Pfleiderer - comment

The German wood panel manufacturer reported Q3 results which still reflected the downturn in the German construction industry with the only positive news that demand has stabilised. Volumes in its core wood products segment was flat with pricing down (We estimate by 7%). Q3 revenues in the EWP division was EUR 162 million (which was below our estimate at EUR 183 million). EBITDA from the EWP division excluding one-time gain from energy trading was flat at EUR 13.9 million (with core margins improving from 8.1% to 8.6%). Sarria had estimated flat EBITDA in Q3. Cost controls offset headwinds from pricing. The star of the quarter was Silekol which saw quarterly revenues of EUR 57 million (above our estimates at EUR 37 million) driven by market share gains. EBITDA at 6.5 was slightly ahead of our projection of 6 million due to pass-through of raw material pricing and volume growth.  The company also closed its acquisition of a port terminal facility in Poland (Project Nord) which is expected to be operational in Q3 2025 and financed by the 75 million equity injection from SVP. Cash burn at EUR 11.5 million was below our estimate at EUR 27 million) as inventories increased to support the growth in Silekol with capex at 16 million (below our estimate at 35 million) however liquidity remained healthy at EUR 119 million with net leverage improving vs. Q2 at 5.4x.  The quarter demonstrated the company managing well through an industry downturn which is only expected to improve in 2025. 

We will learn more about the outlook for 2025 in an investor call on the 16th December 2025. In the meantime, we remain happy holders of the notes at 5% of NAV.