STEF appear to make steady progress

The fourth-quarter and annual results of France’s STEF were generally uneventful, although the French temperature-controlled company is making good progress in certain areas.

2016 was not a bad year for shareholders, although recently its stock dropped 10.2% from a record high of €88.6 in mid-January 2017.

Still, paper gains were in the region of 26% in the past year, excluding dividends. Its normalised trailing yield is 3.2%, based on much lower share prices between 2013 and 2015. Among other things, this means 2016 could be seen as a benchmark for future performance and value creation, given the possibility of rising financial risks if economic growth sputters.

Annual revenues were virtually unchanged year-on-year at €2.82bn, it announced on 25 January 2017. The group is not benefitting from inflationary trends, with market forecasts pointing to a flattish top-line with gently rising earnings over the medium term. Its balance sheet is only mildly stretched, based on available data at the end of 2015, but it could get worse in the current environment.

The core domestic transport unit – ‘Transport France’ (TF) – returned to growth in the final quarter “as it was not impacted by lower fuel prices and recorded a good end-of-year in its seafood business”.

The transport network is holding up relatively well. Quarterly volumes of hauled goods were stable year-on-year, “despite the health crisis which affected the southwest region”. TF represented 43.3% of group sales, turning over €325.4m in the fourth quarter, up 1.6% on a comparable annual basis.

Meanwhile, the logistics business, ‘Logistics France’, saw quarterly revenues fall 0.9% to €130.9m, due to a “lower filling rate of frozen warehouses, 2.5 points lower than during the same period in 2015”. However, the out-of-home catering business recorded a 1.8% sales increase in the final quarter, excluding sales carried out for third parties in France, Spain and Belgium.

The international business, with revenues at €166.2m, recorded the best performance across the group’s assets portfolio in terms of growth – its top-line surged 6.7% year-on-year in the fourth quarter.

“International activities confirmed their growth driver status for the group,” it said, adding: “Italy implemented its growth plan with food manufacturers and recorded a near 10% sales increase, while in Portugal, the consumption increased over 4% at year’s end and the signing of a new contract with a European client from the dairy industry led to a 10.6% increase in business during the quarter.”

Finally, the smaller, non-core maritime division experienced a 13.4% plunge in sales, which fell to €22.1m in the fourth quarter from €25.5m one year earlier.

Source: Transport Intelligence, January 31, 2017

Author: Alessandro Pasetti