Klocker Pentaplast - comment

Post our initiation of Klockner Pentaplast, the company reported Q1 2024. Volumes in their main PHD segment was negative at 4% and below our expectations and positive by 2% in the FP segment which was better than views at 1%. Revenues of €468 million were below our estimates of €534 million driven by volume declines in the PHD segment due to soft market demand and price reductions in the FP segment in line with lower commodity increases. Gross profit increased by 2% to €83 million due to price management which was lower than our estimate of €91 million. However, management had costs under control and so Reported EBITDA was in line with our estimates at €54 million. EBITDA across both the FP and PHD segment were below our views though margins improved due to cost cuts and gains on price/cost spread and favourable mix. Liquidity at €180 million was better than what we modelled though working capital was negative at €67 million as Q1 is used to build up inventory for the remainder of the year. The company gave a rosy outlook on volume growth for the remainder of 2024 at 4% - 7% which was in line with our thoughts. However, there was no mention of a refinancing though we suspect market participants and investors will be asking them this in the call in the afternoon…