Earnings Release • Feb 13, 2020
Earnings Release
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NET FINANCIAL POSITION SUBSTANTIALLY IMPROVES DUE TO CASH GENERATION AND LOWER CAPEX
2019 preliminary consolidated financial highlights:
1
1 The figure was adjusted for the extraordinary charge for the replacement of the Chief Executive Officer and for other restructuring costs, for a total of Euro 2.6 million. The adjustment of the 2018 result concerned the extraordinary accrual of Euro 11.3 million (of which Euro 10.2 million EBITDA effect and Euro 8.3 million net of the tax effect), considered necessary in view of the settlement stipulating mutual positions on the insolvency declaration of Exklusiv-Hauben Gutmann GmbH, in full and final settlement of all claims.
2 Euro 3.2 million, excluding IFRS 16 effect of Euro - 0.2 million
3 The value indicated is net of the IFRS 16 effect, as outlined in the reconciliation tables
Milan, February 13, 2020 – The Board of Directors of Elica S.p.A., the parent of a Group that is the leading manufacturer of kitchen range hoods, approved today the additional periodic disclosure for Q4 2019, prepared in accordance with IFRS, and noted the 2019 preliminary consolidated results.
***
"We are greatly satisfied with the 2019 results which are in line with market expectations - both in terms of revenue and margins - while cash generation exceeded expectations". - stated Mauro Sacchetto, Chief Executive Officer of Elica. "In the second half of 2019, the Group implemented an internal reorganisation ahead of a relaunch over the coming three years. We expect a further improvement for all financial indicators, particularly EBIT, in addition to the cash generation, thanks in part to a rebalancing of investment on revenue. In terms of business development, we expect to launch new products at Eurocucina in April 2020, further boosting growth both in Europe and in our expanding markets - particularly North America and Asia Pacific".
***
In 2019, Elica's consolidated revenues amounted to Euro 480 million, +1.6% on the same period of 2018 (+0.3% net of the currency effect).
The poor market performance continues, with estimated global range hood demand down 0.8%4 in 2019, however improved in the fourth quarter of the year. In particular, North America continues to perform poorly (-2.1%), while Latin America recovered slightly (+0.6%). Asia (-1.2%) also contracted, despite the improved Indian demand - supported by higher public and consumer spending – mainly due to the Chinese market reduction. The EMEA market continues to be impacted by Turkey, while demand has grown in France and UK.
Own brand sales in 2019 were up 10% (+8.5% at like-for-like exchange rates), picking up to 11.7% in Q4 (+9.6% at like-for-like exchange rates), thanks in particular to the EMEA and India regions. The overall percentage of own brand sales out of the total Cooking segment revenue rose to 52% (55% in Q4 2019).
OEM revenue reduced 4.5% on the previous year (-6.1% at like-for-like exchange rates), impacted particularly by the slowdown on the American market, despite signs of recovery in the second half in EMEA.
The Motors segment, representing 13% of total revenue, saw a significant improvement in the fourth quarter of the year (+17.5% on Q4 2018). The overall contraction in 2019 (-4.4%) is however impacted by the poor performance in the first half of the year, particularly on the Turkish market.
Adjusted EBITDA, including the IFRS 16 effect, was Euro 45 million up 12.7% on 2018 (Euro 40 million), with a margin on revenue of 9.4%. Net of the IFRS 16 effect, Adjusted EBITDA was Euro 41.6 million, with
2
4 Source: Elica Group, internal estimates
a margin on revenue of 8.7% (8.5% in 2018). The adjustment to the 2019 result was approx. Euro 2.6 million and concerns the extraordinary charge for the replacement of the previous Chief Executive Officer (Euro 1.3 million) and restructuring charges (Euro 1.3 million). The adjustment to the 2018 result related to the provision of approx. Euro 10.2 million, mainly for the insolvency of the former German subsidiary Exklusiv-Hauben Gutmann GmbH.
In the fourth quarter of 2019, net of the IFRS 16 effect, the margin on revenue rose to 9.1% (Euro 11.3 million) compared to 9% (Euro 10.5 million) in Q4 2018.
Adjusted EBIT was Euro 19.6 million, substantially in line with Euro 19.8 million for 2018, despite higher amortisation and depreciation stemming from the major investment plan supporting the development of the new product range launched in 2017 and 2018.
In Q4 2019, the EBIT margin on revenue was 4.6% (Euro 5.7 million) compared to 4.7% (Euro 5.5 million) in Q4 2018.
