September 16, 2024 12:18 GMT
Suedzuker (SZUGR Snr Unsec; Baa2/BBB) Profit warning
CONSUMER STAPLES
The sugar focused producer is having a year of profit warnings - after upgrades from both raters earlier this year. Co now sees sugar segment facing operating loss in 2H (Sept to Feb) and for the FY. It's blaming market dynamics which has dragged {ECAGSUGA Index} down and continues to flag the EU allowing Ukraine to bypass the (heavy) tariffs as a driver for that.
For the group guidance is now;
- Revenues €9.5-9.9b (prev. guidance €10-10.5b) and midpoint is -6%yoy
- EBITDA €550-650m (prev. €900m-1b) and -55%yoy
- EBIT €175-275m (prev. €500-600m) and -76%yoy
Prelim 2Q results (June to Aug):
- Group revenues ~flat, EBITDA -50%yoy at €190m, EBIT -63% at €115m. Final figures come on 10th Oct.
On RV:
- We said in July "the co should run with recent earnings and ratings strength to refi the '25 early" - which it hasn't done. €2b of net debt (€2.3b gross) will leave it 3.3x/3.8x levered on FY guidance. Moody's sees downward pressure if gross remains above 3.25x - we expect it will move to neg. first (upgraded it only in June) but we would price to Baa3/BBB- ratings till then - 27s already there.
- Main member CDS is the furthest duration on its snr curve (cash is 27s) and trades at +60, -28bps basis even against the 27s.
- Note it has €700m floating perps at 3mE+310 {ED984069 Corp} & notched -4 on ratings (Ba3/BB-) - its been moving in the opposite direction to equities (YTD +4pts vs. -17%) and trades at DM+155/5% to worst=next call in Dec. It receives 50% equity treatment from Moody's, unclear on S&P.
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