Earnings Release • Feb 23, 2011
Earnings Release
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Under embargo until Wednesday 23 February 2011 at 7:30 a.m.
| In € million | 2009 | 2010 | % variance variance | H1 2010 | H2 2010 |
|---|---|---|---|---|---|
| Net sales sales | 506.4 | 557.8 | 10.1% | 265.3 | 292.5 |
| Gross Profit Gross Profit |
154.6 | 163.7 | 5.9% | 83.3 | 80.4 |
| Gross Margin | 30.5% | 29.3% | 31.4% | 27.5% | |
| REBITDA | 45.0 | 57.7 | 28.2% | 29.0 | 28.7 |
| EBITDA | 20.9 | 57.3 | 174.2% | 28.6 | 28.7 |
| EBITDA-Margin | 4.1% | 10.3% | 10.8% | 9.8% | |
| REBIT | 8.7 | 25.7 | 195.4% | 14.0 | 11.7 |
| EBIT | -11.3 | 24.4 | 12.7 | 11.7 | |
| EBIT-Margin | -2.2% | 4.4% | 4.8% | 4.0% | |
| Net result result | -16.9 | 8.5 | 3.8 | 4.7 | |
| Net margin | -3.3% | 1.5% | 1.4% | 1.6% | |
| Shareholders' Shareholders' equity |
197.4 | 212.0 | |||
| Net Debt | 112.5 | 100.7 | |||
| Gearing | 57% | 47.5% |
"Since the 2009 restructuring, Deceuninck focused on debt repayment, sales growth and bringing the company back to profit in 2010.
The financial results of the first full year since the 2009 restructuring confirm that we delivered on our commitment.
"2011 will be a year of stabilisation. Debt reduction, sales growth and margin improvement remain our top priority. In the mean time, Deceuninck is announcing further price increases in order to protect 2011 margins. Raw material costs continue to rise at the beginning of 2011 within very competitive market conditions. Recent geo-political developments and the resulting oil and pvc forecasts are being monitored closely. Order intake during the first weeks of the year is in line with our expectations, and reflects a phase out of government insulation incentives." " The mixed signs of construction recovery and the continued rising raw material costs remain cause for caution. However, within the current environment, we expect to continue sales and profit growth into 2011."
"At Deceuninck, we believe in 'building a sustainable a home'. home'. Plastics only use 4% of home'. nonrenewable oil and gas based fossil fuels. PVC uses less than 1%. 40% is used for heating buildings. Plastics building products are light-weight, maintenance free and provide superior insulation. PVC and Twinson wood composite are maintenance free materials, which save energy throughout a 50+ year life cycle, and will be recycled at end-of-life. Last year, the industry-wide "Vinyl2010" initiative collected and recycled 250.000 tonnes of postconsumer PVC from long lasting PVC building applications. Deceuninck continues to invest its R&D efforts into sustainable building products, which are easy to install, light-weight and have superior insulation values. In line with its business plan, Deceuninck will double its capital expenditures to reach its sustainability goals in manufacturing energy savings, PVC recycling and new product development.
Long term, energy-efficient construction and renovation will continue to grow as an engine of the construction industry. For energy savings, PVC windows remain the 'best value for money' "
| In € million | 2009 | 2010 | % var. |
|---|---|---|---|
| Western Europe | 208.4 | 207.5 | -0.5% |
| Central & Eastern Europe | 161.5 | 172.1 | +6.6% |
| Turkey | 80.6 | 108.0 | +34.0% |
| United States | 55.9 | 70.2 | +25.6% |
| Total | 506.4 | 557.8 | +10.1% |
Full year 2010 sales increased 10.1% to € 557.8 million (2009: € 506.4). Impact of volume totals +6.4%; currency effects: +4.2% and mix effects:-0.4%.
Western Europe: Full year 2010 sales decreased by 0.5% Western Europe to € 207.5 million (2009: € 208.4 million). Sales growth in Belgium, France and Italy contrasted with a sales decline in Spain, the Netherlands and the United Kingdom. Sales in Belgium and France exceeded pre-crisis levels with all time high records in both countries. UK sales decline was also influenced by the discontinuation of a product line.
Central & Eastern Europe (incl. Germany): Full year s Central & Eastern Europe ales increased 6.6% to € 172.1 million. Recovery was strong in Russia and Germany and some smaller markets in the region. Sales growth in Germany was fuelled by the termination of economic stimulus packages at the end of 2010. Besides increased demand, sales were favourably impacted by foreign exchange rates of the Polish zloty, Czech crown & Russian rouble against the euro.
