Eurocash Jumps as Erste Says Buy on Growth Outlook: Warsaw Mover

Eurocash SA, Poland’s biggest distributor of non-durable consumer goods, jumped after Erste Group Bank AG recommended buying its shares, citing an improving earnings outlook.

The stock gained 3.1 percent to 52.70 zloty at the close in Warsaw, the biggest increase since March 15. Eurocash has gained 21 percent this year, compared with a 6.7 percent decline in the benchmark WIG20 Index.

“We still see room for Eurocash to continue its growth in the Polish fast-moving consumer goods market and see its financial position as the strongest ever,” Marek Czachor, an analyst at Erste in Warsaw, said in a research note today.

Eurocash will focus on paying off debt until 2015 while the purchase of domestic distributor Tradis in 2011 should help contribute to “strong double-digit growth” of earnings before interest, taxes, depreciation and amortization, or Ebitda, Czachor said. Net income will probably surge to 354.1 million zloty in 2013 from 250.4 million a year earlier.

After 2015, the strongest contribution to earnings growth “should come from further acquisitions,” he said.

Eurocash is looking for takeover targets and plans to increase its dividend after profits surged last year, Chief Executive Officer Luis Amaral, who is also the company’s controlling shareholder, said on March 13.

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