Voestalpine - better cash management masks worse performance than model

All,

Please find updated model here.  

Working capital management and in particular better inventory work down has masked a worse than modelled decline in top line and EBITDA across all divisions.  Notwithstanding that however, the Company were surprisingly upbeat on the conference call this afternoon, and remained optimistic for their guidance for EBITDA given in December 2019 for FY 2020 (ending March 2020).   

Additionally, on the call the Company confirmed that in the steel division, the Company is at full capacity as customers continue to restock.  They were unable (or unwilling) to confirm if this was a normal restocking activity after calendar year end shut down or if there was an underlying uptick in activity.  

The Company however cautioned on their production sites in China, which currently remain closed until 10th February.  

Overall outlook given by the Company is better than our expectations, but we remain cautious on the name, especially given the Coronavirus issue (and with recent press reports of potential closure of car plants in Europe due to supply issues from China) could cause rebound demand to stutter.  

Free to take any questions.  

Tomas