Turkey: Turkey: Full year sales were € 108 million, an increase by 34% (+21% at constant exchange rate) Sales growth in euro was favourably supported by a strong Turkish lira against a weak euro. Both domestic demand and demand from Turkey's export markets remained strong. Deceuninck continued to strengthen its market position by means of an extensive focus on Customer intimacy and branding to the end consumer.
US: Full year 2010 sales increased by 25.6% to € 70.2 million (+15% at constant exchange rate). Demand from the residential renovation segment remained strong throughout the year stimulated by termination of energy conservation incentives from the American Recovery and Reinvestment Act (ARRA). In April 2010 the qualified first time home buyer tax credit ended and at year end the \$ 1500 tax credit for the replacement of old windows by the latest generation of highly energy efficient windows was stopped. Sales growth expressed in euro was supported by a strong US dollar.
Gross marginwas 29.3% (2009: 30.5%). Higher raw material costs, both PVC resin and additives, were largely offset by improved productivity and sales price increases.
Therecurring operating cash flow (REBITDA)amounted to € 57.7 million (2009: € 45 million) resulting in a REBITDA margin of 10.4% (2009: 8.9%). Decrease of gross margin was partly compensated by lower operational costs.
EBITDA was € 57.3 million (2009: € 20.9 million). EB EBITDA ITDA in 2009 was impacted by € 24.1 million non recurring expenses related to financial and operational restructuring costs.
The recurring operating result (REBIT) was € 25.7 million (2009: € 8.7 million) resulting in a REBIT margin of 4.6% (2009: 1.7%). Non cash costs were € 32.9 million (2009: € 32.2 million). Depreciations decreased by € 3 million due to lower capex level of the past two years. Bad debt provision increased due to sustained tight credit situation.
The financial result was € -15.0 million (2009: € -14.2 million). Interest expenses decreased from € 14.3 million to € 12.4 million due to the debt reduction. Exchange rate expense on financial debt strongly impacted the financial result due to a stronger US dollar against the euro. Deceuninck has hedged the foreign exchange risk on its dollar denominated loans at 1.25. 2009 financial result was impacted by financial restructuring charges. The return to profit resulted in € 0.9 million tax expenses.
Deceuninck completed its turnaround. 2010 net result is € 8.5 million (2009: net loss of € 16.9 million).
Capital expenditure in 2010 was € 15.6 million (2009: € 16 million). Capex relates to tools, productivity improvements and maintenance.
Historical capital expenditure for state of the art manufacturing capacity and new product platforms allowed for a continued low capex level.
Working capital on 31 December 2010 was 19.9% of sales (2009: 19.6% of sales) Rigorous credit control was continued. Factoring amount could be limited to € 5.8 million due to better cash and credit management.
On payables, cash discount opportunities were actively used.
Inventory increased 9.2% due to higher sales volume and higher inventory valuation as a result of increased raw material cost.
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Net cash from operating activities in 2010 increased to € 42.4 million due to higher EBITDA and stringent monitoring of working capital.
Cash from normalised investment activities were at the same level of 2009. Proceeds from nonstrategic asset disposals were lower.
Cash from financing activities were impacted by € 28.1 million debt reimbursements.
Net debt decreased to € 100.7 million (2009: € 112.5 million) as a result of free cash flow generation.
Shareholders' equity increased by € 14.6 million to € 212 million, equalling 45% of total balance sheet. Gearing improved to 47.5% in 2010 (2009: 57 %).
At the general shareholders meeting scheduled on 10th May 2011, the Board of Directors will recommend not paying a dividend for the financial year 2010.
At the end of 2010 the Deceuninck Group employed 2821 FTEs (including temporary workers and outsourced FTEs) as compared to 2816 (including temporary workers) at the end of 2009.
At the Annual General Meeting of Shareholders on 10 May 2011 the re-election for a period of 4 years of Willy Deceuninck will be submitted for approval.
Additionally, the status of independent Director for a period of 3 years for Marcel Klepfisch will be submitted for approval. The Board announces that the Herwig Bamelis, Clement De Meersman and Ger Rooze are not standing for re-election.
Pierre Alain De Smedt, Chairman: "We thank the resigning Directors for the many years of efforts and commitment to the Company."
The remuneration and nomination committee will advise the Board of Directors to appoint Paul Thiers as an independent Director at the Annual General Assembly of 2011.
