Our analysts take a look at the data from the FY24 earnings cycle and identify more interesting observations across European markets and sectors.
After each earnings cycle, we take some time to analyze the enormous amount of data we process with our Comparables feature - a powerful tool to view markets and sectors top down and in their entirety - to see what sector trends jump out at us across our current coverage universes.
Each quarter, we publish some of those insights in this blog as a representation of the depth of information available in our datasets, and the ease with which it can be analyzed from a top-down vantage.
Without further delay, here's our Quarterly Earnings Breakdown for FY24 - European Edition.
Real Estate
The Real Estate sector can be approached on both a sector type - Commercial vs Residential - as well as Geographic - UK vs Europe.
Within the Commercial property sector, office real estate struggles have been well-flagged.
Canary Wharf
Looking at Canary Wharf where the majority of the Net Internal Area (NIA) is Office Space, we see no recovery in the Fair Value of the overall property portfolio, driven by a steady YoY decline in occupancy and rental income from the Office segment.
Office occupancy has seen a steady YoY decline:
Corresponding drop in rental income:
Therefore FV Office portfolio explains decline in overall property portfolio:
The Retail & Hospitality sector, meanwhile, has seen a steady improvement in Rental Income and Fair Value.
Fastighets AB Balder
Meanwhile, for Fastighets AB Balder, Gross Margin, or Net operating margin, Rental Income less direct property costs has held steady on an LTM basis:
As seen by Lettable Area, Residential lettable area dominates:
Importantly, while both sectors have seen a steady increase in Rental value per sqm, Economic occupancy (Rental Income/Rental Value) has been anywhere between 4-6% higher in the Residential arena:
Energy Equipment & Services
Turning to two European High Yield E&P Service stalwarts, we see that Saipem’s LTM Free Cash has continued to improve on a YoY basis.
This FCF improvement has been driven by an improvement in Adjusted EBITDA, specifically driven by the Offshore E&C business - now known as the Asset Based Services sector.
LTM Adjusted EBITDA on the rise driven by Asset Based Services, ie the pre-2023 Offshore E&C business.
The Asset Based Services backlog continues to grow, while the higher margin Offshore Drilling backlog and Order intake appeared to have declined in FY24.
Vs
Offshore Drilling order intake and backlog, respectively:
In fact, Book to Bill ratios across all 3 segments - Asset Based Services, Onshore E&C, Offshore Drilling - show Asset Based Services as the only segment > 1x:
A potentially dangerous sign to keep an eye on in FY25 is the Offshore Drilling YoY Adjusted EBITDA margin decline in FY24. Given the high margin, this sector currently accounts for about one-quarter of the Company’s overall Adjusted EBITDA.
In an attempt to discern insight into the the Offshore Drilling market, we turn to global bellwether, Transocean.
Leverage appears to be heading in the right direction driven by a recent improvement in LTM Adjusted EBITDA:
Following a post-2015 recovery, dayrates and rig utilization across the fleet - Ultra-deepwater and Harsh Environment - have generally borne out this positive trend:
Euro IG Health Care Equipment & Services
In the Euro IG Health Care Equipment & Services space the following charts show YoY change for Revenue and EBIT for those companies that have just reported FY24 results.
Looking at Baxter, a few charts depict financial performance subsequent to the FY21 Hill-Rom acquisition:
Despite the overall improvement in leverage and coverage ratio, the recent declines in Gross and Operating margin are worth further observation into FY25.
Analyze the entire market, faster
Cross-market analysis like the above is easy with Cognitive Credit. Our Comparables feature offers a top-down view of
all our fundamental data across our four coverage universes (European & US High Yield, and European & US Investment Grade), allowing you to find relative value opportunities across your markets, sectors and companies quickly and conveniently.
To see how our cross-market data and analytics could help your business, request your demo today.
