Nabaltec published preliminary FY25 figures with a soft end to the year, below our estimates. At the same time, management released a FY26 guidance. While mid single-digit sales growth is expected, the margin guidance came in disappointing, reflecting several potential headwinds. In detail:
Q4 burdened by weak Dec. business. Sales in the fourth quarter stood at € 41.9m, down 7.7% yoy (eNuW old: € 44.4m) as the company suffered from short-term order cancellations and postponements, particularly visible within the Functional Fillers segment (-10% yoy vs -0.4% at 9M) and a weak last month of the year. FY25p sales decreased by 3.2% yoy to € 197m with Functional Fillers -3% (gap filler strong demand, aluminium hydroxide flat-ish with lower sales prices and weak boehmites sales) and Specialty Alumina -6%.
As a result of the weak demand in Q4, EBIT stood at a mere € 1.2m (2.9% margin) vs € 5.5m in the previous year. With this, the FY margin decreased by 3.1pp yoy to 7.7%; absolute EBIT of € 15.2m (eNuW old: € 15.9m). Overall, slight price pressure, higher labour and energy prices weighed on margins throughout the year but especially in Q4 due to the lower fix cost coverage.
FY26 guidance mixed. Management expects to grow the company's top-line by 4-6% (eNuW old: 5.6%), anticipating higher sales volumes for ATH (higher demand across key end markets) but also the gap filler (eNuW: Functional Fillers +6%). For the latter, Nabaltec is in the midst of production capacity expansion to accommodate demand for the coming years. We model largely flat sales for Specialty Alumina (high refractory exposure) as slightly higher volumes compensate for lower sales prices.
Yet, the EBIT margin guidance of 5-7% came in clearly below our old 8.4% estimate as the company is factoring in margins of safety stemming from the Iran war (impacting energy prices) but also uncertainties from the scheduled maintenance at the waste incineration plant next to its site in Germany (key supplier of production relevant steam). Longer disruptions would require NTG to produce their own steam using LNG, which currently experiencing significant price increases. Excluding those margins of safety, the margin guidance should have been largely in line with our old estimates, in our view. Most importantly, we regard those as one-off topics (2027e EBIT margin to improve to 8%, eNuW).
While short-term newsflow will most likely not support a re-rating of the shares, the valuation continues to appear cheap (shares clearly below book value), especially when considering the return to positive FCF generation following the completion of the current capex program by next year. Adj. FCFY of 16% (FY26) already underpins this. We hence confirm our BUY rating with a slightly reduced € 16 PT (old: € 18) as we reduce estimates but at the same time move from a blended FY25/26e FCFY approach to FY26e FCFY.
ISIN: DE000A0KPPR7
