CTT Systems: There goes the guidance, as expected – Introduce
No new guidance until market conditions begin to normaliseFollowing the turmoil within the airline industry as a result of the COVID-19 outbreak, CTT today decided to withdraw its FY’20 guidance (flat sales organically). While Q1 sales guidance was intact (SEK 72-77m vs. ABGSCe 74m), the company will not issue any new FY guidance until ‘market conditions begin to normalise’. This was expected in our view and we cut our EBIT estimates by 11% for ‘20e two weeks ago in an effort to assess the impending demand weakness.
We find comfort in CTT seeing fairly low risk to OEM sales, as airliners still accept new aircraft and choose to retire their older ones. However, we acknowledge that aftermarket and retrofit sales will see a significant decline during the year, due to the increasing amount of grounded aircraft.
