Earnings Release • Feb 25, 2016
Earnings Release
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Regulated information – 2015 results Under embargo until Thursday 25 February 2016 at 7:15 a.m. CET
Growth driven by successful integration of Pimapen, new customers and improved operating efficiencies.
Growth is supported by a more positive economic environment in US, UK and Southern Europe but has been partially offset by market contraction in Russia.
"2015 was a good year for Deceuninck. We realized strong organic volume growth in Western Europe, North America and Turkey and Emerging Markets, and successfully integrated the Pimaş acquisition in Turkey. On top of volume growth EBITDA margin also benefited from further manufacturing efficiencies and strict cost control.
The successful issue of the retail bond in December provided us with extra € 40 million liquidity which will be used to finance further growth, among which the new facilities in Turkey and on the US West Coast.
I would like to thank all our customers for their trust and all our people worldwide for their passionate dedication.
Press release www.deceuninck.com
In 2016 we expect further growth on the back of innovative product launches and superior service to our customers. This will be enabled by the additional capacity in Turkey and in the US, and supported by further investments in manufacturing efficiency. We, however, closely monitor the increased macro-economic uncertainty in our end markets.
EBITDA evolution will be influenced by currencies and raw material prices, as well as by the start-up costs of our planned efficiency and growth initiatives"
Tom Debusschere steps down as CEO on 1 March for a new challenge. Until 10 May he remains non-executive member of the Board
'The Board regrets but respects Tom's decision. We are very grateful to Tom for his commitment to the company over the past few years. In February 2009 he started as a CEO when the company was going through a difficult period. In a short period of time he succeeded in turning Deceuninck into a financially healthy company and in regaining the confidence of the shareholder. He leaves us with a healthy company that is well positioned for the future.
In anticipation of a successor to Tom Debusschere, Vice Chairman of the Board, Francis Van Eeckhout, will act as interim CEO.
I would like to thank Tom for his performance as a CEO since February 2009. He was instrumental in creating the growth strategy which is now being implemented, This includes the construction of the new factories in Turkey and the US. This strategy will be continued. Tom has built a strong management team in which we maintain every confidence. We hope to name a successor to Tom very soon."
| (in € million) | 2014 | 2015 | Var (%) | 1H 2015 | 2H 2015 |
|---|---|---|---|---|---|
| Sales | 552.8 | 644.5 | 16.6% | 312.1 | 332.4 |
| Gross profit | 150.8 | 182.0 | 20.7% | 90.7 | 91.3 |
| Gross-margin (%) | 27.3% | 28.2% | 29.1% | 27.5% | |
| EBITDA | 35.3 | 54.4 | 53.9% | 27.2 | 27.2 |
| EBITDA-margin (%) | 6.4% | 8.4% | 8.7% | 8.2% | |
| REBITDA | 36.6 | 56.5 | 54.5% | 28.7 | 27.8 |
| REBITDA-margin (%) | 6.6% | 8.8% | 9.2% | 8.4% | |
| EBIT | 14.3 | 26.9 | 87.7% | 12.0 | 14.8 |
| EBIT-margin (%) | 2.6% | 4.2% | 3.9% | 4.5% | |
| Financial result | -7.5 | -10.0 | -4.6 | -5.4 | |
| EBT | 6.9 | 16.9 | 146.0% | 7.5 | 9.4 |
| Income taxes | 3.6 | -3.5 | -2.7 | -0.8 | |
| Net profit | 10.5 | 13.3 | 27.6% | 4.7 | 8.6 |
| Net profit-margin (%) | 1.9% | 2.1% | 1.5% | 2.6% |
| (in € million) | 2014 | 2015 | Var (%) |
|---|---|---|---|
| Equity | 264.5 | 269.3 | 1.8% |
| Net debt | 71.0 | 92.1 | 29.7% |
| Total assets | 503.7 | 562.7 | 11.7% |
| Capital expenditure | 31.3 | 38.7 | 23.7% |
| Working capital | 124.6 | 142.9 | 14.7% |
Consolidated 2015 sales increased 16.6% to € 644.5 million (2014: € 552.8 million).
At comparable scope sales increased 7.3% to € 593.2 million.
