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Last close As at 26/05/2023
EUR5.68
▲ −0.20 (−3.40%)
Market capitalisation
EUR635m
Research: Consumer
Borussia Dortmund’s football season finished on 14 May 2022 with another (comfortable) second place in the Bundesliga confirming qualification for the Champions League in the 2022/23 season. Management’s reiterated guidance for FY22, a net loss of €17–24m, represents a robust performance given the restrictions on fan attendance for the majority of the year and a less successful season in European competitions than is typical. The company is well-placed to deliver an improved financial performance in FY22/23 if further COVID-19 related restrictions can be avoided. Our valuation of €9.8/share suggests significant upside in a normalised operating environment.
Borussia Dortmund |
Looking forward to a better FY22/23 |
Q322 results |
Travel & leisure |
17 May 2022 |
Share price performance
Business description
Next events
Analysts
Borussia Dortmund is a research client of Edison Investment Research Limited |
Borussia Dortmund’s football season finished on 14 May 2022 with another (comfortable) second place in the Bundesliga confirming qualification for the Champions League in the 2022/23 season. Management’s reiterated guidance for FY22, a net loss of €17–24m, represents a robust performance given the restrictions on fan attendance for the majority of the year and a less successful season in European competitions than is typical. The company is well-placed to deliver an improved financial performance in FY22/23 if further COVID-19 related restrictions can be avoided. Our valuation of €9.8/share suggests significant upside in a normalised operating environment.
Year end |
Revenue (€m) |
EBITDA* |
PBT* |
EPS* |
DPS |
P/E |
EV/EBITDA |
06/20 |
370.2 |
63.0 |
45.6 |
0.47 |
0.00 |
7.8 |
6.3 |
06/21 |
334.2 |
39.0 |
24.3 |
0.26 |
0.00 |
13.9 |
10.2 |
06/22e |
350.4 |
81.5 |
65.8 |
0.57 |
0.00 |
6.4 |
4.9 |
06/23e |
389.0 |
106.5 |
91.5 |
0.76 |
0.00 |
4.8 |
3.7 |
Note: *EBITDA, PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Q322: Fewer domestic and European games
BVB’s Q322 revenue declined by c 20% y-o-y to €64.2m due primarily to lower TV Marketing revenue (-50% y-o-y) and Merchandising (-13%), which both reflect fewer Bundesliga games and less success in European competitions than Q321 (Round of 16 in Champions League). Advertising (+20% y-o-y from new sponsors and improved hospitality) and Conference and Catering (+186%) generated strong growth, but Match Operations revenue continued to be hampered by COVID-19 related restrictions. The lower revenue, a modest decline in operating costs and limited transfer activity in the quarter pushed the company back to an EBITDA loss of €5.9m following profit in both quarters of H122.
FY22 guidance reiterated
Management reiterated its guidance for FY22, a net loss of €17–24m, much lower than the losses of €44m in FY20 and €73m in FY21, all years heavily affected by COVID-19 related restrictions. On 10 May 2022, the club announced a mutual agreement with Manchester City to sell one of its most important players in recent seasons, Erling Haaland. Contractual details have yet to be finalised, but management expects the sale will benefit FY23 EBITDA and EBIT by €35–40m. The estimated transfer fee of €75m (source: Transfermarkt.com) is a significant premium to the player’s acquisition cost of €20m in January 2020, but short of the estimated value of €150m (source: Transfermarkt.com). Our estimates for FY22 and FY23 are unchanged ahead of confirmation of the terms of the transfer.
Valuation: Asset-backed valuation of €9.80/share
Our asset-backed sum-of-the-parts valuation reduces to €9.80/share (€11/share previously) to reflect the lower market valuations of the quoted peers (which influence our estimates for the club’s brand valuation), lower to-be-realised valuation for Haaland, and updates to the balance sheet valuations for the stadium and net debt.
