In keeping with previous quarters, Chargeurs published robust sales which were up 7.5% on an organic basis and 6.7% reported. The reported figure is impacted by the Yak disposal in Fashion Technologies and the acquisition of MainTape in the US in the Protective Films business line. Chargeurs’ fast-improving respectability is confirmed as it raised another €15m 7-year bond at 2.45%. There is no mention of the intended deployment of the proceeds.
Management is confirming an underlying EBIT target of at least €35m. This is below our own estimates (€36.9m).
The sales growth delivery looks increasingly like a clockwork exercise. The dull Chargeurs of yesteryear has moved on to a fast-paced, niche-focused cash flow machine.
We were impressed over H1 by the growth posted by Fashion Technologies, the rechristened Interlining business. Its push toward fast and traditional fashion appears to be successful. Q3 sales inched down 1.8% but this need not be an issue as Q2 was flagged as benefiting from advanced bookings.
The money-making machine, the Protective Film business, is booking impressive and steady growth at 7.9% combining volumes and positive mix impacts. The group is still shy about its latest US acquisition MainTape, which has been presented as a perfect fit.
The newish Technical Substrates is seemingly doing very well on the back of extra-wide manufacturing capacities now matching market demand.
And finally, the capital-light wool trading division is seeing a growth uptick as well.
All good with only one question: what is the next step as Chargeurs is now long in financial ammunition?
As we have been taking a rather aggressive stance about earnings delivery initially, we shall not upgrade forecasts and wait for external growth announcements, if any.
