- North America (51% of EBITDA) recorded its strongest quarter in over 20 years: In LC, Revenue: +27% y/y & +5% q/q; EBITDA: +200% y/y & +58% q/q; EBITDA margin: 19.7% (CRe: +14.3%) +1,140% bps y/y & +670bps q/q. Graphic Paper and Packaging & Specialties performed well again in the quarter.
- South Africa (42% of EBITDA) disappointed on the back of lower DWP volumes (41% lower than CRe): In LC, Revenue: 3% y/y & -9% q/q; EBITDA: +71% y/y & +7% q/q; EBITDA margin: 25.5% (CRe: +34.0%) +1,020% bps y/y & +390bps q/q.
- DWP (44% of EBITDA) disappointing due to 100kt of backlogged volumes: Revenue: +38% y/y & +9% q/q; EBITDA: +300% y/y & +70% q/q; EBITDA margin: 20.7% +1,360bps y/y & +743bps q/q.
- Packaging & Specialties (32% of EBITDA) shot the lights out again due to improved pricing: Revenue: +25% y/y & +11% q/q; EBITDA: +47% y/y & +30% q/q; EBITDA margin: 16.0% +235bps y/y & +242bps q/q. Strong volume performance continued in North America (+20% y/y and -2% q/q).
- Graphic Paper (25% of EBITDA), a mixed performance with NA continuing its strong performance and Europe lagging: Revenue: +26% y/y & +7% q/q; EBITDA: -9% y/y & -17% q/q; EBITDA margin: 2.9% -110bps y/y & -81bps q/q. In Europe, CWF and CM were at 99% and 80% of pre-COVID levels, respectively.
- Gearing on the right trajectory: Net debt decreased by -1% y/y and -5% q/q to USD 1,976mn, helped by favourable FX. Net debt/EBITDA decreased to 3.7x. SAP’s revised leverage covenants (net debt/EBITDA) with it’s banking group: December 2021: 5.50x; March 2022: 5.25x; June 2022: 4.75x; September and December 2022: 4.50x and March 2023: 4.25x. Based on our current estimates, SAP has more than enough headroom (current Q1 22E: 3.4x).
- CapEx guidance of USD 395mn disappointing in terms of de-gearing and FCF generation in FY 22E: This is well ahead of our current estimate of USD 250-300mn. The USD 395mn includes USD 30mn for the Saiccor mill expansion (not clear if related to 110ktpa expansion or the line conversion); USD 80mn for cost optimisation (no colour provided) and USD 75mn for sustainability projects. This implies a SIB CapEx level of USD 210mn.
- Outlook guidance better than our base case: SAP is guiding for Q1 22E EBITDA to be higher q/q (CRe: USD 158mn), despite a USD 22mn impact on EBITDA due to the Somerset planned maintenance shut.
Download Report
