Chargeurs

We have revised our estimates for 2023 and 2024 downwards following H1 23. We were over-optimistic about top-line growth and now estimate sales of €702m with an underlying operating profit of 5%, compared with 6.1%. The downward revision comes mainly from the Chargeurs Advanced Materials division, where we were too enthusiastic about the prospects for a rebound in volumes in a macro-economic environment that remains unfavourable. We have also lowered our estimates for the Fashion Technologies division, which, despite the catch-up effect of the fashion and luxury goods sector, recorded a fall in sales in H1 due to the devaluation of the Argentinian peso. Top-line growth was also impacted by our downward revision of estimates for Chargeurs Luxury Fibers, whose growth was adversely affected by a cyclone in New Zealand. Lastly, our EPS forecasts were penalised by the rise in financial expenses in H1 23.

Given that we have based our NAV estimate on EV/EBITDA multiples with an average estimated EBITDA for 2023, 2024 and 2025, our downward revision of EBITDA particularly for Chargeurs Advanced Materials has penalised our NAV. We now value the division at around €300m, compared with €452m previously. The downward revision of the estimated EBITDA for Fashion Technology has also had a slight negative impact on our NAV. Lastly, the increase in net debt from €174.4m at the end of 2022 to €194.4m in H1 23 contributed to the fall in our NAV.

The sharp fall in our DCF comes from our downward revisions to the FY 23-24 EPS forecast (see EPS commentary). We expect revenues of €702m (vs. €789m) with an underlying profit of €35m for 2023 and revenues of €788m (vs. €872m) with an underlying operating profit of €49m (vs. €53m). In addition, as with NAV, the increase in estimated net debt weighs on our DCF.