Earnings Release • Jul 23, 2013
Earnings Release
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Regulated information – 1H 2013 results Under embargo until Tuesday 23 July 2013 at 7:30 a.m. CET
Press release www.deceuninck.com
| (in millions of euro) | 1H 2012 | 1H 2013 | Var (%) |
|---|---|---|---|
| Sales | 274.3 | 263.1 | -4.1% |
| Gross profit | 81.4 | 78.1 | -4.1% |
| Gross-margin (%) | 29.7% | 29.7% | |
| EBITDA | 24.4 | 19.0 | -22.2% |
| EBITDA-margin (%) | 8.9% | 7.2% | |
| EBIT | 11.2 | 6.7 | -40.8% |
| EBIT-margin (%) | 4.1% | 2.5% | |
| Financial result | -7.5 | -4.0 | |
| EBT | 3.7 | 2.7 | |
| Income taxes | -2.5 | -2.4 | |
| Net profit | 1.2 | 0.3 | |
| Net profit-margin (%) | 0.5% | 0.1% |
"After the harsh winter in Q1 2013, Deceuninck's sales performance has been under pressure, due to challenging market conditions in Europe, and despite market share gains in most countries.
Sales growth in Turkey temporarily weakened in June as a result of political situation in the major cities.
US sales grew steady on the back of a sustainable housing recovery and continued improving consumer confidence.
We were able to keep our gross margin stable year-on-year, but EBITDA margin was negatively impacted by our lower sales volume and increased bad debt, which ultimately impacted our net profit.
In this challenging economic environment we continue our capital expenditures plan for strategic growth projects. During the first half 2013 we spent € 10.4 million in the 3 axis of our long term strategy "Building a sustainable home": Innovation – Ecology – Design. In Western Europe, the roll out of our new OmniRAL colour offering and the glassfibre reinforced window system is progressing. At Deceuninck Recycling volumes are gradually increasing as planned. Solid management of working capital helped us reduce net debt further from € 117.6 million at 30 June 2012 to € 84.7 million at 30 June 2013."
The government austerity programmes and near zero growth throughout Europe continue to weigh on consumer confidence. The European consumer tends to save, rather than invest in energy efficient home improvements. Whereas the recovery in the US now seems sustainable, the domestic growth in Turkey and the Turkish lira, may suffer if the political situation were to continue for multiple months.
Historically, a soft economy drives lower ethylene feedstock costs, which results in relief from PVC prices. A concern today is the pressure to increase PVC margins upstream within a trend of consolidation of European PVC producers.
This uncertain picture, combined with a short order book, typical to the industry, does not allow Deceuninck to give a quantified guidance for full year 2013. Within this environment, Deceuninck commits to protect margins and maintain profitability through innovation, productivity improvement and rigorous cost control."
| (in millions of euro) | Var. 1Q | Var. 2Q | 1H | 1H | Var. 1H | Var. 1H |
|---|---|---|---|---|---|---|
| 2012/2013 | 2012/2013 | 2012 | 2013 | 2012/2013 | Loc. Curr. | |
| Western Europe | -15.0% | -8.9% | 106.9 | 94.2 | -11.8% | |
| Central and Eastern Europe | -9.2% | -5.3% | 76.4 | 71.2 | -6.8% | |
| Turkey and Emerging Markets | 14.2% | 4.8% | 57.6 | 62.6 | 8.6% | 7.2% |
| United States | 1.9% | 6.9% | 33.4 | 35.0 | 4.8% | 6.0% |
| Total | -5.8% | -2.8% | 274.3 | 263.1 | -4.1% |
Deceuninck's 1H 2013 consolidated sales were € 263.1 million, a year-on-year decrease by 4.1% (1H 2012: € 274.3 million).
Sales volume: -1.6%; exchange rates: -0.8%; mix effects: -1.8%.
Half year 2013 sales in Western Europe decreased to € 94.2 million, a year-on-year decrease by 11.8%. The year-on-year decrease was lower during the second quarter (-8.9%) as compared to the first quarter (-15%). In the first quarter harsh and exceptionally long winter conditions impacted sales on top of underlying weak demand.
Sales were weak in all countries of the region with the exception of Italy and the UK. A clear improvement in demand for energy efficient windows was noted the UK as a result of new Customers and further competitive wins.
In general residential renovation and newbuild activity in the region continues to be impacted by weak consumer confidence as a result of the ongoing economic crisis and government austerity programmes.
Half year 2013 sales in Central and Eastern Europe decreased year-on-year 6.8% to € 71.2 million. Sales were weak in most countries of the region, including Russia, with the exception of Germany, Romania and the Baltic. The year-on-year decrease was lower during the second quarter (-5.3%) as compared to the first quarter (-9.2%). Exceptionally long winter conditions in the first quarter and adverse weather conditions in the second quarter impacted sales on top of underlying sluggish demand in the entire region.
On top of weak demand sales were negatively impacted by currencies such as Russian ruble (RUB).
