Conclusion
Q3 sales and orders were sharply below our estimates, but (low) earnings in line, thanks to cost-savings and synergies. We expect low orders to drive cuts to 2021 consensus estimates and expect a negative reaction for the shares (-5% or more). The performance was better in Insulating glass (driven by residential construction) but weak in Heat Treatment i.e. safety glass (more exposed to commercial construction). Consequently, Glaston sees a clear need to adapt Heat Treatment business to current market demand. Automotive remains weak due to overcapacity. In our view, it seems that a sustainable recovery in Glaston's business remains uncertain, despite decent performance of Insulating Glass. ND/EBITDA (LTM) rose to >3x and balance sheet becomes a risk unless earnings improve.
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