Equita cuts Italcementi 2010-2012 estimates

Equita cuts Italcementi 2010-2012 estimates
Published: 20 October 2010

Analysts at Equita revised down their forecasts of Italcementi’s 2010-2012 results and cut the cement producer’s price target by 3% to EUR 6.90, in expectation of a weak third quarter. The broker reiterated a "hold" rating on the Italian group’s stock.

The expected worsening in the cement maker’s performance in the third quarter is to blame on: 1) the Italian market where the prices remain at their minimum levels, 2) the Indian market where price pressurse heightened in the summer period and 3) on Egypt where September was a disappointing month in terms of both prices and volumes.

Considering these expectations, the broker lowered by 5% Italcementi’s EBITDA estimates for 2010-2012, foreseeing an even stronger impact on the group’s 2012 net profit forecasts and downgrading them by 8-9%.

Equita have estimated Italcementi’s 2010 EBITDA at EUR843m compared to forecasts by an analysts’ consensus for EUR800m. The expectations about the group’s 2011 EBITDA have been set at EUR950m and EUR 990m by Equita and the consensus, respectively.

The Italian broker expects a 3% yearly growth in Italcementi’s revenue for the 2010 third quarter, to EUR1.2bn. The quarterly EBITDA is seen at EUR 239m, down 18%, and the net debt is expected to swell to EUR 2.468bn at the end of the period from EUR2.458bn at the end of the second quarter of this year.