Earnings Release • May 26, 2016
Earnings Release
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REGULATED INFORMATION
Embargo: Thursday 26 May 2016 – 8:00 am CET
"D'Ieteren had an encouraging start to 2016 with both activities showing positive sales trends. D'Ieteren Auto's sales were up slightly despite the tail-end effect of the "Emissiongate". Its order book and order intake continued to be robust throughout the quarter and the pipeline of model updates and new model introductions bodes well for the coming quarters.
Double digit organic sales growth in the US underpinned the rise in Belron's top line in 1Q 2016. In Europe, organic sales growth was positive if one excludes AutoRestore's divested operations in the UK. Belron continues to analyze opportunities to enter new service markets where it can leverage its key competencies to deliver future profitable growth.
Operating free cash flow before taxes3 was positively impacted in 1Q 2016 by a significant reduction in working capital at D'Ieteren Auto and a higher REBITDA4 at Belron, partially mitigated by higher capex to support growth in the US.
D'Ieteren group's net debt 5 position declined sharply year-on-year."
Embargo: Thursday 26 May 2016 – 8:00 am CET
Excluding registrations of less than 30 days1, Belgian new car registrations rose by 4.0% (year-on-year) to 145,837 units in Q1 2016. The market share1 of the brands distributed by D'Ieteren Auto (19.94% in Q1 2016 or -77bps versus Q1 2015) was negatively impacted by the decision to temporarily suspend the commercialization of vehicles potentially concerned by the "Emissiongate" in Q4 2015. Volkswagen remained the Belgian market leader helped by the success of the Tiguan and Touran. Even though Audi lost some share1, the brand managed to maintain its runner-up position in the premium segment which was down. SEAT's share1 was broadly flat (-6bps) thanks to the good performance of the Ibiza, Leon and
| Net figures1 | Q1 2015 | FY 2015 Q1 2016 | |
|---|---|---|---|
| New car market (in units) % change yoy |
140,188 -1.1% |
470,811 2.9% |
145,837 4.0% |
| Total market share new cars | 20.71% | 22.34% | 19.94% |
| Volkswagen | 9.36% | 10.05% | 8.75% |
| Audi | 6.09% | 6.76% | 5.66% |
| Škoda | 3.26% | 3.55% | 3.61% |
| Seat | 1.39% | 1.34% | 1.33% |
| Porsche | 0.59% | 0.62% | 0.58% |
| Bentley/Lamborghini | 0.02% | 0.01% | 0.01% |
| Market share commercial vehicles (gross figures) |
8.73% | 11.23% | 8.97% |
Alhambra. Most of Škoda's models contributed to the brand's market share1 improvement. Porsche's market share1 was broadly flat at an exceptionally high level.
Belgian registrations of new light commercial vehicles (0-6 tonnes) reached 18,659 units in Q1 2016, up 9.5% year-on-year. D'Ieteren Auto's market share improved by 24bps to 8.97% thanks to the success of the Transporter and Crafter.
D'Ieteren Auto's sales rose by 1.0% in Q1 2016. The total number of new vehicles, including commercial vehicles, delivered by D'Ieteren Auto fell by 0.7% to 32,516 but new vehicle sales (in EUR) increased by 1.1% due to a positive mix effect and higher list prices. After-sales activities generated higher revenues but sales of used cars and spare parts and accessories declined in Q1 2016. D'Ieteren Sport's sales were stable.
D'Ieteren Auto's capital employed decreased significantly year-on-year mainly due to a better management of working capital.
The recall involving about 320,000 vehicles with non-compliant software in Belgium, has started following the go-ahead from the German Federal Motor Transport Authority (KBA). The non-compliant software of the concerned vehicles will be updated. On vehicles with a 1.6L engine, an air flow transformer will be installed as well. These interventions will have no negative impact on fuel consumption, CO2 emissions, engine performance or sound level. The recall campaign should be completed in 2017. The Volkswagen group will cover most of the costs (e.g. air flow transformers and technician time) related to the recalls. Some costs (e.g. mailing and logistics) were already provisioned for by D'Ieteren Auto in 2015.
Embargo: Thursday 26 May 2016 – 8:00 am CET
D'Ieteren's healthy order book (+26% year-on-year at the end of March 2016) should result in an improving market share1 during the remainder of the year. D'Ieteren Auto aims at a stable market share1 for the full year 2016 compared to 2015. Audi should continue to benefit from the launch of the new A4 at the end of 2015. The pipeline of model updates and new model introductions is promising. During the remainder of the year, two new SUV's (Audi Q2 and SEAT Ateca) will be launched, the Volkswagen Tiguan, the Audi A4 Allroad and Porsche Panamera, Boxster and Cayman will be replaced and several models (Volkswagen up!, Beetle and Amarok, Audi A3 and SEAT Leon) will receive a facelift.
The guidance remains unchanged:
Sales from continuing operations increased by 8.5% in Q1 2016 comprising a 6.0% organic increase, 1.5% from acquisitions and a 2.0% trading day impact partially offset by a 1.0% negative currency translation effect. The business completed 2.8 million repair and replacement jobs, an increase of 10% compared to 2015.
