Atalian - comment

The results were below our forecasts, and despite reiterating FY guidance Atalian will need to work hard on pass-throughs over the rest of the year. We expect most of the working capital outflow to reverse, but without an RCF Atalian is reliant on its Factoring banks and vulnerable to invoice delays.

Revenue was 5% below our forecast at EUR500m due mainly to weakness in the Turkish Lira, whilst French Revenue was in line. EBITDA was EUR17m vs our forecast of EUR25m. The main factor here was lower than expected French EBITDA due to delays in passing through higher labour costs in France. Working capital was a EUR69m outflow, and EUR18m was blamed on restructuring costs, with most of the rest down to delays in factoring invoices due to the timing of Easter. Management has said that most of this would reverse in Q2 (but would not say all), we expect there are still some discussions with factoring banks on lines (and cost of lines). We are keeping our forecasts for now but will review at the Q2 results.