A2M has been lurking in the shadows of late as anticipation builds before its earnings report this morning, which unfortunately is a miss to expectations. Clearly a hugely challenging year for A2M and todays results reflect that with profit down ~79%. They have reported inline revenue however EBITDA of $123m was ~12% below expectations while NPAT of $80.6m was also a miss on the $95m expected, however there was a number of one-offs included here which reduces the miss if we (optimistically) strip those out + a higher tax rate hurt profit. EBITDA margin was inline with prior guidance & they were operating cashflow positive . They have net cash if $875.2m and issued no earnings guidance. There was the potential for capital management, however they have elected to retain cash for growth. I would suspect this may have something to do with Nestle which has shown interest in A2M. A weak result, not a disaster but weaker than expected – corporate appeal remains…Overall, a miss.
I expect A2M to drop ~10% on this number but there’s nothing in the report to put off any buyers, the price just improved! With rumoured suitors waiting to see if any nasty surprises are about to surface e.g. Swiss based Nestlé, we still remain short-term bullish A2M after this disappointing result.
MM remains long A2M
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