Scope change as a result of the acquisition of Pimaş in Turkey and Russia resulted in a favourable impact of sales of € 51.3 million (+9.3%).
Overall sales growth is primarily explained by the Pimaş acquisition in 4Q 2014, which – as Pimaş revenues were already reported in 4Q 2014 to a large extent - also explains why the growth rate between Q4 2014 and Q4 2015 is lower than during the first 3 quarters.
Organic volume growth remained strong throughout the year especially during 4Q supported by mild weather conditions and improved builder confidence in Western Europe and US and driven by strong brands in Turkey.
| % of sales | 1Q 2015 | 2Q 2015 | 3Q 2015 | 4Q 2015 | FY 2015 |
|---|---|---|---|---|---|
| Sales (in € million) 2014 | 115.4 | 148.8 | 141.3 | 147.2 | 552.8 |
| Exchange rate | 4.6% | 3.9% | -0.3% | -0.1% | 1.9% |
| Volume | 3.1% | 4.6% | 4.6% | 5.6% | 4.4% |
| Mix (country, price, product) | 0.9% | -2.3% | 2.1% | 2.6% | 1.0% |
| Change of scope | 9.4% | 12.0% | 11.8% | 4.1% | 9.3% |
| Total | 18.0% | 18.2% | 18.2% | 12.3% | 16.6% |
| Sales (in € million) 2015 | 136.2 | 175.9 | 167.1 | 165.3 | 644.5 |
| (in %) | Western Europe |
Central & Eastern Europe |
Turkey & Emerging Markets |
North America | Total | |
|---|---|---|---|---|---|---|
| Sales (in € million) 2014 | 157.5 | 174.4 | 137.7 | 83.2 | 552.8 | |
| 1Q 2015 | -0.7% | -3.5% | 63.1% | 45.3% | 18.0% | |
| 2Q 2015 | 8.6% | -6.2% | 49.7% | 39.2% | 18.2% | |
| 3Q 2015 | 10.7% | -1.3% | 50.1% | 29.1% | 18.2% | |
| 4Q 2015 | 15.1% | 0.5% | 14.1% | 25.7% | 12.3% | |
| FY 2015 | 8.2% | -2.7% | 40.2% | 33.7% | 16.6% | |
| Sales (in € million) 2015 | 170.5 | 169.7 | 193.1 | 111.2 | 644.5 | |
| Var. FY in Loc. Curr. | 2.8% | 46.6% | 11.6% |
1Regional quarterly sales segmentation has been aligned with IFRS financial report segmentation to ensure consistency. As a result the quarterly sales slightly differ per region, but remain unchanged at consolidated level. Changes mainly affect Western Europe and Central & Eastern Europe.
Full year 2015 sales in Western Europe increased 8.2% to € 170.5 million. The Group benefited from an economic recovery in Spain and Italy, and continued growth in the UK and Benelux. Volumes in France picked up during the 4th quarter supported by mild weather conditions and government incentives.
Western Europe represents 26 % of consolidated 2015 sales (2014: 28%).
Full year 2015 sales expressed in euro decreased by -2.7% to € 169.7 million (2014: € 174.4 million). At constant exchange rates sales grew 2.8%. We recorded growth in Central Europe but this was partially offset by the contraction of the Russian market and by the devaluation of the Russian ruble.
Central & Eastern Europe represents 26% of consolidated 2015 sales (2014: 32%).
This region includes primarily domestic sales in Turkey as well as sales in Chile, India, Brazil and Australia. 2015 sales expressed in euro increased by 40.2% to € 193.1 million (at constant exchange rates: +46.6%). The increase is primarily driven by the successful integration of Pimaş, and by organic growth realized across all 3 premium brands (Egepen Deceuninck, Winsa and Pimapen). This growth was mainly driven by superior product quality and service, and the strong commercial network (>3000 points of sale owned by the customer). Business development in Emerging Markets was slower than anticipated which is mainly explained by the challenging market conditions in Brazil and India. Business development in Chile is on track and the Group started foiling of window profiles in Santiago de Chile in order to meet increasing demand for coloured windows in the region.
