Yesterday, Semperit disclosed it will suspend a 2025 dividend. In our view, this reflects disciplined capital allocation. In detail:
Ahead of its annual results release on March 18th, the company confirmed that its financial performance came in slightly ahead of expectations (guidance: € 78m EBITDA excl. project costs; eNuW: € 78.7m). As expected, efficiency measures taken and stable business developments drove a noticeable improvement in H2 with an EBITDA contribution of € 48.03m (eNuW), following a weaker H1 EBITDA of € 30.7m.
We expect FY25 EBT to reach € 0.5m and net income to come in at € 0.4m (eNuW), a clear recovery from the € -11.2m in H1 25, but insufficient to cover the € 0.40 dividend expected by the market. With growth initiatives underway - including the ramp-up of expanded production capacity as soon as demand improves significantly - the dividend suspension appears prudent and highlights Semperit's strong capital allocation discipline.
The company has made efforts to streamlined internal processes, adjusted headcount, reduced costs and strengthened margins. Improvements were not yet reflected in FY25, due to offsetting factors (i. e. project delays and additional costs related to geopolitical uncertainty). Having expanded two production sites in recent years in anticipation of the next cyclical upswing, Semperit is well positioned to benefit from improving end markets, which we expect in FY26e based on leading indicators such as building permits and PMIs. Additional stimulus from Germany's infrastructure package could provide further support.
Looking into FY26e, we forecast sales growth of 7.2% yoy to € 711m, driven by gradually recovering demand, selective price increases and short-term growth initiatives. Both segments should contribute. Raw material dynamics remain mixed: natural rubber prices are easing amid rising Asian inventories, while synthetic rubber remains elevated due to geopolitical uncertainty in the Middle East. We expect these pressures to normalize, though prolonged increases would pose a risk.
We project FY26e EBITDA to rise 18% yoy to € 87m, with margins expanding 1.1pp to 12.2%, supported by higher fixed-cost absorption, full-year effects of € 10m annual cost savings and easing raw material headwinds.
Free cash flow generation looks set to improve notably in FY26e. We expect FCF yield to increase from 5.4% in FY25e (eNuW) to 6.9% in FY26e (eNuW), supported by a stronger top line and operating leverage. On this basis and assuming continued earnings normalization, we factor in a resumption of dividend payments next year.
At current levels, shares trade at 5.3x EV/EBITDA FY26e, implying limited credit for upside potential on margins given rising sales and full effects of cost measures taken. In our view, the market continues to price in cyclical depressed earnings, offering an attractive entry point ahead of top-line improvements and operational leverage in FY26e. BUY at a PT of € 18.5, based on DCF.
ISIN: AT0000785555
