Kepler sees Ebro as good shelter but not immune to cost inflation, cuts to 'hold'

Ebro Foods SA

15/03/2022 10:18

** Kepler Cheuvreux downgrades Spanish pasta maker Ebro
Foods  EBRO.MC  to "hold" from "buy," citing higher inflation
and no clear catalysts in the short term
    ** In its view expectations of seeing the company improving
earnings again in 2022 have vanished following rising raw
materials costs
    ** While Kepler says it still believes Ebro is "a good
shelter," it expects the company's profitability to get hurt by
durum wheat production that is at 20-year lows, as well as
transport, labour and energy prices
    ** Hence, the broker reduces adjusted EBITDA expectations
for the Spanish company by 4-6% in 2022-2023
    ** Kepler doesn't expect Ebro to be affected by Russian
invasion of Ukraine as the company has "no exposure to wheat,
just durum wheat" and the countries are not important producers
of that grain
    ** Out of 12 analysts that cover Ebro Foods, six rate the
stock "strong buy" or "buy"​ and six rate it "hold"

 (Reported by Tiago Brandao)
 ((tiago.brandao@thomsonreuters.com))