Paul Thiers (1957) graduated as a Master in Law (1980) and in Public Notary Law (1981) at Catholic University of Leuven. He is an alumnus (PUB) of Vlerick Management School. From 1982 until 2005 he was a Co-CEO and Board Member at Unilin Group. He currently serves on the Board of Directors of Pentahold NV, Origis NV, Altior CVBA, Accent NV, Vergokan NV, Grada NV and Museum Dhondt-Dhaenens.
Pierre Alain De Smedt, Chairman: "We are delighted that Paul Thiers has accepted to become a Member of the Board. Paul is a well respected and highly experienced business leader who will provide our Board with new insight and international management experience."
The undersigned declare that:
On behalf of the Board of Directors
| Tom Debusschere | Pierre Alain De Smedt |
|---|---|
| CEO | Chairman of the Board of Directors |
The statutory auditor has confirmed that his audit procedures on the consolidated financial statements have been substantially completed and have revealed no material adjustments that would have to be made to the accounting information included in this press release.
Deceuninck is a leading international designer and manufacturer of high quality PVC systems for windows and doors, cladding and roofline, interior and garden applications. The basic technology used by the company is extrusion of patented PVC and Twinson composite material. The highly integrated state of the art production process includes compounding, tool manufacturing, extrusion of gaskets and profiles, printing, PVC lamination and the patented Decoroc coating technology.
The Group is active in over 75 countries, has 35 subsidiaries (production and/or sales) across Europe, North America and Asia, and employs 2,821 FTE (including temporary employees), of which 670 in Belgium. In 2010 the Deceuninck Group achieved consolidated sales of € 558 million.
(End of press release)
* * * * *
DECEUNINCK, Ludo Debever, Investor Relations Manager Telephone: +32 51 239248 Mobile: 32 473 552335 E-mail: [email protected]
Annexe 1: Deceuninck Consolidated Income Statement Annexe 2: Deceuninck Consolidated Statement of Financial Position Annexe 3: Deceuninck consolidated Statement of Cash Flows
| In thousand € € | 2009 | 2010 |
|---|---|---|
| Net sales Net sales |
506,377 | 557,758 |
| Cost of goods sold | -351,804 | -394,093 |
| Gross profit | 154,573 | 163,665 |
| Marketing, sales and distribution expenses | -92,748 | -92,545 |
| Research and development expenses | -4,663 | -5,177 |
| Administrative and general expenses | -43,043 | -40,852 |
| Other net operating expenses | -25,442 | -686 |
| Operating result Operating result |
-11,323 -11,323 | 24,405 |
| Financial charges | -48,118 | -30,685 |
| Financial income | 33,924 | 15,709 |
| Profit (+) / loss (- Profit (+) / loss (-) before taxes ) before taxes ) before taxes |
-25,517 -25,517 | 9,429 |
| Income taxes | 8,568 | -881 |
| Profit (+) / loss (- Profit (+) / loss (-) for the financial year ) for the financial year |
-16,949 -16,949 | 8,548 |
| The result for the financial year is attributable to: | ||
| Shareholders of the parent company | -17,090 | 8,378 |
| Non-controlling interests | 141 | 170 |
| Earnings (+) /loss (- (+) /loss (-) per sha ) per sha share distributable to the re the |
||
| shareholders of the parent company (in €): shareholders of the parent company (in €): |
||
| Normal earnings (+) / loss (-) per share | -0.16 | 0.08 |
| Diluted earnings (+) / loss (-) per share | -0.16 | 0.08 |
| Annexe 2: Deceuninck Consolidated Statement of Financial Position |
|---|
| ------------------------------------------------------------------- |
| In thousand € In € |
2009 | 2010 |
|---|---|---|
| ASSETS | ||
| Intangible fixed assets | 5,442 | 4,733 |
| Goodwill | 10,843 | 10,860 |
| Tangible fixed assets | 219,569 | 204,574 |
| Financial fixed assets | 1,274 | 1,310 |
| Deferred tax assets | 9,459 | 14,475 |
| Long-term receivables | 2,047 | 1,670 |
| Non-current assets nt assetsnt assets | 248,634 | 237,622 |
| Inventories | 59,732 | 65,171 |
| Trade receivables | 96,720 | 107,619 |