Financial expense was Euro 5.1 million, increasing by approx. Euro 1 million over 2018, with Euro 0.3 million concerning the impact from initial application of IFRS 16 and Euro 0.6 million from the impairment (write-down) of the non-core investment in a Group associate real estate company.
Net Profit was Euro 7.4 million, significantly up on Euro 2.3 million in 2018. Minorities of Euro 4.4 million compared to Euro 3.3 million in 2018, mainly reflect the reduction in the Group's investment in the Indian Joint Venture in September 2018 (from 51% to 25.5%).
Net Profit attributable to the Group amounted to Euro 3.05 million, recovering considerably on the loss of Euro 0.96 million in 2018;
| 2019 | % revenue |
2018 | % revenue |
19 Vs 18% |
2019 - same |
||
|---|---|---|---|---|---|---|---|
| In Euro thousands | standards as 2018 |
||||||
| Revenue | 479,986 | 472,387 | 1.6% | 479,986 | |||
| Adjusted EBITDA | 45,038 | 9.4% | 39,973 | 8.5% | 12.7% | 41,625 | 8.7% |
| EBITDA | 42,467 | 8.9% | 29,818 | 6.3% | 42.4% | 39,054 | 8.1% |
| Adjusted EBIT | 19,623 | 4.1% | 19,771 | 4.2% | (0.8%) | 19,598 | 4.1% |
| EBIT | 17,052 | 3.6% | 8,539 | 1.8% | 99.7% | 17,027 | 3.5% |
| Net financial expenses | (5,119) | (1.1%) | (4,053) | (0.9%) | (26.3%) | (4,854) | (1.0%) |
| Income taxes | (4,554) | (1.0%) | (2,172) | (0.5%) | (109.7%) | (4,612) | (1.0%) |
| Profit from continuing operations | 7,379 | 1.5% | 2,314 | 0.5% | 218.9% | 7,562 | 1.6% |
| Adjusted Profit for the year | 9,333 | 1.9% | 10,593 | 2.2% | (11.9%) | 9,516 | 2.0% |
| Profit for the year | 7,379 | 1.5% | 2,314 | 0.5% | 218.9% | 7,562 | 1.6% |
| Adjusted Profit attributable to the Group | 4,930 | 1.0% | 7,318 | 1.5% | (32.6%) | 5,113 | 1.1% |
| Profit attributable to the Group | 2,976 | 0.6% | (961) | (0.2%) | 409.7% | 3,159 | 0.7% |
| Basic earnings per share on continuing operations and | |||||||
| discontinued operations (Euro/cents) | 4.70 | (1.55) | 403.2% | 4.99 | |||
| Diluted earnings per share on continuing operations and | |||||||
| discontinued operations (Euro/cents) | 4.70 | (1.55) | 403.2% | 4.99 |
3
(*) see paragraph on the application of IFRS 16 Leases
5 Euro 3.2 million, excluding IFRS 16 effect of Euro - 0.2 million
| Q4 2019 - MTD |
% revenue |
Q4 2018 - MTD |
% revenue |
19 Vs 18% | Q4 2019 - MTD Same standards |
|
|---|---|---|---|---|---|---|
| In Euro thousands | 2018 | |||||
| Revenue | 124,094 | 117,330 | 5.8% | 124,094 | ||
| Adjusted EBITDA | 12,452 | 10.0% | 10,537 | 9.0% | 18.2% | 11,321 |
| EBITDA | 11,853 | 9.6% | 4,382 | 3.7% | 170.5% | 10,722 |
| Adjusted EBIT | 5,731 | 4.6% | 5,489 | 4.7% | 4.4% | 5,137 |
| EBIT | 5,132 | 4.1% | (1,743) | (1.5%) | 394.4% | 5,137 |
| Net financial expenses | (2,112) | (1.7%) | (769) | (0.7%) | (174.6%) | (2,022) |
| Income taxes | (1,554) | (1.3%) | 744 | 0.6% | (308.9%) | (1,577) |
| Profit from continuing operations | 1,466 | 1.2% | (1,768) | (1.5%) | 182.9% | 1,538 |
| Adjusted Profit for the period | 1,921 | 1.5% | 3,511 | 3.0% | (45.3%) | 1,538 |
| Profit for the period | 1,466 | 1.2% | (1,768) | (1.5%) | 182.9% | 1,538 |
| Adjusted Profit attributable to the Group | 485 | 0.4% | 2,148 | 1.8% | (77.4%) | 30 |
| Profit attributable to the Group | 30 | 0.0% | (3,131) | (2.7%) | 101.0% | 30 |
| Basic earnings/(loss) per share on continuing operations and | ||||||
| discontinued operations (Euro/cents) | 0.05 | (5.05) | 100.9% | 0.16 | ||
| Diluted earnings/(loss) per share on continuing operations and | ||||||
| discontinued operations (Euro/cents) | 0.05 | (5.05) | 100.9% | 0.16 |
(*) see paragraph on the application of IFRS 16 Leases
The Net Financial Position at December 31, 2019, net of the IFRS 16 effect of Euro -11.8 million, was a debt of Euro 47.2 million, compared to Euro -56.3 million at December 31, 2018. The improvement mainly relates to the generation of operating cash (Euro 39.1 million in 2019, substantially in line with the previous year) and lower capex (Euro -21.2 million compared to Euro -27.8 million in 2018).
