Forecasts reduced following a difficult Q2
Q2 trading was weaker than expected; revenues and EBITA are unlikely to surpass last year’s levels. We reduce forecasts but expect a more typical double-digit revenue growth and an expanding EBITA profile to resume from FY16. Excluding the investment in NA, the shares trade on an annualised FY15 P/E of 10x – a 40% discount to its peers. Provided management can improve employee productivity and move NA towards targeted break-even, we see the potential for significant ratings expansion.
Trading update – guidance reduced
Q2 trading was weaker than management expected; the market in general has become more price-conscious, and Sinnerschrader's (XETRA:SZZG)’s largest automotive client unexpectedly scaled back the value of ongoing business. Trading has picked up in Q3 with Unilever (LONDON:ULVR) Food Solutions and car2go (a subsidiary of Daimler AG (XETRA:DAIGn)) signing as new clients and negotiations are progressing well with O2 following its merger with E-Plus, one of SinnerSchrader’s largest customers. However, against a strong basis of comparison for growth (Q314 revenues +44%, Q414 +32%) management now expects FY15 revenues and EBITA to be slightly lower than last year.
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