H1 results were strong, on foreign margin expansion reflecting higher pricing and abating energy/raw material costs. Foreign countries more than made up for the weak L4L sales and EBIT in Greece. SAR’s new management raised FY 2023 EBIT guidance by +7.5% to E43m. Keeping sales unchanged at E480m highlights this is a margin call. H1 gross margin went up +300bps compared to FY 2022 (and +200bps yoy).

Q2 results were impressive, with both IKEA and sporting goods businesses growing their sales double-digit (L4L), on higher prices but mainly on higher volume, given supply/product availability issues have been resolved. Gross margin improved qoq/flat yoy and operating leverage sent EBITDAL +76% yoy. Management says H2 will be higher than H1 in absolute terms, although we expect the growth rate to face a stronger base.

Q2 GGR/EBITDA/Net income came in +13%/+7%/+35% yoy, a run-rate in line with our full year estimates and company’s FY EBITDA target (unchanged). The surprise came from the introduction of a 2YR/E150m share buy-back scheme and the E1.0/share interim dividend (from E0.30 last year), pointing to a 6% yield. Half of this comes from the gains booked from/related to the Betano sale (parent accounts) last year and explains the higher-than-usual interim payment.

As expected, Q2 results came in much weaker qoq, on lower refining margins and despite volume holding up quite well (local demand +5% yoy). Clean EBITDA at E164m was lower than the c. E475m booked on average in each of the last 4 quarters. Unfortunately, Helleniq does not have a naphtha reformer (like MOH) to take advantage of the huge naphtha-gasoline cracks ($35/bbl in Q2), nor a big enough RES mass (yet) to offset at least part of the weakness in refining.

What’s new? Two years after buying its first 12.6% stake in Hellenic Bank (HB) from Third Point at 0.30x TBV 2021, Eurobank announced it has agreed to buy Pimco’s 17.3%; Senvest’s 1.6%; and Wargaming’s 7.2% stakes in the CY bank (at 0.70x TBV 2023E), raising its total participation to 55.31%. Going above 30% ownership means launching a mandatory public offer for the remaining shares.
Illustration only. In this note we look at the pro forma impact on Eurobank’s 2023-2025 numbers from fully consolidating Hellenic Bank. Our work is based on a) our current estimates for standalone Eurobank; b) 100% effective stake consolidation of HB; c) HB’s 2023 and medium term guidance (announced with Q2 2023 results); d) NO synergies between HB and Eurobank’s existing CY ops.