Exhibit 1: Financial summary
€m |
2020 |
2021 |
2022e |
2023e |
||
Year end 30 June |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||
Revenue |
|
|
370.2 |
334.2 |
350.4 |
389.0 |
Cost of Sales |
(22.4) |
(19.6) |
(20.6) |
(21.6) |
||
Gross Profit |
347.8 |
314.6 |
329.9 |
367.4 |
||
EBITDA |
|
|
63.0 |
39.0 |
81.5 |
106.5 |
Operating profit (before amort. and excepts.) |
|
49.1 |
25.3 |
67.7 |
92.5 |
|
Amortisation of acquired intangibles |
(88.3) |
(92.6) |
(89.8) |
(97.3) |
||
Exceptionals |
(3.9) |
(4.8) |
0.0 |
0.0 |
||
Reported operating profit |
(43.1) |
(72.1) |
(22.1) |
(4.8) |
||
Net Interest |
(3.4) |
(1.1) |
(1.9) |
(1.0) |
||
Joint ventures & associates (post tax) |
(0.0) |
0.1 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
45.6 |
24.3 |
65.8 |
91.5 |
Profit Before Tax (reported) |
|
|
(46.6) |
(73.2) |
(24.0) |
(5.8) |
Reported tax |
2.6 |
0.3 |
0.0 |
0.0 |
||
Profit After Tax (norm) |
43.0 |
24.2 |
60.5 |
84.2 |
||
Profit After Tax (reported) |
(44.0) |
(72.8) |
(24.0) |
(5.8) |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
43.0 |
24.2 |
60.5 |
84.2 |
||
Net income (reported) |
(44.0) |
(72.8) |
(24.0) |
(5.8) |
||
Average Number of Shares Outstanding (m) |
92.0 |
92.0 |
105.4 |
110.4 |
||
EPS - normalised (c) |
|
|
46.8 |
26.3 |
57.4 |
76.2 |
EPS - normalised fully diluted (c) |
|
|
46.77 |
26.28 |
57.43 |
76.23 |
EPS - basic reported (€) |
|
|
(0.48) |
(0.79) |
(0.23) |
(0.05) |
Dividend (€) |
0.00 |
0.00 |
0.00 |
0.00 |
||
Revenue growth (%) |
(0.0) |
(9.7) |
4.9 |
11.0 |
||
Gross Margin (%) |
94.0 |
94.1 |
94.1 |
94.4 |
||
EBITDA Margin (%) |
17.0 |
11.7 |
23.3 |
27.4 |
||
Normalised Operating Margin |
13.2 |
7.6 |
19.3 |
23.8 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
441.5 |
389.8 |
355.6 |
313.5 |
Intangible Assets |
229.7 |
193.4 |
167.0 |
133.0 |
||
Tangible Assets |
193.0 |
183.5 |
175.7 |
167.7 |
||
Investments & other |
18.8 |
12.9 |
12.9 |
12.9 |
||
Current Assets |
|
|
76.5 |
60.7 |
78.8 |
115.9 |
Stocks |
6.8 |
6.8 |
10.5 |
11.2 |
||
Debtors |
36.5 |
29.9 |
31.4 |
34.8 |
||
Cash & cash equivalents |
3.3 |
1.7 |
14.7 |
47.6 |
||
Other |
29.9 |
22.2 |
22.2 |
22.2 |
||
Current Liabilities |
|
|
(122.6) |
(163.6) |
(88.5) |
(89.5) |
Creditors |
(110.2) |
(100.1) |
(84.1) |
(85.0) |
||
Tax and social security |
(0.0) |
(0.0) |
(0.0) |
(0.0) |
||
Short term borrowings |
(8.0) |
(56.9) |
0.0 |
0.0 |
||
Finance leases |
(4.4) |
(4.2) |
(2.1) |
(2.1) |
||
Other |
0.0 |
(2.3) |
(2.3) |
(2.3) |
||
Long Term Liabilities |
|
|
(89.9) |
(54.3) |
(54.3) |
(54.3) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
||
Finance leases |
(20.1) |
(16.8) |
(16.8) |
(16.8) |
||
Other long term liabilities |
(69.9) |
(37.5) |
(37.5) |
(37.5) |
||
Net Assets |
|
|
305.4 |
232.6 |
291.6 |
285.7 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
305.4 |
232.6 |
291.6 |
285.7 |
CASH FLOW |
||||||
Operating Cash Flow |
59.5 |
37.9 |
79.6 |
105.5 |
||
Working capital |
(18.0) |
(6.9) |
(21.2) |
(3.3) |
||
Exceptional & other |
(38.9) |
(13.6) |
(58.1) |
(59.0) |
||
Tax |
0.3 |
0.0 |
0.0 |
0.0 |
||
Net operating cash flow |
|
|
3.0 |
17.4 |
0.3 |
43.3 |
Capex |
(6.1) |
(3.4) |
(6.0) |
(6.0) |
||
Net investment in intangibles |
(44.6) |
(58.6) |
(3.3) |
(3.3) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net interest |
(3.3) |
(1.4) |
(1.9) |
(1.0) |
||
Equity financing |
0.0 |
0.0 |
82.9 |
0.0 |
||
Dividends |
(5.5) |
0.0 |
0.0 |
0.0 |
||
Other |
(3.9) |
52.5 |
(59.0) |
0.0 |
||
Net Cash Flow |
(60.6) |
6.4 |
13.0 |
32.9 |
||
Opening net debt/(cash) |
|
|
(44.4) |
29.1 |
76.2 |
6.4 |
Other non-cash movements |
(12.9) |
(53.6) |
56.9 |
0.0 |
||
Closing net debt/(cash) |
|
|
29.1 |
76.2 |
6.4 |
(26.6) |
Source: Borussia Dortmund, Edison Investment Research
|
|
Research: Industrials
The acquisition of Grant Westfield (GW) is a typical Norcros deal: profitable, strongly complementary to the existing product offer and has excellent ongoing growth prospects. The cash- and debt-free consideration is £80m and represents 7.9x FY21 EBITDA. We have raised our first full-year (FY24) EPS estimate by c 10% in underlying terms, which is consistent with guidance, and the P/E for the year is now just 5.9x.
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