Antolin - comment

Post the earnings call yesterday, the company’s guidance on the call was mixed with flat topline growth (due to model volatility) and slower order intake of €5.5 billion at 6% margins but better than expected EBITDA margins of 9% and €400 million for 2024 which was higher than our expectations. The company is also expected to be free cash flow positive in 2024 with a slight working capital inflow due to strong order intake. The capacity utilisation of the manufacturing assets in the high 70% area was below the management’s target at 85%. In addition, Antolin is expected to raise only 20% of the non-core proceeds of €400 million from sale & leaseback of assets.  But the main news yesterday was the management’s announcement of a refinancing of the loans and the 2026 notes in the coming quarters but not the 2028 notes. Management admitted that they might have to pay a double-digit coupon with no PIK component and there will be no equity injection from the shareholder. They also denied that their largest lender (Santander) was trying to sell their existing exposure and relations with them remained positive. We will await the terms and structure of the refinancing and its potential impact on the existing 2028 notes before we change our views on the situation.