Turkey and Emerging Markets represents 30% of 2015 consolidated Group sales compared to 25% in 2014.
Full year 2015 sales of Deceuninck North America (DNA) increased by 33.7%% to € 111.2 million (at constant exchange rates, sales increased 11.6 %), primarily driven by new customer development on the back of DNA's superior service levels. In addition the Group benefited from a positive climate for both renovation and new housing. Over 1.1 million new (single and multi family combined) homes were started (2014: 1.0 million) and the most relevant housing market indicators suggest continued market confidence.
North America represents 17 % of 2015 consolidated sales compared to 15% in 2014.
In December DNA broke ground on its new Western U.S. production facility that is located in Fernley, NV, near Reno, The construction of a new 50,000m² building, designed for up to 24 extrusion lines, will allow DNA to efficiently service to new customers on the US West Coast.
Gross-margin improved to 28.2% (2014: 27.3%), which is mainly explained by further manufacturing efficiencies. There was a limited favourable impact lower raw material cost but this was largely offset by unfavourable currencies.
EBITDA increased to € 54.4 million or 8.4% of sales (2014: € 35.3 million or 6.4% of sales) as a result of higher volumes, improved gross margin and strict control over operating expenses. Operating expenses grow 9.6% to € 152.9 million, mainly driven by the Pimaş acquisition and further organic growth, and include start-up costs of our ongoing efficiency and growth initiatives. EBITDA also includes a € 2.4 million gain on the sale of the Izmir site.
REBITDA was € 56.5 million or 8.8% of sales (2014: € 36.6 million). Restructuring costs mainly amounted to € 2.2 million.
Operating result (EBIT) was € 26.9 million (2014: € 14.3 million) resulting in an EBIT-margin of 4.2% compared to 2.6% in 2014.
Non cash costs amount to € 27.5 million against € 21.0 million in 2014. Non cash costs are € 6.5 million higher mainly as a result of € 5.3 million higher depreciations. explained by the Pimaş acquisition and higher capital investments, and one-off non cash income recorded in 2014.
Financial result was € -10.0 million (2014: € -7.5 million). The increase is primarily explained by the IFRS accounting treatment of euro denominated loans in Turkey. This results in a € 1.7 million non cash cost in financial result, which is offset by the same amount recorded in equity, and the one off write-down of capitalised expenses related to the 2015 refinancing. In December 2015 Deceuninck successfully issued a € 100 million retail bond, which provided € 40 million additional liquidity. This will be used to finance further efficiency and growth investments, among which the new facilities in Turkey and on the US West Coast. Income taxes
Income tax expense amounted to € 3.5 million against a € 3.6 million favourable income tax in 2014, which is mainly explained by the increased profitability of the Group. The favourable income tax in 2014 related mainly to the recognition of deferred tax assets at Deceuninck North America.
The net profit in 2015 was € 13.3 million against € 10.5 million in 2014.
Trade working capital increased from € 124.6 million (22.5% on 2014 sales) on 31 December 2014 to € 142.9 million (22.2% on 2015 sales) on 31 December 2015.
Trade receivables increased by € 5.7 million compared to 31 December 2014 as a result of higher sales in the 4th quarter. Days outstanding (DSO) decreased year-on-year as a result of strict receivables management. Total factoring remained more or less stable and amounted to € 16.2 million at 31 December 2015 (31 December 2014: € 16.0 million). Inventories increased by € 2.0 million while trade payables decreased year-on-year by € 10.6 million.
Capital expenditures (capex) in 2015 were € 38.7 million against € 31.3 million in 2014, including part of the cost of the new extrusion factory in Menemen as well as investments related to the integration of Pimaş.
Maintenance capex including new extrusion tools amounts to € 19.2 million.
The net financial debt at 31 December 2015 amounted to € 92.1 million against € 71.0 million at 31 December 2014. This increase is mainly due to the decision to increase working capital and to further invest in manufacturing efficiency and growth.
Equity increased by € 4.8 million to € 269.3 million from € 264.5 million at 31 December 2014, as net profit of € 13.3 million was largely offset by unfavourable currency translation adjustments in equity (7.2 million) and the € 2.7 million dividend payment.
