Tessenderlo resolves forecasts The time

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Tessenderlo Group has had a good year in which the Bio-Valorization branch in particular performed strongly. The corona virus prompts the chemical company to exercise caution in its outlook.

The third quarter update of November had already made it clear that Tessenderlo Group

heading for a beautiful 2019. Among other things, the wet spring in the US and the summer heat in France would have a favorable effect on profit, it was then said. Tessenderlo also pushed forward a calculated profit forecast for the first time: the adjusted gross operating profit (adjusted EBITDA) would be about half higher at approximately 270 million euros.

The prognosis is now largely resolved by the company. Last year, turnover rose 7.5 percent to 1.74 billion euros. Without T-Power, the natural gas power plant that only became fully owned in the fourth quarter, the turnover increase was 4.3 percent. The Bio-Valorization branch (gelatin and proteins and fats for animal feed) in particular performed strongly with 9.3 percent more turnover. Agro (fertilizers and plant protection) and Industrial Solutions (water treatment and plastic pipes) both grew by approximately 2 percent.

Adjusted gross operating profit (EBITDA) is 50.6 percent higher at 267.7 million euros, which is in line with our own forecast. Almost a fifth of the profit – 51.2 million euros to be precise – comes from T-Power. This immediately shows that the investment in the power plant is not only useful as a buffer in an otherwise cyclical activity, but also really pays off. After all, without T-Power, the profit increase is a lot smaller: 31.8 percent, still a strong figure.

No dividend

Tessenderlo has a net profit of 97.6 million euros, which is 6 percent more than in 2018. However, a dividend cannot be deducted. Top man (and reference shareholder) Luc Tack chooses to keep the cash in the group. This is also a tradition under Tack: the last dividend dates from 2013.

“All factories and operations are currently running as expected,” the press release said, with the exception of a production interruption at a French factory. The company also points out that it provides “support for vital services and critical flows of goods,” including basic chemicals for drinking water production, gelatin for medical and food applications, crop nutrition and plastic pipes for drinking water supplies.

In principle, Tessenderlo expects the adjusted gross operating profit in 2020 to be higher than in 2019. However, that forecast does not take into account “a potential impact” of the corona virus. “This disease is a new factor of uncertainty that is expected to have a significant negative economic impact worldwide and its effect on adjusted EBITDA for 2020 is currently difficult to estimate.”



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