Adler Pelzer - comment

Revenues in EMEA are 10% down and worse than feared, but Asia and Mercosur outperformed. Overall revenue is as expected. We have reallocated past regional revenues to better reflect the current situation - see next model update. However, the company did manage to keep a €7m better than modeled gross margin and dropped €10m of personnel expenses compared to model. We note that somewhere in the P&L is a release of €12m of Other Provisions and we don’t know where. So “sustainable” Pre IFRS 16 EBITDA would be €12m lower at €30m and therefore well below last year’s €37m. We can find the €30m upstream loan in financial assets, but the company also seems to have paid another €15m in dividends. The bonds seem to have picked up slightly on the figures, but the closer we look, the more convinced we are that they should have dropped instead. It looks like the first leg of this short was not successful, but we will continue to hold the short until the bonds come back down (soon) and close out before Christmas to avoid paying too much carry.