The gearing was 34.2% at 31 December 2015 against 26.8 % at 31 December 2014.
The Board of Directors will recommend at the Annual General Meeting on 10 May 2016 to increase the gross dividend payment to € 0.025 per share for the financial year 2015.
On 31 December 2015 Deceuninck employed worldwide 3,593 full time equivalents (FTEs) (including temporary workers and external staff) (31 December 2014: 3,434).
| 10 | May | 2016 | 1Q 2016 trading update |
|---|---|---|---|
| 10 | May | 2016 | Annual Shareholders Meeting at 11 am |
| 20 | July | 2016 | 1H 2016 results |
| 21 | October | 2016 | 3Q 2016 trading update |
End of press release
At Deceuninck, our commitment towards innovation, ecology and design provides us with a clear focus: building a sustainable home. A home that is more energy-efficient to live in and more attractive to look at. Deceuninck works worldwide with state-of-the-art materials, resulting in low maintenance, top insulating and long lasting products that can be fully recycled at end of life. Moreover, our values of Candor, Top performance and Entrepreneurship help us build a better world for our Partners and end users. Deceuninck has strong ambitions. We want to build a work environment in which people are proud to contribute, and strengthen our position within the top three market players. Alongside our ecological sustainability, Deceuninck also pursues financial sustainability.
Deceuninck serves >4000 customers in 91 countries from 14 factories and 22 warehouses located in 19 countries in North & South America, Europe (incl. Russia & Turkey) and Asia. Deceuninck employs 3600 people across all continents.
The head office of the Group is located in Belgium.
The Deceuninck Group achieved sales of € 644.5 million in 2015 with a net result of € 13.3 million.
Contact Deceuninck: Ludo Debever • T +32 51 239 248 • M +32 473 552 335 • [email protected]
| For the 12 month period ended 31 December (in € thousand) |
2014 | 2015 |
|---|---|---|
| Sales | 552,814 | 644,524 |
| Cost of goods sold | -402,020 | -462,522 |
| Gross profit | 150,794 | 182,002 |
| Marketing, sales and distribution expenses | -95,233 | -104,465 |
| Research and development expenses | -6,707 | -7,643 |
| Administrative and general expenses | -37,592 | -40,818 |
| Other net operating result | 1,182 | -2,127 |
| Operating profit before gain from bargain purchase | 12,445 | 26,949 |
| Gain from bargain purchase | 1,862 | -96 |
| Operating profit (EBIT) | 14,307 | 26,853 |
| Financial charges | -17,207 | -17,473 |
| Financial income | 9,755 | 7,483 |
| Profit before taxes (EBT) | 6,856 | 16,864 |
| Income taxes | 3,603 | -3,522 |
| Net profit | 10,458 | 13,341 |
| The net profit is attributable to: | ||
|---|---|---|
| Shareholders of the parent company | 10,586 | 13,582 |
| Non-controlling interests | -128 | -241 |
| Earnings per share distributable to the shareholders of the parent company (in €): |
||
|---|---|---|
| Normal earnings per share | 0.08 | 0.10 |
| Diluted earnings per share | 0.08 | 0.10 |
| (in € thousand) | 31 December 2014 | 31 December 2015 |
|---|---|---|
| Assets | ||
| Intangible fixed assets | 5,922 | 5,392 |
| Goodwill | 10,871 | 10,741 |
| Tangible fixed assets | 215,649 | 218,802 |
| Financial fixed assets | 66 | 65 |
| Deferred tax assets | 21,080 | 19,013 |
| Long-term receivables | 1,068 | 1,105 |
| Non-current assets | 254,657 | 255,118 |
| Inventories | 93,417 | 95,454 |
| Trade receivables | 115,826 | 121,484 |
| Other receivables | 8,677 | 16,424 |
| Cash and cash equivalents | 29,046 | 70,720 |
| Fixed assets held for sale | 2,060 | 3,473 |
| Current assets | 249,026 | 307,553 |
| Total assets | 503,684 | 562,671 |
| Equity and liabilities | ||