| In Euro thousands | Dec 31, 19 | Jan 1, 19 | Dec 31, 18 |
|---|---|---|---|
| Cash and cash equivalents | 35,613 | 35,612 | 35,612 |
| Bank loans and borrowings (current) | (27,317) | (37,792) | (37,792) |
| Bank loans and borrowings (non-current) | (55,451) | (54,102) | (54,102) |
| Net Financial Position | (47,155) | (56,282) | (56,282) |
| Lease payables IFRS 16 (current) | (3,525) | (2,961) | n/a |
| Lease payables IFRS 16 (non-current) | (8,233) | (8,829) | n/a |
| Net Financial Position - Including IFRS 16 impact | (58,913) | (68,073) | (56,282) |
| Assets for derivatives | 498 | 513 | 513 |
| Liabilities for derivatives (current) | (386) | (1.737) | (1.737) |
| Liabilities for derivatives (non-current) | (198) | (120) | (120) |
| Net Financial Position - Including IFRS 16 impact & Derivatives effect | (58,999) | (69,416) | (57,626) |
The Managerial Working Capital on annualised revenue was 3.7% in 2019, unchanged on 2018.
| In Euro thousands | Dec 31, 19 | Dec 31, 18 | Jan 1, 19 |
|---|---|---|---|
| Trade receivables | 55,022 | 51,192 | 51,192 |
| Inventories | 72,890 | 76,196 | 76,196 |
| Trade payables | (110,100) | (109,916) | (109,916) |
| Managerial Working Capital | 17,812 | 17,472 | 17,472 |
| % annualised revenue | 3.7% | 3.7% | 3.7% |
| Other net receivables/payables | (9,671) | (10,801) | (10,801) |
| Net Working Capital | 8,141 | 6,672 | 6,672 |
On March 7, 2019, the Board of Directors of Elica S.p.A. approved the 2018 consolidated results at December 31, 2018 and the statutory financial statements at December 31, 2018, prepared in accordance with IFRS, in addition to the Directors' Report.
On April 18, 2019, the Shareholders' Meeting of Elica S.p.A. met in ordinary session and approved the following matters on the agenda:
Having held the position of Chief Executive Officer since November 2016, Antonio Recinella and the company have mutually agreed that the conditions have arisen to begin a leadership transition process. The settlement agreement for Mr. Recinella's departure, in legal conclusion of the relationship, was approved on the same date by the Board of Directors of the company, with the
favourable opinion of the Appointments and Remuneration Committee and the Control, Risks and Sustainability Committee (acting as the Related Parties Committee). The agreement stipulates the recognition of a total indemnity of Euro 1.280 million gross, to be paid by the end of July 2019, on condition of the agreement's confirmation in a protected setting. The agreement in addition includes the maintenance of a number of benefits until December 31, 2019 at the latest; no subsequent benefits or rights are stipulated.
• On July 24, 2019, Elica S.p.A. announced an agreement for the sale of 1,275,498 treasury shares, equal to 2.014% of the share capital, to TIP - Tamburi Investment Partners S.p.A., an independent and diversified investment/merchant bank listed on the STAR segment of the Italian Stock Exchange, at an agreed price of Euro 2 per share for a total amount of Euro 2,550,996. The agreed price is in line with the motions passed by the Shareholders' Meeting of April 18, 2019 concerning the disposal of treasury shares.
This transaction took place concurrently with the purchase by TIP of the entire holding of Whirlpool EMEA S.p.A in Elica of 7,958,203 shares - equal to 12.568% of the share capital - against the same consideration of Euro 2 per share paid by TIP to Elica.
