Vestel White Goods reported a net loss of 1.7mn (£604K) in 4Q11 (4Q10: TRY 4.8mn loss, 3Q11: TRY 3.9mn profit), thus worse than the expectation of a TRY 9.7mn net profit and the consensus estimate of a TRY 7mn net profit.
Deviation between estimates and the announced net profit mainly stemmed from lower than expected gross profit (the company has not fully reflected FX movements and increased raw material cost to its product prices due to competition), despite higher than expected FX gain and tax income this quarter.
Strong US Dollar against the Euro negatively affects company margins, as was the case in 4Q11.
Although the top line is very much in line with expectation, gross margin was well below forecast, and therefore EBITDA and the bottom line fell short of expectations.
However, there was an improvement in working capital requirement, as in net the debt position.
While estimations will be revised based on the announced financials, a target price of TRY 2.4 per share is being maintained per share and ‘Accumulate’ recommendation for Vestel White Goods for now.