Delignit (DE:DLXG) is delivering across the board with growing evidence that well-defined strategic development is paying off. While 2017 performance was impressive (EBITDA up a third), the pace may accelerate thanks to recent bumper investment in capacity, efficiencies and a more diversified revenue base, allied with continued positive conditions. Indeed, management looks to double annual revenue at enhanced margin by 2022, which suggests that, as for 2017, current year guidance of sales up 8%+ at broadly similar margin may be cautious. Robust finances (FY17 net debt/EBITDA of 0.8x) support investment and dividend growth (+67% in 2017).
Firing on all cylinders
H217 margin surprise
Continued clear EBITDA margin outperformance (9.4% in H2, giving 9.2% for FY17 against guidance of 7.5-8.3%) made up comfortably for a slight revenue miss (+6% in H2, giving +9% for FY17 against expected +10-15%). Investment-led economies of scale again drove notable growth (20%) in second-half EBITDA, if less than the step change 42% of H1. While Automotive, Delignit’s principal sector, took a relative pause (revenue up 2%), albeit still buoyant on the back of strong OEM business and new orders from car makers, Technological Applications stepped up materially (+16%), thanks to early returns from contracts for floor solutions for trains from the European subsidiary of an Asian group. Once more, exports were the driver (+17% in H2 and +33% for the full year), endorsing the strategic broadening.
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