In Europe, sales rose by 3.8%, consisting of a 3.6% trading day impact and a 2.8% increase from acquisitions partially offset by a 0.9% organic decrease and a 1.7% decline due to a negative currency translation effect. The trading day impact reflects additional trading days at the start of the year partially offset by Easter falling earlier than in 2015. This impact will reverse over the coming months. Acquisition growth relates to the acquisition of franchise networks in the Netherlands and Germany in 2015. The organic sales decrease is primarily due to market declines and competitor challenges in Italy and the disposal of Autorestore's fixed site operations in the UK last year. These negative factors were partially offset by improving sales trends in the UK following last year's restructuring efforts. The translation impact is primarily due to the weaker British Pound.
Outside Europe, sales growth reached 12.7% consisting of a 12.2% organic increase, 0.3% growth from acquisitions and a 0.5% increase due to extra trading days partially offset by a negative currency impact of 0.3%. The organic growth primarily reflects market growth on the back of more miles driven, and share gains in the USA. Safelite was well positioned to benefit from the winter conditions and additional marketing in the early part of the year by ensuring the staffing levels and product availability were in place. The translation impact is primarily due to the weaker Canadian, Australian and New Zealand dollars although this was mitigated by the strong US dollar.
Belron paid out a EUR 46 million dividend in Q1 2016. D'Ieteren's share amounted to EUR 43 million.
REGULATED INFORMATION
Embargo: Thursday 26 May 2016 – 8:00 am CET
For the remainder of the year, Belron still expects moderate organic sales growth despite continuing adverse underlying market trends in Europe and a stable to modestly lower current operating result2 from continuing operations. The positive impact from higher sales in the US is currently partially offset by higher costs in order to gain market share. Belron anticipates higher charges related to the long term management incentive programme (EUR 12.5 million expected for 2016 compared to EUR 4.9 million in 2015). In order to improve its financial results, the business will continue to be innovative in all areas, increase the flexibility of its operations and look for further efficiency initiatives.
1 In order to provide an accurate picture of the car market, Febiac publishes market figures excluding registrations that have been cancelled within 30 days. Most of them relate to vehicles that are unlikely to have been put into circulation in Belgium by the end customer.
2 In order to better reflect its underlying performance and assist investors in gaining a better understanding of its financial performance, D'Ieteren uses Alternative Performance Measures ("APMs"). These APMs are non-GAAP measures, i.e. their definitions are not addressed by IFRS. D'Ieteren does not present APMs as an alternative to financial measures determined in accordance with IFRS and does not give to APMs greater prominence than defined IFRS measures. See note 3 of the Full-Year 2015 Financial and Directors' Report for the definition of these performance indicators.
3 Operating free cash flow before taxes is an APM (not addressed by IFRS). This non-GAAP indicator is defined as REBITDA4 (see below) minus the change in net working capital and net capital expenditure.
4 REBITDA is not an IFRS indicator. This APM (non-GAAP indicator) is defined as current earnings before interest, taxes, depreciation and amortization.
3 The net financial debt is not an IFRS indicator. D'Ieteren uses this Alternative Performance Measure to reflect its indebtedness. This non-GAAP indicator is defined as the sum of the borrowings minus cash, cash equivalents and investments in non-current and current financial assets.
End of press release
REGULATED INFORMATION
Embargo: Thursday 26 May 2016 – 8:00 am CET
In existence since 1805, and across family generations, D'Ieteren seeks growth and value creation by pursuing a strategy on the long term for its businesses internationally and actively encouraging and supporting them to develop their position in their industry or in their geographies. The group serves some 12 million corporate and end customers in 33 countries in two areas:
- D'Ieteren Auto distributes Volkswagen, Audi, SEAT, Škoda, Bentley, Lamborghini, Bugatti, Porsche and Yamaha vehicles in Belgium. It is the country's number one car distributor, with a market share of more than 22% and 1.2 million vehicles on the road at the end of 2015. Sales in 2015: EUR 2.9 billion.
- Belron (94.85% owned) is the worldwide leader in vehicle glass repair and replacement. Some 2,400 branches and 10,000 mobile vans, trading under more than 10 major brands including Carglass®, Safelite® AutoGlass and Autoglass®, serve customers in 33 countries. Sales in 2015: EUR 3.2 billion.
| Last five press releases (with the exception of press releases linked to the repurchase or sale of own shares) |
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| 29 April 2016 | D'Ieteren Auto – Dieselgate Commission recommendations |
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| 8 January 2016 | Belron – Agreement to form a joint venture in Brazil |
29 August 2016 | 2016 Half-Year Results |
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| 8 December 2015 | Investor Day & Trading Update |
Axel Miller, Chief Executive Officer Arnaud Laviolette, Chief Financial Officer
Pascale Weber, Financial Communication - Tel: + 32 (0)2 536.54.39 E-mail: [email protected] – Website: www.dieteren.com
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