MILAN, Feb. 11 (Class Editori) -- Facing the uncertainties brought by the coronavirus, the analysts of Moncler stated that the company will be able to recover soon. The last year recorded a net profit of 361.5 million euros, up 9 percent compared to 332.4 million euros in the previous year.
In 2019, revenues grew by 13 percent at constant exchange rates to 1,628 billion euros (+15% at current exchange rates), adjusted EBITDA to 574.8 million euros from 500.2 million euros in 2018, EBIT to 475.4 million euros from 414.1 million euros in 2018, and net cash to 662.6 million euros.
"2019 has been once again an extraordinary year," commented Chairman and CEO, Remo Ruffini, but noting that "We live in a constantly changing world and, for this reason, it is increasingly volatile and uncertain as well. In these days we are close to our colleagues and to all the people of China who are facing a difficult situation, for which important and urgent measures have been taken."
The situation caused by the coronavirus, noted the company, "is having major impacts on traffic and sales in all shopping malls in China where the Moncler shops are present and on Chinese tourism worldwide." For Moncler, it is not possible to predict the duration of this situation and therefore to assess its impact on the results of the financial year.
So, with the fiscal year 2019 performing well, with all markets accelerating (Italy recorded +21% in the retail-driven fourth quarter 2019 alone, but the EMEA area was also strong with a +19% driven by the UK, Germany and France). With the exception of Asia that was weaker (+9% year on year in the fourth quarter), owing to the negative performance in Hong Kong, offset by good growth in the Chinese mainland and the Republic of Korea. The coronavirus outbreak on January 24 dramatically affected the group's business in China.
One third of the stores in China (13) are closed today. As for the others, the turnover has fallen by 80 percent in the last two weeks. Other regions are suffering from lower Chinese demand as well, including the Republic of Korea (where some duty-free has been closed), Singapore, and Japan, while business in Europe has started to suffer with some lag. At the same time, some projects relating to China have been postponed, including the opening of two shops and three relocations.
The emergency plan currently in place provides for the cut in unnecessary expenditure, the postponement to the second half of certain A&P investments and the renegotiations of the rents. As a result, Mediobanca Securities revised its estimates for 2020, assuming a 10 percent drop in revenues in the first quarter, flat performance in the second quarter and a recovery with double-digit growth in the second half.
This brings the turnover estimate 2020 of the bank to 1.75 billion euros (+7.4% year on year) with an EBITDA margin falling by -60 pb to 34.7 percent and a decrease to 353 million net profit. "Visibility is currently very low and we understand that the consensus estimates are not within reach in the current scenario," Mediobanca said.
With regard to the decision of the Board to propose - during the extraordinary meeting convened on March 16 - the introduction of the increased voting rights until the end of June 2028, to "give stability and continuity to the managerial and creative direction of the company led by Remo Ruffini, it allows them to continue their growth path with the support of stable investments and the long-term commitment of shareholders to share their line and strategy. The increase will also make the capital structure more flexible in the context of possible growth operations for external lines, mitigating the possible impact of shareholder dilution. Last but not least, by encouraging stable and long-term investments, the increase in voting rights will help to balance possible short-term investment strategies", Mediobanca is proof of Ruffini's strong commitment at the helm of the company. It is worth pointing out, Fidentiis added, that in any case the maximum voting rights will be kept at 29.9 percent so that the company remains open to the market.
Moncler's management is exploring opportunities for mergers and acquisitions, but there is nothing on the table now. In December, the rumor that luxury giant Kering would have headed toward Moncler, which then explained that founder and major shareholder, Ruffini, "periodically maintains contacts and talks with investors and other operators in the sector, including the Kering Group, on potential strategic opportunities to further promote the development of the company, "without any concrete fact now".
Mediobanca then confirmed its neutral rating on Moncler stock, lowering its target price from 37 euros to 34 euros. "A decline in business from the Chinese cluster, with a significant impact on the performance of the first half of 2020 and a reduced reliance on mergers and acquisitions, can lead to some short-term gain in the stock. However, in our opinion, the very solid fundamentals together with a proactive approach to managing the group in difficult times should provide support in the long term," Mediobanca said.
Citi, too, appreciated the good set of results in 2019, despite headwinds in Hong Kong. However, given the exposure of around 30 percent to Chinese customers, the coronavirus will affect Moncler's 2020 accounts. Citi believes that the group's revenues will be substantially stable in Asia this year, meaning sales should grow by 5 percent compared to +13 percent in 2019. (All rights reserved)
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