Stef is on the right track

The annual results of Stef, the temperature-controlled logistics provider, showed that the French group is on the right track in terms of growth, which is also reflected in a strong stock performance in 2015.

The company said on 17 March that it benefited from “the rebound of food consumption in the Eurozone, after three negative years”, which boosted its refrigerated and frozen goods business.

Revenues rose 2.2% – well above the domestic rate of inflation – reaching €2.8bn in 2015, while operating income surged 8% to €110m from €102m one year earlier.

Underlying profitability, as gauged by its operating income margin, or EBIT margin, expanded 20 basis points to 4.5%, and partly contributed to a 15.5% rise in pre-tax income, up from €65m to €75m year-on-year.

Stef’s core transport unit enjoyed a rise in operating income from €50m to €58m. It contributed to just over half of group EBIT, while its logistics and international divisions – whose combined EBIT stood at €45.2m – experienced falls in operating income last year of 3% and 5% respectively.

Finally, the maritime unit, the smallest division on the company’s roster, reported rising operating income, up from €5m to €7m in 2015.

Stef said that “gearing improved (1.08x in 2015 versus 1.17x in 2014) due to good debt control and a strengthening of equity to €494m (€440m in 2014)”, but frankly, that was only a minor improvement. It pointed out, however, that it “upheld its key strategic commitments in 2015”, which also shows in its trailing stock performance (+41% in 2015).

The company’s shares have essentially been flat since the turn of the year. According to consensus estimates, Stef could report €215m of EBITDA, which would put its stock on a forward EV/EBITDA multiple of 6.4x for 2016, while its price-to-earnings ratio is a lowly 10x.

In 2016, Stef said it “will continue with its development strategy outside France and boost its organic growth and operations in new market segments” domestically. It added that it would also have to work to strengthen “the position of La Méridionale under the future organisation of the regulated maritime service to Corsica”.

A shareholder meeting is due on May 18, when the board will propose the payment of a dividend per share of €1.95, which implies a trailing yield of about 3%, and a 14.7% dividend rise year-on-year, as well as a rather conservative pay-out ratio at 33%.

Source: Transport Intelligence, 23rd March 2016

Author: Alessandro Pasetti