First Berlin Equity Research has published a research update on Schloss Wachenheim AG (ISIN: DE0007229007). Analyst Simon Scholes reiterated his BUY rating and maintained his EUR 22.00 price target.
Final results for the year ending 30 June showed a 10.9% increase in sales to €425.8m (2021/22: €384.0m) and a 6.2% decline in EBIT to €27.4m (2021/22: €29.2m). Both sales and EBIT were slightly above the upward revision in guidance (sales +10%; EBIT of €25m-€27m) given by the company following the Q3 results in May. Sales and EBIT were also respectively 0.4% and 4.2% above our forecasts. Restructuring of the French business reduced group EBIT by €4.4m. Adjusted for this item, EBIT would have been €31.8m – 8.9% above the 2021/22 figure. Due mainly to a reduced restructuring charge in France, management is guiding towards EBIT of €28-€30m for the current financial year. Management will propose an unchanged dividend of €0.60 to the AGM on 16 November. SWA’s past two business years have been dominated by the adverse impact of cost inflation. Inflation is now subsiding and during the remainder of 2023/24 we expect this to feed through to lower interest rates and improving consumer sentiment. We maintain out Buy recommendation and price target of €22.00.