Fedrigoni - comment

Guidance on yesterday’s call was positive. Management is seeing volumes bottom out around current levels, which means there will be another two quarters of LfL impact, as development should be sideways next year. Prices are still falling, but at a slower rate, while inventory downstream in the industry is apparently low. On that basis, Management predict double-digit EBITDA growth due to cost savings already enacted. We tend to be cautious around such predictions, as either price rises or competitive pressure often consumes such savings entirely. But in Fedrigoni’s case, we think the M&A roll-up does lend itself to genuine cost savings and the competitive pressure is contained by its numerous niche leadership positions. So we may be raising our forecast for the company, which means the time could have come for us to take a position in the bonds soon.