Greek stocks came under strong selling pressure on Thursday, amid a deteriorating climate in the domestic bond market in the aftermath of negative developments in negotiations between Greek authorities and the troika in Paris. General Index fell 2.63 pct to end at 950.95 points, after falling as much as 3.46 pct during the session. Turnover was a moderate €86.07mn. Despite mixed news flow (positive Q3 results, stalled political developments) the end of the month may trigger some program trading and stabilise the market.
In the last trading day of November Ellaktor, GEKTERNA and Athens Water will announce their Q3 results during the day. Hellenic Statistical Authority to announce (12:00) provisional estimate of Q3 GDP (Flash Estimate 1.7%) while after market hours Moody’s will release its report on Greece credit rating with market consensus to expect an upgrade (current: Caa1/Stable) as it stands below the other two rating agencies by one and two notches respectively.
Two days left before the expiration of the deadline for 3Q/9M 2014 announcements. So far 61 out of the 114 ASE listed companies (c54%) posted profits in the 9M period as restructuring efforts brought results primarily on EBITDA line while tourism was the key catalyst for most of the turnarounds seen in the period. Despite the marginal increase in turnover (+0.1%) EBITDA has increased by 10.1% while net profits (excl. banks) is up by 4.5% significantly affected by one offs related to refineries sector inventory losses (~€150m). Profitable vs loss making companies ratio improved to 1.15 as 13 companies returned to positive bottom line while in the same period only 8 companies reversed their profits to losses. The following table summarises the profitability map of ASE companied so far.
|Distribution of Profitable/Loss making companies in ASE (114 companies/48.5%)|
|pp||Profits Increase||34||Loss Increase||18|
|p||Profits reduction||14||q||Loss Reduction||27|
|M||Turn arround||13||L||Loss Reverse||8|
¢ In the Spotlight
Greece: Following inconclusive two-day talks with the troika in Paris, government officials indicated on Thursday that it is unlikely the current review will be completed in time for the December 8 Eurogroup. This means there would not be enough time to negotiate the terms of a precautionary credit line with the eurozone before the start of the new year.
Piraeus Port Organization: OLP and PCT, a subsidiary of Cosco, signed a new revised friendly settlement plan agreement on Thursday. The plan, approved by Piraeus Port’s shareholders on November 24, envisages investment plans worth 230 million euros in the port. The investment plan will boost the annual capacity of the port’s Piers II and III to 6.2 TEUs from 3.7 million currently, while the net current value of the contract will be raised from 498 million euros to 678-1,027 million euros. PCT will also build a new oil product pier with more favourable financial terms.
Bank of Cyprus: Bank of Cyprus posted a profit of 76 million euros in the first nine months of the year, helped by the disposal of assets in Ukraine, Romania and Serbia. For the third quarter the bank reported a 5 million euro loss compared with a 50 million gain in the second quarter. Nine month profits were lifted by 60 million euros income from the disposal of assets in Ukraine, Romania and Serbia.
In other news the bank announced that the Cyprus Securities and Exchange Commission has approved the Prospectus for the Retail Offer and the applications for the listing and trading of the Relevant Shares and Retail Shares on the main market of the CSE and ATHEX. The Relevant Shares are expected to be listed on or about 16 December 2014, subsequent to the commencement of the subscription period of the Retail Offer, which is scheduled to commence on 15 December 2014.
Ellaktor: Subsidiary AKTOR, as the Leader of the Partnership AKTOR S.A.-EUROCONSTRUCT TRADING’98 SRL (with a participation percentage of 51%) has signed the contract related to Lot 2 of the Motorway Sebes – Turda in Romania. The contract is financed by the Cohesion Fund (85%) and the Romanian State (15%), through the Sectoral Operational Programme ‘Transport’. The contractual amount is 549 mil lei (approx. 122 mil €). The project duration is 22 months (4 months design and 18 months construction) and is due to be completed in September 2016.
PPC (3Q/9M 2014 Results): The company announced a broadly in line set of results showing improvements mainly on the cost side. In specifics:
¡ In 3Q2014 turnover amounted to € 1,591.3 m posting a 3.2% growth, while EBITDA increased to € 246.7 m. compared to€ 94.7 m in 3Q2013. Excluding one-off items, EBITDA settles at € 264.1 m versus € 203.7 m in 3Q2013, with the respective margin settling at 16.6% compared to 13.1% in 3Q2013.
