UBS: Mayr-Melnhof "2009 results preview" (Buy)


2009 results due on 17 March / improved earnings on lower top-line

Despite increased raw material prices, we expect MMK to report solid 2009
numbers with improved earnings on lower top-line vs 2008 as we assume MMK to
have successfully adjusted its cost base in 2009. Overall, we expect group
sales -10% y/y to €1,562m, but almost flat EBITDA and EBIT at €226.4m and €
226.4m respectively, some 100bp improved EBIT margin of 8.9%. We expect EPS to
be up 6% to €4.69, but MMK to keep its dividend stable at €1.70.


Divisional picture

In MM Karton, we expect the order backlog to have stabilised on a low level of
c30kt, tonnage produced -4% to 1.460t, utilisation rate c86%, sales -15% to
€743m, EBIT +28% to €50.1m, an improved EBIT margin 6.7%. In MM Packaging, we
expect MMK to have processed 623kt, sales -5% to €940m and EBIT -10% to €88.3m,
an EBIT margin of 9.4%.


Initial 2010 outlook and further market consolidation expected

We do not expect management to provide full-year guidance as yet, due to the
low visibility, but to maintain its cautious outlook, given very subdued demand
in western Europe. To maintain its price discipline, we expect MMK to continue
selective capacity adjustments, e.g., temporary plant shutdowns. We expect MMK
to remain an active player in further market consolidation throughout 2010.


Valuation

We value MMK at 5.4x 2010E EV/EBITDA, a 15% discount to its packaging peers to
reflect the lack of liquidity, and in line on PE metrics.