Daily report 28-11-2013

Manos Chatzidakis	9:49 π.μ. (Πριν από 7 λεπτά)

Market Comment

General Index bounced yesterday as opportunities from MSCI selloff triggered buying interest. Volatility was once again the main characteristic of the day while volumes stayed relatively high at €165.3m. Q3 results are expected to impact prices namely NBG (+), MOH (+), Frigoglass (-). Alpha bank, FFGroup, Frigoglass are announcing results today while the deadline for 9M announcements is tomorrow. Finally we note that today US market will remain closed due to the Thanks Giving national holiday.

In the Spotlight

Greece:  Taxpayers and corporations last month generated 1.1 billion euros of new debts to the state, bringing the total since the start of the year to 7.28 billion euros. Old and new debts amount to 60.6 billion euros, with 70 percent deemed non-collectable, General Secretary for Public Revenues Haris Theoharis said on Wednesday.

Frigoglass (Results 9M 2013): Frigoglass announced losses €8.2m in Q3 on lower sales (-17.9%) and weak performance of Glass unit and adverse FX movements. In specifics:

¡  The Group’s net sales declined by 17.9% in the third quarter to €82.7 million, with unfavourable movements of emerging market currencies impacting our top-line by around 6%. East Europe reported a double digit sales growth against weak prior year comparables, with Russia posting a good year-on-year performance. In West Europe, sales continued to reflect market conditions in the region. Sales in North America continued growing year-on-year, albeit at a slower pace than the previous quarter. Glass business sales were lower year-on-year, primarily reflecting a temporary reduction of our customers’ investments in Nigeria and a negative currency effect.

¡  Gross profit (excl. depreciation) declined by 12.2% in the quarter to €16.3 million, with the respective margin expanding by 130 basis points year-on-year to 19.7%. EBITDA in the third quarter was €5.2 million, up 6.4% year-on-year, with EBITDA margin improving by 140 basis points to 6.3%. Unfavourable currency movements had a negative impact on our EBITDA, primarily reflecting the weakening of the Indian Rupee, Nigerian Naira and South African Rand against the Euro. The negative currency translation impact on EBITDA was almost 10%.

¡  Capital expenditure was €4.8 million in the third quarter, well below last year’s level of €7.9 million. Despite a lower year-on-year level of payables, net working capital reached €191.6 million at the end of 3Q13, compared to €219.7 million in 3Q12. This year-on-year improvement is mainly attributed to €41.8 million lower inventories. ¡  Net debt amounted to €271.4 million at the end of the third quarter, 8.7% below the same period last year. Frigoglass will host an analysts and investor conference call to discuss its third quarter results today at 4:00 pm, Athens Time (2:00 pm London time and 9:00 am New York time). Dial in numbers are 00800 128 103 from Greece, +44 208 817 9301 from the UK and +1 718 354 1226 from the US. All other international callers should dial +44 208 817 9301 Frigoglass Results 9M 2013 In thous. euro 2012 2013 Δ Sales 438,894  395,671  -9.8% Q3 100,689  82,674  -17.9% EBITDA 56,372  52,819  -6.3% (% Sales) 12.84%  13.35%  +51 bps Q3 4,887  5,201  6.4% (% Sales) 4.85%  6.29%  +144 bps Net Income 6,039  1,651  -72.7% (% Sales) 1.38%  0.42%  -96 bps Q3 -10,382  -8,220  20.8% (% Sales) -10.31%  -9.94%  +37 bps

NBG (Results 9M 2013/conference call): NBG announced a mixed set of results as one offs distorted bottom line. Improvements in operational cost reduction, funding cost and NPL deceleration were the main positives In specifics:

