Klöckner Pentaplast - comment

Disappointing operating results should translate into prices, but the exit facility is unlikely to move on the first print. Compared to our projections, Q4 saw weaker revenues and margins in both segments and a large WC outflow towards year end due to "significant pre-petition vendor payments” required during the November Chapter 11 filing — €54m AP unwind vs the 9+3 plan, plus €6m factoring slippage (Lender Update p.11). This is temporary, restructuring-driven; not run-rate. We are more interested in the operating miss in both segments, which could be due to customer supply-base derisking, but must not be allowed to translate into permanent loss of market share (although in the case of pharma, it probably will).