Pro-forma Q3 revenues of Chargeurs were down 3.9% with Protective Films up to €47.6m vs. €45.9m on positive volume effects, Interlining down to €43.1m vs €43.9m on currency negative impacts and Wool down to €20m from €35m on substantial perimeter changes, a drop in volumes and reduced raw wool prices.
The Q3 figures are good in the general context of a weak macro environment. Protective Films have done an excellent job by managing volume growth. The Interlining division, by seeing sales down only marginally, is also impressive in this cut-throat industry. To improve its profitability, this division will close one loss-making line of business at a €4m cost and save €1.5m a year.
Beyond the perimeter changes, the further decline in volume and prices in the wool segment confirms that trimming down the exposure to this industry was wise.
Chargeurs went one step further by selling 26.4% of a combing unit in China to a local partner, keeping only a 50% shareholding. The group has essentially exited the industrial side of wool, to focus on servicing its customers through its global sales network, thus tying up very little capital.
Q3 figures and actions confirm that Chargeurs is well on its way to exiting the dark years of restructuring with then little financial resources to see it through. What emerges is a group with decent prospects and essentially no debts. The latest FY 2013 earnings guidance, confirmed at €14m at least vs. €7m in 2012, is below our own estimates at €17.5m but clearly verges on the side of caution. We will nevertheless trim our forecasts a bit for the ongoing year.
