SFPI GROUP : Difficult H1-2023 and more cautious about H2

The H1-2023 could not hide a slowdown in volume from Building-related (renovation mostly) businesses. Price hikes are now a thing of the past while input prices remain elevated. Volumes are down. Conversely the two 'industrial' units catering to BtoB business are doing well to very well. Now allowing for lesser ambitions for 2023, our TP is down marginally leaving considerable upside potential.

On the back of a weak H1 and lowered FY 2023 sales guidance from €715m to €680m, our 2023 earnings have been slashed by 30%. SFPI is battling with an eroding gross margin as high input costs cannot be immediately offset in current pricing. 2024 should see an end to margin pressure with earnings essentially unchanged.

The DCF has mechanically suffered from lower expected gross margins. Capex may be adjusted down later on, depending on economic developments. SFPI is keeping a close eye on its net cash position.