| Issued capital | 52,912 | 53,257 |
| Share premiums | 85,927 | 86,777 |
| Consolidated reserves | 169,423 | 180,968 |
| Cash flow hedge reserve | -91 | -72 |
| Actuarial gains / losses | -3,864 | -2,425 |
| Treasury shares | -261 | -261 |
| Currency translation adjustments | -44,316 | -52,992 |
| Equity excluding non-controlling interest | 259,731 | 265,253 |
| Non-controlling interest | 4,758 | 3,999 |
| Equity including non-controlling interest | 264,489 | 269,252 |
| Interest-bearing loans | 14,635 | 143,486 |
| Long-term provisions | 24,962 | 25,119 |
| Deferred tax liabilities | 5,771 | 4,581 |
| Non-current liabilities | 45,368 | 173,186 |
| Interest-bearing loans | 85,396 | 19,324 |
| Trade payables | 84,670 | 74,070 |
| Tax liabilities | 6,224 | 6,933 |
| Employee related liabilities | 9,702 | 12,434 |
| Short-term provisions | 777 | 1,127 |
| Other liabilities | 7,058 | 6,345 |
| Current liabilities | 193,826 | 120,233 |
| Press release Total equity and liabilities |
503,684 | 562,671 |
Regulated information – 2015 results www.deceuninck.com
| For the 12 month period ended in 31 December (in € thousand) | 2014 | 2015 |
|---|---|---|
| Operating activities | ||
| Net profit | 10,458 | 13,341 |
| Depreciations of (in)tangible fixed assets | 22,147 | 25,260 |
| Impairments on (in)tangible fixed assets | 919 | 1,276 |
| Gain from bargain purchase | -1,862 | |
| Provisions for pensions and other risks & charges | -2,991 | 1,930 |
| Impairments on current assets | 2,810 | -932 |
| Net financial charges | 7,451 | 9,989 |
| Profit on sale of tangible fixed assets | -120 | -1,533 |
| Loss on sale of tangible fixed assets | 84 | 100 |
| Income taxes | -3,603 | 3,522 |
| Share-based payment transactions settled in equity | 528 | 642 |
| Cash flow from operating activities before movements in working | ||
| capital and provisions | 35,822 | 53,596 |
| Decrease / (increase) in trade and other receivables | -12,780 | -17,971 |
| Decrease / (increase) in inventories | -6,736 | -2,277 |
| Increase / (decrease) in trade payables | 12,308 | -7,552 |
| Decrease / (increase) in other non-current assets | 238 | 12 |
| Decrease / (increase) in other current assets | 362 | -5,894 |
| Increase / (decrease) in other non-current liabilities | 0 | -364 |
| Increase / (decrease) in other current liabilities | -108 | 4,572 |
| Cash flow generated from operating activities | 29,106 | 24,123 |
| Interest received | 1,058 | 1,735 |
| Income taxes paid (-) / received (+) | -1,239 | -3,545 |
| Cash flow from operating activities | 28,925 | 22,313 |
| Investing activities | ||
| Cash receipts on sale of tangible fixed assets | 763 | 5,297 |
| Purchases of tangible fixed assets | -31,018 | -37,839 |
| Purchases of intangible fixed assets | -315 | -906 |
| Acquisition of subsidiaries, net of cash | -15,256 | |
| Other transactions | 301 | 0 |
| Cash flow from investing activities | -45,524 | -33,448 |
| Financing activities | ||
| Capital increase | 49,939 | 1,195 |
| New (+) / repayments (-) of long-term debts | -7,019 | 108,791 |
| New (+) / repayments (-) of short-term debts | -9,709 | -40,583 |
| Interests paid | -5,120 | -7,664 |
| Dividends paid | -2,151 | -2,679 |
| Other financial items | -1,102 | -4,375 |
| Cash flow from financing activities | 24,839 | 54,685 |
| Net increase (+) / decrease (-) in cash and cash equivalents | 8,240 | 43,551 |
| Cash and cash equivalents as per beginning of period | 21,715 | 29,046 |
| Impact of exchange rate fluctuations | -908 | -1,877 |
| Press release Cash and cash equivalents as per end of period |
29,046 | 70,720 |
| Regulated information – 2015 results | www.deceuninck.com |
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