| Other receivables | 9,705 | 8,433 |
| Cash and cash equivalents | 50,902 | 43,856 |
| Fixed assets held for sale | 4,143 | 8,693 |
| Current assets Current assets |
221,202 | 233,772 |
| Total ASSETS Total ASSETS |
469,836 | 471,394 471,394 |
| EQUITY and LIABILITIES EQUITY and |
||
| Issued capital | 42,495 | 42,495 |
| Share premiums | 46,355 | 46,355 |
| Consolidated reserves | 131,512 | 141,495 |
| Treasury shares | -651 | -651 |
| Currency translation adjustments | -23,497 | -19,134 |
| Equity excluding non- Equity excluding non-controlling interest controlling interest |
196,214 | 210,560 |
| Non-controlling interest | 1,221 | 1,466 |
| Equity including non- Equity including non-controlling interest controlling interest controlling interest |
197,435 197,435 | 212,026 |
| Interest-bearing loans | 129,883 | 93,551 |
| Long-term provisions | 18,716 | 21,247 |
| Deferred tax liabilities | 4,980 | 5 ,063 |
| Non-current liabilities current liabilities current liabilities |
153,579 153,579 | 119,861 |
| Interest-bearing loans | 33,549 | 51,054 |
| Trade debts | 56,967 | 61,656 |
| Tax liabilities | 6,034 | 5,149 |
| Employee related liabilities | 10,646 | 12,130 |
| Other liabilities | 11,626 | 9,518 |
| Current liabilities Current liabilities |
118,822 | 139,507 |
| Total EQUITY and LIABILITIES Total LIABILITIES |
469,836 | 471,394 471,394 |
| In thousand € In € |
2009 | 2010 |
|---|---|---|
| OPERATING ACTIVITIES OPERATING |
||
| Profit (+) / loss (-) for the financial year | -16,949 | 8,548 |
| Depreciation (in)tangible fixed assets | 31,263 | 28,174 |
| Impairments of (in)tangible fixed assets | 2,547 | 1,729 |
| Provision for pensions, restructuring and other risks & charges | -1,760 | 811 |
| Impairments on current assets | 250 | 2,208 |
| Net financial charges | 14,194 | 14,976 |
| Profit on sale of tangible fixed assets | -1,596 | -235 |
| Loss on sale of tangible fixed assets | 883 | 127 |
| Income taxes | -8,568 | 881 |
| Share based payment transactions settled in equity | 104 | 203 |
| Cash flow from operating activities before movements in working capital and provisions capital |
20,368 | 57,422 |
| Decrease/(increase) in trade debtors and other receivables | 7,646 | -11,429 |
| Decrease/(increase) in inventories | 20,547 | -4,875 |
| Increase/(decrease) in trade debts | -53,093 | 4,689 |
| Decrease/(increase) in other non-current assets | -126 | 376 |
| Decrease/(increase) in other current assets | 4,452 | -1,878 |
| Increase/(decrease) in other non-current liabilities | -1,484 | 349 |
| Increase/(decrease) in other current liabilities | -4,064 | 414 |
| Cash flow generated from operating activities Cash from operating activities |
-5,754 | 45,068 |
| Interest received | 3,011 | 1,862 |
| Income tax paid | -3,464 | -4,579 |
| CASH FLOW FROM OPERATING ACTIVITIES CASH FROM OPERATING ACTIVITIES |
-6,207 | 42,351 |
| INVESTING ACTIVITIES INVESTING ACTIVITIES |
||
| Cash receipts on sale of tangible fixed assets | 9,161 | 3,749 |
| Purchases of tangible fixed assets | -14,822 | -15,481 |
| Purchases of intangible fixed assets | -847 | -162 |
| Other transactions | -44 | -392 |
| CASH FLOW FROM INVESTING ACTIVITIES CASH FROM |
-6,552 | -12,286 -12,286 |
| FINANCING ACTIVITIES FINANCING ACTIVITIES |
||
| Capital increase | 80,351 | 0 |
| Repayments of long-term debts | -39,182 | -21,976 |
| Repayments of short-term debts | -7,463 | -6,216 |
| Interest paid | -13,459 | -7,629 |
| Net financial charges, excluding interests | -3,599 | 1,061 |
| CASH FLOW FROM FINANCING ACTIVITIES CASH FROM FINANCING |
16,648 | -34,760 -34,760 |
| Net increase (+) / decrease (- Net increase / decrease (-) in cash and cash equivalents ) in cash and cash equivalents ) |
3,889 | -4,695 |
| Cash and cash equivalents as per 1 January Cash equivalents as 1 January |
46,819 | 50,902 |
| Impact of exchange rate fluctuations | 194 | -2,351 |
| Cash and cash equivalents as per 31 December Cash equivalents as 31 DecemberDecember |
50,902 | 43,856 |
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