¡ In 3Q2014, electricity demand, excluding pumping and exports, increased by 1.4% (210 GWh) vs 3Q2013. The increase in PPC’s domestic sales was 1.1% as there was a slight market share reduction by 0.4 percentage points. In 3Q2014, electricity generation from lignite decreased by 8.2% (-510 GWh) compared to 3Q2013. In the same period the percentage participation of lignite in PPC’s total energy mix, amounted to 38.2% vs 41.2% for 3Q2013. Energy purchases (excluding PPC’s imports) from the System and the Network increased by 5.5% (234 GWh). Hydro generation increased by 4.1% (46 GWh) compared to 3Q2013 due to slightly better hydrological conditions in 3Q2014 compared to 3Q2013.
¡ In 9M 2014 the overall energy mix cost decreased by € 65.7 m. (-2.4%), mainly due to the reduction of the expense for the variable cost recovery mechanism by € 287.7m, which to a considerable extent was offset by the increased expenses for energy purchases (€ 139.9 m) and for Capacity Assurance Certificates (€ 50.2 m).
¡ Quarterly provisions reduced by 33% at €55m a significant development as provisioning for new overdue bills starts to slow down.
¡ Net debt amounted to € 4,967.3 m. (up from 6M € 4,906.6 m.), an increase of € 318.9 m. compared to 30.9.2013 (€ 4,648.4 m.) and an increase of € 443 m. compared to 31.12.2013 (€ 4,524.3 m.). This increase is due to a net outflow of about € 190 m. for the rendering of the last part of the Special Property Tax collected through the electricity bills in 9M2014, the extraordinary payment of € 42.3 m. (out of the total amount of € 48.3 m) against the LAGIE deficit as well as the increase in working capital needs.
¡ Management reiterated the guidance for €5.8bn sales in 2014.
|EBITDA Mrg||15.2%||18.0%||+280 bps||6.1%||15.5%||+936 bps|
|Net Mrg||0.1%||2.8%||+260 bps||-7.8%||1.6%||+941 bps|
Aegean (Q3/9M Results): Aegean announced a strong set of results helped by tourist demand. Despite the miss in top line results were in line with consensus. In specifics:
¡ Consolidated turnover totalled 736 million euros in the nine-month period, up 10 pct from the same period in 2013, pre-tax earnings rose to 105.4 million euros, from 75.9 million and net after tax earnings jumped 31 pct to 78.6 million euros, from 60 million in 2013.
¡ Both Aegean Airlines and Olympic Air carried 7.9 million passengers in the nine-month period, up 14 pct from the same period last year, for an average occupancy rate of 79 pct. Domestic network recorded a 16 pct increase, while the international network reported a 12 pct increase in passenger traffic, helped by a network expansion and a recovery of incoming tourism in Athens.
¡ Operating cash flows improved to 124 million euros, with parent’s cash reserves at 264 million euros.
|AEGEAN||2013||2014||Y-o-Y||2014||Act. vs||2013||2014||Y-o-Y||2014||Act. vs|
|EUR m.||9M||9M||(%)||9M Est.||Est.||Q3||Q3||(%)||Q3 Est.||Est.|
|EBITDA Mrg||15.4%||14.7%||-76 bps||13.8%||+0 bps||23.7%||23.6%||-18 bps||21.3%||+0 bps|
|Net Mrg||11.1%||9.5%||-165 bps||9.3%||+0 bps||16.8%||16.0%||-80 bps||15.3%||+0 bps|
Figures are not comparable as Aegean was merged with Olympic Air in Oct. 2013.
Folli Follie Group (Q3/9M Results): Overall solid Folli Follie Group (FF) 9M 2014 group results (out yesterday post market close), coming better than expected (3-4%) at the top and bottom-line, reflecting robust Retail/Wholesale performance and solid progress at the cost front. In specifics:
¡ On a comparable basis (ie ex-Travel Retail business), 9M group sales and EBITDA posted increases of 13% and 27% y-o-y to EUR723m (vs BETAe of EUR698m) and EUR161.4m (BETAe EUR163m), respectively. In turn, group EBT and net earnings reached EUR138.2m (BETAe EUR129m) and EUR95.3m (vs our call of EUR92.6m), compared with EUR285.8m and EUR280m in Q3 2013.