Elica and Whirlpool shall maintain their commercial partnership as previously, in accordance with the long-term agreement signed on December 18, 2018.
Following the above transactions, on July 26, 2019 TIP came to hold 14.582% of the share capital of Elica S.p.A..
18, 2019, the Board of Directors of Elica S.p.A. on July 30, 2019 launched the 2019-2025 Phantom Stock & Voluntary Co-investment Plan, identifying the Beneficiaries of the 2019-2021 plan cycle and the relative Performance objectives, as defined in the prospectus published on March 18, 2019 and available on the website http://corporation.elica.com, Investor Relations/Shareholders' Meeting section, to which reference should be made for greater details, in addition to the authorised storage mechanism.
***
The Executive Officer for Financial Reporting Mr. Giulio Cocci declares, pursuant to Article 154-bis, second paragraph of Legs. Decree No. 58/98, that this press release corresponds to the underlying accounting documents, records and accounting entries.
***
The Elica Group has been active in the kitchen hood and stoves market since the 1970's. Chaired by Francesco Casoli and led by Mauro Sacchetto, today it is the world leader in terms of units sold. It is also a European leader in the design, manufacture and sale of motors for central heating boilers. With approx. 3,700 employees, the Elica Group has seven plants, including in Italy, Poland, Mexico, India and China. With many years' experience in the sector, Elica has combined meticulous care in design, judicious choice of materials and cutting-edge technology guaranteeing maximum efficiency and reducing consumption, making Elica the prominent market figure it is today. The company has revolutionized the traditional image of the kitchen cooker hood: it is no longer seen as simple accessory but as a design object which improves quality of life.
***
For further information:
Giulio Cocci - Group Chief Financial Officer Francesca Cocco – Lerxi Consulting – Investor Relations Tel: +39 (0)732 610 4205 E-mail: [email protected]
Gabriele Patassi - Press Office Manager Mob: +39 340 1759399 E-mail: [email protected]
Image Building: Tel: +39 02 89011300 E-mail: [email protected]
EBITDA is the operating profit (EBIT) plus amortisation and depreciation and any impairment losses on goodwill and brands. EBIT is the operating profit as reported in the consolidated income statement.
Adjusted EBITDA is EBITDA net of the relative adjustment items. Adjusted EBIT is EBIT net of the relative adjustment items.
Net financial income/(expense) is the sum of the Share of profit/(loss) from associates, Financial Income, Financial Expense, Impairment of financial assets and Exchange rate gains and losses.
The adjusted profit is the result for the period, as published in the Consolidated Income Statement, net of the relative adjustment items.
The adjusted profit attributable to the Group is the result for the period attributable to the Group, as published in the Consolidated Income Statement, net of the relative adjustment items.
Adjustment items: earnings items are considered for adjustment where they: (i) derive from non-recurring events and operations or from operations or events which do not occur frequently; (ii) derive from events and operations not considered as in the normal course of business operations, as is the case for impairments, disputes considered atypical in terms of frequency and amount and restructuring charges.
The earnings per share for 2018 and 2019 was calculated by dividing the Profit attributable to the Group, as defined in the Consolidated Income Statement, by the number of outstanding shares at the respective reporting dates. The numbers of shares in circulation at the reporting date was 63,322,800, while at December 31, 2018 was 62,047,302.
The earnings (loss) per share in Q4 2018 and Q4 2019 was calculated as the difference between the profit (loss) per share and the profit (loss) per share for 9M of the same years.
Managerial Working Capital is the sum of Trade receivables with Inventories, net of Trade payables, as presented in the Consolidated Statement of Financial Position.
Net Working Capital is the amount of Managerial Working Capital and Other net receivables/payables. Other net receivables/payables comprise the current portion of Other receivables and Tax Receivables, net of the current portion of Provisions for risks and charges, Other payables and Tax payables, as presented in the Consolidated Statement of Financial Position.
Net Financial Position (NFP) is the sum of Cash and Cash equivalents and Other financial assets less Current bank loans and borrowings and amounts due under finance leases and to other lenders, as reported in the Statement of Financial Position and Non-current bank loans and borrowings and amounts due under finance leases and to other lenders, as reported in the Statement of Financial Position. Amounts due under finance leases were zero.
The Net Financial Position - Including IFRS 16 Impact is the sum of the Net Financial Position and current and non-current lease payables from application of IFRS 16, as per the Statement of Financial Position.
The Net Financial Position - Including IFRS 16 impact and Derivatives Effect is the sum of the Net Financial Position - Including IFRS 16 impact and the derivative instrument assets and liabilities, as per the Statement of Financial Position.
