Buzzi Unichem: Good news from Germany
The investment case for Buzzi Unichem was based on the thesis that Buzzi is regarded as an Italian Company (with all the related problems), wheras the majority of the business is located outside Italy, especially in the German stock listed subsidiary Dyckerhoff.
Dyckerhoff announced 2011 results today and they are very strong.
Profit was ~66 mn EUR after 6 mn the year before. Cashflow was much stronger as Dyckerhoff reports a reduction in net debt by almost 140 mn EUR. As 93% of this ends up at Buzzi, things look a lot better than last year from this part of the Group.
In the base case, I assumed 200 mn Free Cashflow p.a. for the whole Group, so it seems that Buzzi is on track at least based on my investment case.
However we will have to wait what the result of the “non Dyckerhoff” business will show. However one should be aware that this is only a first step into the right direction.
Unfortunately, the Pref shares have underperformed the common shares significantly. Since Jan 01.01.2011, the relative underperfomance was ~-20%.
Let’s hope that the gap closes if things improve further.