¡  Net Interest Income on 9M results is down by 7% y-o-y to €2.381m, commission and fees up by 7% y-o-y. Core revenues are down 7%. 
¡  Group net profit in 9M2013 reached €262 million (including losses of €265 million from impairment of Eurobank participation), vs. losses of €2,455 million in 9M2012.
¡  Cumulative 25% reduction in domestic operating costs since 9M.09, largely achieved through the 28% reduction in domestic staff expenses over the same period (adjusted for first time FBB and Probank consolidation). With the prospect of the agreed 3.5% cut at the beginning of 2014, the cumulative reduction from the beginning of the crisis will exceed 30% at the end of the year.
¡  Provisions declined further in Q3 as a result of the slowdown in new loan delinquencies in Greece and SE Europe. In 9M2013, Group provisions stood at €1,239 million vs. €1,872 million in 9M2012, down significantly (by 34%).
¡  The ratio of +90 dpds to total loans stood at 21.9% (vs 20.8% in 2Q2013) for the Group and 27.1% (vs 25.9% in 2Q2013) for the domestic loan book, substantially lower than other systemic banks
¡  The contribution of Finansbank, NBG's subsidiary in Turkey, was particularly notable, posting net profit of €412 million in 9M.13, up 9% yoy on a constant currency basis, despite the adverse impact from the tight monetary policy now being experienced by the country’s banking sector.
¡  Positive contribution by NBG’s businesses in SE Europe, generating net profit of €17 million in 9M2013, vs. losses of €38 million in 9M2012.
¡  Pro-forma Core Tier I stands at 9.4% given the Pangea dealand the approved IRB in Finansbank. Reported CT1 stands at 8.4%.
¡  Group deposits post significant growth of 17% yoy, across all its business regions: Greece +23%, SE Europe +14%, Finansbank +21% (on a constant currency basis).
¡  Rapid reduction in the cost of deposits due to the repricing of time deposits.
¡  Significant reduction in Eurosystem funding by €8.7 billion since the beginning of the year, and by €10.8 billion yoy, with the parallel elimination of any ELA exposure.
¡  Further improvement in the loan-to-deposit ratio in Greece to 88% vs. 109% a year earlier. At Group level, the corresponding index has dropped for the first time below 100% (to 97%), vs. 115% in September 2012.
¡  The management stated that apart from Astir sale there are also other actions to improve CT1 at 10% level without disclosing other details.
¡  NIM is seen up in the forthcoming months as economic environment improves while provisions may peak in 2014 as GDP turn around.
¡  Regarding bad loans the management stated that there is a plan for an internal bad bank and not for a separate entity.

Motor Oil (Results 9M 2013): Motor oil reported €27.8m (-46%) net profit in Q3 and  EBITDA of €74m as domestic demand conditions improve and group’s cracking margins were for another quarter better than Mediterranean benchmark. However the group continued its sales activity at high rates (8.921 metric tones vs 8.639 in 2012) of which 67% represent exports sales. In terms of turnover the translation of volumes was lower as the refining production was at 4.998bn euro vs 5.417.7bn euro in 9M 2013. Net debt shaped at €943m vs €1,027m in 31.12 and free cash flow generation at €68m. We note that 9M results are negatively affected by the one off of deferred tax in Q1 (~€15.3m) and inventory losses of 35m (inventory gains of €3m in Q3). Overall an improved quarter given the tough environment of the first half year which remained positive in terms of FCF generation. Given the normalization of supply in crude oil in Med market after the lift of constraints in Iranian oil and the stabilization of domestic market (heat oil, automotive fuels) we believe that there will be gradual improvements that will be seen to profit margins and liquidity.

A conference call is scheduled at 17:30 GR time. Conference Call Details:

¡  GBR participants 0800 953 0329
¡  GRE participants 00800 4413 1378
¡  US participants 1866 819 7111
¡  International participants + 44 (0) 1452 542 301

Alpha Bank (Results 9M 2013): Alpha Bank will report today its Q3 financial results after the bell. Core revenues are expected to improve on stronger NIΙ and increased fees by 29.3%. Provision rate at 33.4% q-o-q will lead to €280m net loss. A conference call will follow at 18:00 (GR time). Conference Call Details:

¡  Greek participants: +30 211 180 2000
¡  UK participants: +44 (0) 800 3681063
¡  USA participants: +1 866 288 9315

Fourlis (Results 9M 2013/Conference call): Fourlis held its 9M results conference call yesterday. We point out the following:

¡  New pick up points had a marginal positive effect on IKEA’s sales during 3Q13 since they opened up in September – Larger positive impact will be evident during 4Q13
¡  4Q13 shows slightly improved trends compared to the year ago period
¡  The management expects that during 2014 we will not have significant Cogs inflation
¡   The management will not proceed with significant changes in its pricing policy for FY 2013
¡  Intersport posted a double-digit growth in Turkey (excl. FX) – FX headwinds resulted had a negative effect on sales on a reported basis
¡  Cyprus will show improved performance during 4Q13 compared to the year ago period
¡  Macros improvement in Greece has not yet materialized in real economy despite some stabilization

Other 9M/Q3 Results:

MLS	Results 9M 2013
In thous. euro	2012	2013	Δ
Sales	5,021	6,096	21.4%
Q3	1,932	2,342	21.2%
EBITDA	3,213	3,626	12.9%
(% Sales)	63.99%	59.48%	-451 bps
Q3	1,144	1,308