Kareful
I am in the process of preparing an analysis and commentary on the first half results for the current financial year, as announced on 22 February 2013, which I hope will be of interest to readers.
The PIGS analysis, set out on their website, is very good as far as it goes, highlighting for example that "there is a real risk to business continuity unless cash is otherwise generated through asset sales or a capital raising". They have since told us that they are not selling the things they said they were going to sell...and we all know that the chances of capital raising given the dividend block, the hybrid problem and the debt and pension deficit overhang is nil. But the PIGS analysis pulls its punches a little.
For example, on the final / summary page of the presentation, it states that we should "Expect EBIT in 2014 to be positive based on...Commercial print market decining 5% to 7%. "
In other words, as we are declining 10% constant currency and 17% reported, we SHOULD NOT expect FY14 to be EBIT positive. This is effectively the shareholders being told that you can forget the undertaking to deliver positive EBIT in FY14, it's going to be a loss.
To then be told in the same breath that packaging is growing "double digit" is a form of cherry-picking which treats shareholders like fools. So a sector worth $150m per annum (6% of $2.5bn) is going up 10% = $15m revenue increase, whilst the main buiness is going down 17% = $350m decrease. Are we supposed to congratulate them on that?
More to follow...
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