Fedrigoni

The HoldCo PIKs should be up this afternoon. Management confirmed its ambition to address the Fiber Midco issue in the next quarter or two, as this is expensive paper and is now the shortest maturity bond on the balance sheet. Fedrigoni beat our Q226 forecast by a whopping 10% as clients pulled forward orders in anticipation of price rises that came in Q3. The CFO made clear that H226 would continue strong, but made room for volumes to soften and left full year guidance unchanged. Collectable cards and RFID were again strong, while the bulk of the outperformance was in Pressure Sensitive Labels. Cascading down the P&L, EBITDA therefore beat ours by €12m, even after accounting for a €7.4m loss on the sale of PP&E (considering there is no visible CF from such sales, it must have been effectively just a write-off of old equipment). CapEx and M&A were in line, so the €24m beat carried through to FCF, and the company used the proceeds to address various short term lines, so that net cash production was close to forecast. We will be updating our model, but will only slightly raise our full year targets, considering much of this outperformance was borrowed from H2.