The column FY 19 GAAP 2018 presents the income statement indicators, as if the new standard IFRS 16 regarding the recognition of lease contracts had not been applied. A comparison is therefore provided with the previous year. The impacts from this application concern the accounts of Other operating expenses and provisions and amortisation and depreciation, in addition to financial expense. The column Jan 1, 19 presents the impact on initial application of IFRS 16 Leases, at the beginning of the period presented.
| operating lease commitments as per financial statements at 31/12/2018 | 13,049 |
|---|---|
| maturity within 12 months | (1,012) |
| impact of contracts for goods of a value of less than 5k\$ (with a residual duration of greater than 12 months) |
(19) |
| Other | (147) |
| impact from discounting | (520) |
| Impact on the right of use land in Poland | 440 |
| finance lease payable as per IFRS 16 at 1/1/2019 | 11,791 |
| Q4 2018 - | ||||
|---|---|---|---|---|
| Euro thousands | Q4 2019 - MTD | MTD | 2019 | 2018 |
| Operating profit – EBIT | 5,132 | (1,743) | 17,052 | 8,539 |
| (Amortisation & Depreciation) | 6,721 | 5,048 | 25,415 | 20,202 |
| EBITDA | 11,853 | 4,382 | 42,467 | 29,818 |
| (CEO replacement risk provision) | 1,280 | |||
| (Valuation trade receivable before sale, from Gutmann) | 6,155 | 10,155 | ||
| (Restructuring charges) | 599 | 1,292 | ||
| Adjusted EBITDA | 12,452 | 10,537 | 45,038 | 39,973 |
| Euro thousands | Q4 2019 - MTD |
Q4 2018 - MTD |
2019 | 2018 |
|---|---|---|---|---|
| Operating profit – EBIT | 5,132 | (1,743) | 17,052 | 8,539 |
| (Impairment of Brands) | 0 | 1,077 | 0 | 1,077 |
| (CEO replacement risk provision) | 0 | 0 | 1,280 | 0 |
| (Valuation trade receivable before sale, from Gutmann) | 0 | 6,155 | 0 | 10,155 |
| (Restructuring charges) | 599 | 0 | 1,292 | 0 |
| Adjusted EBIT | 5,731 | 5,489 | 19,623 | 19,771 |
| Q4 2018 - | ||||
|---|---|---|---|---|
| Euro thousands | Q4 2019 - MTD | MTD | 2019 | 2018 |
| Profit for the period | 1,466 | (1,768) | 7,379 | 2,314 |
| (Impairment of Brands) | - | 1,077 | - | 1,077 |
| (CEO replacement risk provision) | - | - | 1,280 | - |
| (Valuation trade receivable before sale, from Gutmann) | - | 6,155 | - | 10,155 |
| (Restructuring charges) | 599 | - | 1,292 | - |
| (Impact valuation trade receivables - from Gutmann) | (139) | - | (139) | |
| (Income taxes & adjusted items) | (144) | (1,814) | (617) | (2,814) |
| Adjusted Profit for the year | 1,921 | 3,511 | 9,333 | 10,593 |
| (Profit attributable to non-controlling interests) | (1,436) | (1,363) | (4,403) | (3,275) |
| (Non-controlling interest profit adjustments) | - | - | - | - |
| Adjusted Profit attributable to the Group | 485 | 2,148 | 4,930 | 7,318 |
| 2019 | 2018 | |
|---|---|---|
| Profit/(loss) attributable to the Group (in Euro thousands) | 2,976 | (961) |
| Shares in circulation at period-end | 63,322,800 | 62,047,302 |
| Earnings (loss) per share (Euro/cents) | 4.70 | (1.55) |
| Q4 2019 - MTD | Q4 2018 - MTD |
|
|---|---|---|
| FY Earnings (loss) per share (Euro/cents) | 4.70 | (1.55) |
| 9M Earnings (loss) per share (Euro/cents) | (4.65) | (3.50) |
| Earnings (loss) per share (Euro/cents) | 0.05 | (5.05) |
| Euro thousands | 2019 | 2018 |
|---|---|---|
| Other receivables | 5,374 | 6,589 |
| Tax assets | 14,966 | 17,275 |
| (Provision for risks and charges) | (6,487) | (9,318) |
| (Other payables) | (15,749) | (14,503) |
| (Tax liabilities) | (7,775) | (10,844) |
| Other net receivables / payables | (9,671) | (10,801) |
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