DO & CO looks set to report solid Q4 results on June 11 (see p.2). Here is what to expect:
Sales are seen up 11% yoy to € 583m, carried by Airline Catering (c. 80% of group), which should grow 13% to € 503m on sustained volume growth at the Istanbul hub and the ramp-up of recently won contracts (e.g. with ANA or Air Canada); reported growth should also be far less fx-distorted than in the heavily skewed Q3, where headwinds were a significant drag. International Event Catering should rise 7% yoy to € 37m, helped by an earlier start to the F1 season, DOC's flagship event contract, which pulled an extra Grand Prix into the quarter vs. prior year (the Japanese GP moved to late March). Restaurants, Lounges & Hotels, the smallest division, should be broadly flat (+1% yoy to € 43m) in a seasonally quiet quarter. For the full year, this implies group sales of € 2,450m (+7% yoy).
EBIT is expected to improve 11% yoy to € 50m, leaving the group margin stable at 8.5%. Airline Catering is expected to remain the primary growth driver: EBIT +18% yoy to € 42m and a 0.4pp margin improvement to 8.3%, on operating leverage from higher kitchen utilisation. While International Event Catering sales are set to grow, EBIT should ease to € 3.5m (-23% yoy): the prior-year 13.3% margin was flattered by a release of accruals, meaning this year's 9.6% (eNuW) is compared against a tough base. Restaurants, Lounges & Hotels EBIT look set to increase 4% yoy to € 4.3m (9.9% margin). On an FY basis, this should lead to group EBIT of € 213m (+16%) and a 0.7pp margin uplift to 8.7%.
Demand at DOC's key partner Turkish Airlines held up during the Middle East escalation. It carried 7.2m passengers in March (+16% yoy), and the set-up into FY26/27 is more constructive than the recent soft headline implies. First, April looks like the trough: group passengers fell 2.9% yoy, yet Turkish Airlines guides the full April-June quarter to be flat (previously: +9% yoy), implying a recovery in May-June as the regional disruption eases. Second, the April drop was entirely a conflict-driven collapse in Middle East flying (passengers -56%); excluding the region, traffic grew c. 3.5%, led by the long-haul segments where catering value per flight is structurally higher. Third, the structural engine is intact: The Turkish Airlines fleet is up 12% yoy and guided to reach 560-570 aircraft by year-end (from 534), while DOC's own contract wins (e.g. American Airlines at Heathrow from April) add volume largely independent of any single carrier's near-term capacity. On a net basis, Airline Catering growth should cool from the Q4 pace in early FY26/27, but is seen re-accelerating through the year.
Meanwhile, recent airline commentary points to a less stretched European jet-fuel backdrop than feared. Lufthansa and Jet2 are not expecting material disruptions through the summer flight schedule, i.e. until the end of DOC's fiscal H1. Also, Ryanair said that the supply disruption risk is receding. This should reduce concerns around supply-driven schedule cuts, which appear to have partly weighed on the shares recently.
All in, the growth and margin-expansion case remains intact, with near-term macro headwinds appearing increasingly contained and priced in. BUY, unchanged PT of € 250, based on DCF.
ISIN: AT0000818802