Half year 2013 sales increased 8.6% to € 62.6 million (at constant exchange rates: +7.2%) Sales growth on the domestic Turkish market temporarily weakened as a result of the political situation in the major cities as of June.
Sales growth in the Emerging Markets continued as a result of the gradual build-up of business in India and South America from local branches.
Half year 2013 sales increased 4.8% to € 35.0 million. At constant exchange rates sales increased 6.0%.
Sales grew steadily on the back of a sustainable housing recovery and continued improving consumer confidence. At the same time, remodeling activity has remained consistent. Sales growth at Deceuninck North America was supported by product innovations, new Customers and external raw material sales.
Gross margin was stable at 29.7% in spite of a more challenging economic environment. Cost of living and rising energy cost were offset by continued focus on productivity. Raw material costs remained stable at a high level, in spite of decreased feedstock costs.
The operating cash flow (EBITDA) decreased to € 19.0 million or 7.2% of sales (1H 2012: € 24.4 million). Stable gross margin was offset by higher operating expenses (OPEX) mainly due to higher bad debt (€ 2.7 million).
The operating result (EBIT) was € 6.7 million (1H 2012: € 11.2 million). Minor decrease of non cash costs compared to 1H 2012.
Financial result improved to € - 4.0 million from € -7.5 million. Interest expenses decreased with € 2.3 million mainly as a result of the new 5-year refinancing agreement concluded in August 2012, as well as lower working capital requirements.
Income tax expense was € 2.4 million due to an unfavourable legal entity mix.
The net profit 1H 2013 amounted to € 0.3 million or 0.1% on sales versus 0.5% on sales in 1H 2012.
Working capital decreased from € 116.4 million on 31 December 2012 to € 112.2 million on 30 June 2013. (30 June 2012: € 139.0 million)
Inventories were stable as compared to 30 June 2012.
Trade receivable decreased by € 6.5 million to € 107.7 million compared to 30 June 2012. Days outstanding (DSO) improved year-on-year thanks to continued strict credit monitoring policy in spite of unfavourable legal entity mix.
Trade payables increased as a result of increased buying leverage.
The operating working capital on 30 June 2013 was 16.5% of the Last Twelve Month (LTM) sales as compared to 21.0% on 30 June 2012.
Capital expenditures in 1H 2013 were € 10.4 million.
€ 6.6 million relates to operational capex, € 3.8 million was spent on new tools.
Operational capex spending related to "Building a sustainable home" including capex for finishing the new fully automated Omniral coating line as well as for finishing a compound tower, which moved from Diksmuide in Belgium to Protvino in Russia.
The net financial debt at 30 June 2013 amounted to € 84.7 million compared to € 117.6 million on 30 June 2012. Net debt continued to decrease due to gross operating profit and strict monitoring of working capital.
Shareholders' equity decreased with € 5.2 million to € 206.2 million compared to € 211,4 million at 31 December 2012. The gearing was 41.0% at 30 June 2013 against 43.8% at 31 December 2012.
On 30 June 2013 Deceuninck employed worldwide 2,815 full time equivalents (FTEs) (including temporary and external staff) (30 June 2012: 2,805).
24 October 2013 Q3 2013 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 employs about 2800 people in 25 countries, of which 600 in Belgium. Deceuninck sales in 2012 were € 556.9 million with a net positive result of € 4.2 million.
Contact Deceuninck: Ludo Debever • T +32 51 239 248 • M +32 473 552 335 • [email protected]
| For the six month period ended 30 June | 2012 | 2013 |
|---|---|---|
| (in thousands of euro) | Unaudited | Unaudited |
| Sales | 274,347 | 263,052 |
| Cost of goods sold | -192,982 | -184,990 |
| Gross profit | 81,365 | 78,062 |
| Marketing, sales and distribution expenses | -47,362 | -48,633 |
| Research and development expenses | -2,894 | -2,844 |
| Administrative and general expenses | -19,341 | -19,817 |
| Other net operating result | -521 | -107 |
| Operating profit (EBIT) | 11,247 | 6,661 |
| Financial charges | -19,961 | -8,932 |
| Financial income | 12,426 | 4,941 |
| Profit before taxes (EBT) | 3,712 | 2,670 |
| Income taxes | -2,473 | -2,392 |
| Net profit | 1,239 | 278 |
| The net profit is attributable to: | ||
|---|---|---|
| Shareholders of the parent company | 1,159 | 212 |
| Non-controlling interests | 80 | 66 |
| Earnings per share distributable to the shareholders of the parent company (in euro): |
