Centrale del Latte Di Italia SpA (MI:CLII) (CLI) price increases, implemented during H1, continue to drive revenue growth, with total revenue of €187m in FY17 above our forecast of €181m. Newer initiatives, such as vegetable-based drinks and the export business continue to generate good growth. We have raised our revenue forecasts to reflect the higher FY17 base, but trim our EBITDA forecast as the FY17 figure was below our forecast. Now that the CLF business has been owned for a full year, revenue synergies are coming through and there has been scope for some cost efficiencies. We therefore raise our medium-term EBIT margin growth by 10bp per annum to capture the potential for further cost containment. Our fair value rises to €3.30/share (from €3.25 previously).
Price increases still driving revenue growth
Price increases were implemented on 1 April 2017 to offset some cost inflation and were fully rolled out on 1 June. We believe organic growth was c 6% for FY17, which is impressive. 2017 represents the first full year of ownership of the CLF business and indeed, FY17 EBITDA was affected by one-off costs of €220,000.
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