A cura di Banca Imi
Based on our 4Q16 forecasts, we calculated that, out of the 79 companies in our preview sample, 44% of results came in above expectations, 38% in line, and 18% below our forecasts. Overall, we judge the 4Q16 reporting season in Italy as in line with our expectations. In the Eurozone, the 4Q16 reporting season turned out better than in Italy, with about 54% earnings reports above forecasts for the Eurostoxx, according to Bloomberg.
4Q16 results: Financials. 4Q16 results were mixed among Financials: out of the 16 companies in our sample (asset gatherers, banks and insurance), 9 reported above, 2 in line, and 5 below our estimates, in line with the previous quarter. Banks were in the shadows, due to ongoing pressure on interest margin, higher LLP and one-offs, and the impact from market volatility. The season was a touch better for Asset Gatherers, driven by higher performance fees, while pointing to a more challenging outlook. Insurance were winners in the reporting season, mainly on solid non-life technical profitability.
4Q16 results: Non-Financials. As for non-Financials: out of the 63 companies in our sample (Consumers, Industrials, Energy & Utilities, TMT), 26 reported above (41%), 28 in line (45%), and 9 below our estimates (14%). Hence, we view non-Financials as in line with our expectations. Auto was a winner this season, having delivered several reports above expectations. Cost efficiencies and a recovery in oil prices were key positive drivers, respectively, in TLC and Oil & Gas sectors. We registered some earnings disappointment from Industrial G&S
Outlook. Looking ahead at the 1Q17 earnings season, we anticipate a moderate improvement from Banks’ quarterly reports, in sight of a lower expected cost of risk, following YE16 extra-provisions, and a stable, or slightly improving, NII and commission income, the latter also reflecting a more favourable market environment. Among non-Financials, exportoriented companies are expected to benefit from a stronger USD and a re-acceleration of international demand, particularly from the USA and commodity-driven countries.
Sector Review: Financials
In Asset Gatherers, Anima Holding’s net profit was above, thanks to both higher-than-expected performance fees and a better cost control. Azimut Holding’s net profit was also above, thanks to higher performance fees, partially offset by operating costs and higher provisions. Banca Generali’s net profit was above, with a more favourable tax rate and a stronger balance sheet structure. Banca Mediolanum was broadly in line, with lower taxation more than offsetting higher opex and provisions, while pointing to a challenging outlook. Finecobank was in line, on slightly higher net revenues and lower operating costs.
In Banks, Banco BPM reported below, impacted by several non-recurring items. Banca IFIS’ adj. net profit was slightly above, thanks to solid net banking income; Credem was above, thanks to strong commission income, improving NII and lower CoR. Creval was below, due to higher CoR and one-offs, although NII and fee income were slightly above; UBI’s net income was below, penalised by one-off charges, while total income was in line, and LLP was better than expected. Unicredit’s net loss was worse than expected, due to higher provisions and one-offs, while confirming 2019 targets.
Among Insurers, Cattolica’s net profit was above, on solid non-life profitability, while life was still weighed down by the BPVi agreement. Generali reported above, on an improving combined ratio and stronger economic solvency, guiding for an acceleration in cost reduction. UnipolSai was above, on better results from other activities and favourable taxation, while technical profitability was in line. Unipol’s net profit was above, on better non-life combined ratio and favourable taxation; Vittoria’s adj. net profit was in line, on strong non-life technical profitability.
Sector Review: Consumer
In Branded Goods, Luxottica was broadly in line, driven by a stronger retail channel and stabilising Lens Crafter in NA, while Wholesale was still subdued; Safilo’s adj. net income was below, with sales in line, on still weak Asia Pacific, and signs of a turnaround at the US chain Solstice. Salvatore Ferragamo was in line, driven by the retail channel, on improving North America and stabilising Europe, while wholesale remained weak. Geox was below, due to the COGS inflation caused by FX, a negative channel mix and increased discounts. Moncler was above, driven by a strong retail performance, solid international wholesale, and lower COGS. Prada’s sales were in line, helped by a recovery in Europe (France, Russia and UK), while America, Japan and Middle East were weak, on soft spending patterns and reduced tourists flow. Tod’s EBITDA was slightly ahead of our forecast, supported by a rebound in China, while rising labour costs were offset by savings in rents’ renegotiation. YNAP‘s EBITDA was in line, with subdued European demand, offset by positive American and Asian business.