||
|---|---|---|
| Normal earnings per share | 0.01 | 0.00 |
| Diluted earnings per share | 0.01 | 0.00 |
| (in thousands of euro) | 31 December 2012 | 30 June 2013 | |
|---|---|---|---|
| Restated (*) | Unaudited | ||
| Assets | |||
| Intangible fixed assets | 3,030 | 2,918 | |
| Goodwill | 10,817 | 10,798 | |
| Tangible fixed assets | 194,421 | 188,467 | |
| Financial fixed assets | 1,582 | 1,590 | |
| Deferred tax assets | 15,256 | 14,990 | |
| Long-term receivables | 1,048 | 1,251 | |
| Non-current assets | 226,154 | 220,014 | |
| Inventories | 71,572 | 83,804 | |
| Trade receivables | 100,694 | 107,748 | |
| Other receivables | 6,622 | 6,729 | |
| Cash and cash equivalents | 23,211 | 24,321 | |
| Fixed assets held for sale | 8,395 | 8,277 | |
| Current assets | 210,494 | 230,879 | |
| Total assets | 436,648 | 450,893 | |
| Equity and liabilities | |||
| Issued capital | 42,495 | 42,495 | |
| Share premiums | 46,355 | 46,355 | |
| Consolidated reserves | 149,052 | 149,382 | |
| Cash flow hedge reserve | -99 | 123 | |
| Treasury shares | -261 | -261 | |
| Currency translation adjustments | -27,746 | -33,336 | |
| Equity excluding non-controlling interest | 209,796 | 204,758 | |
| Non-controlling interest | 1,632 | 1,537 | |
| Equity including non-controlling interest | 211,428 | 206,295 | |
| Interest-bearing loans | 37,326 | 42,829 | |
| Long-term provisions | 25,708 | 25,308 | |
| Deferred tax liabilities | 2,616 | 1,960 | |
| Non-current liabilities | 65,650 | 70,097 | |
| Interest-bearing loans | 78,486 | 66,171 | |
| Trade debts | 55,900 | 79,347 | |
| Tax liabilities | 4,630 | 6,275 | |
| Employee related liabilities | 11,582 | 12,837 | |
| Short-term provisions | 3,266 | 2,630 | |
| Other liabilities | 5,706 | 7,241 | |
| Current liabilities | 159,570 | 174,501 | |
| Total equity and liabilities | 436,648 | 450,893 |
(*): Certain amounts shown do not correspond to the consolidated financial statements as per 31 December 2012 and reflect adjustments made for the adoption of IAS 19-Revised as detailed in Note 1 of the interim condensed consolidated financial statements as per 30 June 2013.
| 2012 | 2013 | |
|---|---|---|
| For the six month period ended in 30 June (in thousands of euro) | Unaudited | Unaudited |
| Operating activities | ||
| Net profit | 1,239 | 278 |
| Depreciations on (in)tangible fixed assets | 11,995 | 11,385 |
| Impairments on (in)tangible fixed assets | 310 | 321 |
| Provisions for pensions and other risks & charges | -152 | -566 |
| Impairments on current assets | 993 | 1,181 |
| Net financial charges | 7,535 | 3,991 |
| Profit on sale of tangible fixed assets | -41 | -37 |
| Loss on sale of tangible fixed assets | 61 | 23 |
| Income taxes | 2,473 | 2,392 |
| Share-based payment transactions settled in equity | 150 | 150 |
| Cash flow from operating activities before movements in working | ||
| capital and provisions | 24,563 | 19,118 |
| Decrease / (increase) in trade and other receivables | -12,064 | -10,773 |
| Decrease / (increase) in inventories | -3,195 | -14,524 |
| Increase / (decrease) in trade debts | -524 | 25,030 |
| Decrease / (increase) in other non-current assets | -125 | -77 |
| Decrease / (increase) in other current assets | -166 | 137 |
| Increase / (decrease) in other non-current liabilities | -3,185 | -322 |
| Increase / (decrease) in other current liabilities | 2,152 | 3,483 |
| Cash flow generated from operating activities | 7,456 | 22,072 |
| Interest received | 533 | 569 |
| Income taxes paid | -339 | -1,252 |
| Cash flow from operating activities | 7,650 | 21,389 |
| Investing activities | ||
| Cash receipts on sale of tangible fixed assets | 149 | 275 |
| Purchases of tangible fixed assets | -13,708 | -10,448 |
| Purchases of intangible fixed assets | -21 | -2 |
| Other transactions | 0 | -7 |
| Cash flow from investing activities | -13,580 | -10,182 |
| Financing activities | ||
| New (+) / repayments (-) of long-term debts | -5,570 | 1,717 |
| New (+) / repayments (-) of short-term debts | 15,548 | -7,032 |
| Interests paid | -4,181 | -3,549 |
| Dividends paid | 0 | -61 |
| Other financial items | -2,128 | -276 |
| Cash flow from financing activities | 3,669 | -9,201 |
| Net increase (+) / decrease (-) in cash and cash equivalents | -2,261 | 2,006 |
| Cash and cash equivalents as per beginning of period | 24,443 | 23,211 |
| Impact of exchange rate fluctations | 853 | -896 |
| Cash and cash equivalents as per end of period | 23,035 | 24,321 |
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