¡ Note that last year’s results were flattered by EUR182m capital gains linked to the sale of 51% stake in HDFS to Dufry.
¡ Key growth driver Retail/Wholesale demonstrated a 26% y-o-y sales rise to EUR103m, while Jewellery-Watches-Accessories and Department Stores advanced 12% and 11% y-o-y to EUR512m and EUR107m, respectively.
¡ In Q3, FF group sales were up 20% y-o-y to EUR245m (BETAe EURm219m), while despite gross margin erosion of 310bps, group EBITDA grew by 19% to EUR45m (BETAe of EUR46.6m) thanks to operating efficiency gains (opex as % of sales dropped to 28.1% from 31.4% a year earlier).
¡ Furthermore, group EBT and net earnings settled at EUR45m and EUR29.3m (10% above BETAe of EUR26.6m), hit by much higher taxation (EUR15m against EUR1.6m in 3Q13).
|EBITDA Mrg||19.8%||22.3%||+254 bps||18.5%||18.3%||-12 bps|
|Net Mrg||41.5%||13.2%||-2,838 bps||19.8%||12.0%||-784 bps|
Kleemann (Q3/9M Results): Group’s turnover for the nine month period of 2014 amounted to €67,8mn up 9,6% compared to the same period of 2013 with international sales to represent 89% of the total. Consolidated gross margin amounted to 35,1% from 33,4% last year. Earnings after taxes amounted to €3,1mn from €2,8mn (+11,7%) in the corresponding period of 2013. Results were affected by provisions for doubtful debtors amounting to €2,8mn vs €1,8mn in 9M 2013. Profit after tax and minority interests amounted to €2,4mn increased by 26,4%.
Cash flow from operating activities increased by 8,2 mln euro and amounted to €14,0mn. Total equity to liabilities ratio amounts to 2,04. Net debt amounted to -8.6 mln euro from -5,0 in 31/12/2013.
Kleemann Group also announced that it founded a new representative office in France, in order to have more direct communication and growth in that market. For the closing of the year, the management expects the improved performance and the high liquidity of the Group to be maintained.
|EBITDA Mrg||10.5%||9.7%||-77 bps||15.4%||14.1%||-131 bps|
|Net Mrg||3.1%||3.5%||+47 bps||6.2%||7.7%||+155 bps|
Other Q3/9M results:
|EBITDA Mrg||0.7%||0.5%||-22 bps||0.2%||0.4%||+19 bps|
|Net Mrg||0.5%||0.3%||-18 bps||0.0%||0.3%||+30 bps|
|EBITDA Mrg||2.9%||6.5%||+363 bps||4.5%||10.5%||+592 bps|
|Net Mrg||-9.5%||-5.8%||+376 bps||-6.4%||-1.7%||+474 bps|
|EBITDA Mrg||12.0%||12.7%||+69 bps||12.4%||13.6%||+121 bps|
|Net Mrg||7.4%||8.3%||+85 bps||7.9%||9.4%||+142 bps|
|EBITDA Mrg||9.4%||10.3%||+97 bps||9.8%||10.6%||+80 bps|
|Net Mrg||0.2%||0.4%||+20 bps||0.1%||1.0%||+85 bps|
|EBITDA Mrg||28.1%||35.6%||+755 bps||11.1%||30.1%||+1,898 bps|
|Net Mrg||18.1%||23.1%||+497 bps||2.9%||18.2%||+1,523 bps|
|EBITDA Mrg||0.8%||1.0%||+21 bps||1.6%||1.4%||-21 bps|
|Net Mrg||-0.2%||0.2%||+39 bps||0.5%||0.6%||+18 bps|
|EBITDA Mrg||20.3%||19.3%||-107 bps||36.2%||27.6%||-862 bps|
|Net Mrg||-6.3%||-0.3%||+595 bps||-11.9%||-5.1%||+|