In Consumer Goods&Services, Autogrill’s EBITDA was in line, with efficiency on labour costs in Europe more than offsetting wage inflation in North America and start-up costs in International. Campari’s adj. EBIT was broadly in line, with a stronger contribution from Grand Marnier and lower SG&A offsetting lower organic growth. De’ Longhi’s EBITDA was in line, mainly driven by price/mix and cost reductions, which more than offset FX and lower volumes. Parmalat was above, mainly thanks to North America and Latam sales more than offsetting lower Africa and Australia; Zanetti was slightly below, on negative price/mix while progress at Nutricafés was partly offset by rising opex. ADB’s net profit was below, on higher provisions, with solid growth in the Non-Aviation business. ENAV’s EBITDA was broadly in line, sustained by higher traffic, a slight increase in tariffs and opex reduction. SAVE was above, led by a double-digit traffic growth as well as tariffs increase driving the Aviation business.
Sector Review: Industrials
Among Autos, FCA’s adjusted EBIT was above, mainly driven by NAFTA, but also Maserati, Components and other areas (Latam closed at break-even) were better than expected; 2017 guidance was revised upwards. Ferrari beat our forecast, driven by Engines and Sponsorship, while Cars were slightly below; guidance was better than forecast. Brembo was once again above, also thanks to fixed costs’ full absorption, due to the full saturation and utilisation of company’s plants. Piaggio reported broadly in line, on slightly rising volumes and revenues, while the dividend was above forecast. Sogefi beat our forecasts, on sound growth in North America and Asia, and strong Air & Cooling, while margins benefitted from efficiency actions.
In Construction, Astaldi was below, also weighed down by higher net financial charges partly due to FX losses. Buzzi Unicem’s EBITDA was above, with better than expected net debt. Salini’s op. profitability was in line, while net debt beat our forecast on capex containment and a strong cash-in of receivables.
Among Industrials Goods & Services, CNH Industrial was below, on weak industrial EBIT and higher financial charges, partially offset by a lower tax rate; guidance was below our forecasts. Danieli’s EBITDA was below, penalised by one-off restructuring charges from the recently-acquired companies, despite FX gains. Leonardo’s EBITA was in line, with net debt better than expected, while pointing to flat 2017 revenues. Poste Italiane beat our forecasts, thanks to higher EBIT from Insurance services, reflecting more effective cost control. Prysmian’s adj. EBITDA was in line, on sound Energy products and, mostly, Telecom, with a strong reduction in net debt. Tenaris’ EBITDA was in line, on a lfl basis, while NFP declined on rising NWC and capex.
In Pharma/Medical Equipment, Amplifon’s EBITDA was in line, with op. leverage in EMEA partly offset by marketing expenses in Americas and APA. Diasorin’s EBITDA was in line, and it provided solid 2017 guidance. Recordati’s EBITDA was in line, while net debt increased, weighed down by the purchase of treasury shares.
Sector Review: Energy & Utilities/TMT
In Oil & Gas, Eni’s adj. EBIT was well above forecasts, thanks to a strong E&P division, supported by an increase in oil prices and a material opex reduction. Maire Tecnimont was above, as higher volumes from EPC projects more than offset lower margins (higher EPC services component in revenues). Saipem reported below, on weak revenues across all business lines and lower Onshore drilling profitability, while confirming 2017 guidance in a challenging environment. Saras was above, thanks to stronger refining business, partially offset by lower EBITDA from thermal power generation.
In Utilities, Atlantia’s EBITDA was in line, driven by both domestic (increasing traffic and tariffs), and foreign motorways (increase in Chilean margins, offsetting the weakness in Brazil) and higher aviation margins. SIAS was in line, driven by slightly higher motorways revenues (tariff rise and higher traffic), offsetting more than halved technological revenues. Enel’s EBITDA was slightly above, thanks to improving Latam, Italy and Spain, partly offset by negative FX and lower conventional generation margins. ERG’s net income was above, largely due to perimeter changes (Terni hydropower assets), and a strong performance from wind power. Italgas was slightly below, due to lower allowed remuneration, partly offset by contribution from investments for metres. Snam’s net income was above, as a downwards revision in transportation was offset by a better performance from storage, lower financial costs and a higher equity contribution from participations. Terna’s EBITDA was broadly in line, as lower allowed remuneration was offset by the consolidation of RHV Grid and higher regulated revenues for the quality of service. A2A’s EBITDA was above, on an improved outlook for thermal power generation and one-offs. Acea reported above, thanks to a higher contribution from energy and water, plus one-offs in electricity network. Ascopiave was slightly above, on better unitary margins in gas and electricity sales, and cost efficiencies more than offsetting the WACC review in gas distribution. Hera was in line, with organic growth and M&A contribution, more than offsetting negative regulatory items. Iren’s EBITDA was in line, as a negative WACC revision was offset by organic growth (generation & energy market), efficiencies and M&A contribution.