Varroc Engineering Q4 Review - Weak Margin Performance: Systematix

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Systematix Research Report

Varroc Engineering Ltd.’s Q4 FY21 Ebitda performance was below expectations as industry-wide shortage of semi-conductors hurt Varroc Lighting Systems Ltd. volumes and one-off expenses at Czech facility.

The greenfield plants continue to see Ebitda losses on a slower-than-expected ramp-up.

The management expects H1 FY22 demand to be impacted by the shortage of semi-conductors and Covid-19-led lockdowns in India.

Varroc Lighting Systems Q4 profitability was hit by lower manufacturing revenues in North America, a €5 million hit due to rejection of freight recovery in Europe and raw material inflation.

In India, Ebitda margin contracted 150 basis points due to raw material inflation, which will be passed on over the next few quarters.

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