Recticel

Earnings Release • Aug 30, 2019

PRESS RELEASE

Regulated information – Inside information

Brussels, 30 August 2019 – 07:00 CET

FIRST HALF-YEAR 2019 RESULTS

• Combined¹ sales decreased by 7.6% on a comparable restated basis²
• Combined Adjusted EBITDA: EUR 58.4 million, EUR 44.9 million before IFRS 16
• Result of the period (share of the Group): EUR 16.1 million, EUR 16.7 million³ before IFRS 16
• Combined net financial debt: EUR 201.1 million, EUR 83.9 million before IFRS 16 (30 June 2018: EUR 138.7 million; 31 December 2018: 100.2 million)

Olivier Chapelle (CEO): "Our topline has decreased by 7.6% during the 1 st half of 2019, influenced by soft Automotive and Comfort markets and by selling price erosion as a consequence of the isocyanates raw material cost decrease. In the 2nd quarter, the volumes in our Insulation division remained very strong, and our Bedding division has turned the corner and is back on a growth path.

The Group's profitability has shown good resilience in these unfavourable market circumstances, as profitability improved sequentially in the 2nd quarter versus the 1st quarter. The Flexible Foams division delivered a strong performance, and the lower profitability of the Insulation division, linked to start-up costs of the new plant in Finland and to temporary margin erosion, is back to standard level in the 3 rd quarter of 2019. In Bedding, the profitability is improving as from the 2nd quarter, as a result of topline growth and mix improvement, and this trend is expected to extend into the 2nd semester.

Strong cash generation has enabled our like-for-like net financial debt to reach a new historic low.

The Group continues to optimise its overhead and operating cost structure and the announced closures of its Bedding plant in Hassfurt (Germany) and the Eurofoam Flexible Foams plant in Troisdorf (Germany) have now been finalised.

The Automotive Interiors divestment process continues its course in unfavourable market circumstances. Interested parties are currently assessing the division and we expect the outcome to be announced around the year-end."

OUTLOOK

The economic and geopolitical environment remains highly volatile and increasingly uncertain. Taking into account the gradual profitability improvement within the first half-year, and our expectations for the remainder of the year, we anticipate our 2019 full year Adjusted EBITDA to be in line with 2018 on a like-for-like basis2/3 . Recticel is in a strong financial position and has demonstrated its ability to adapt to rapidly changing market conditions.

¹ For the definition of terminology used, see Glossary and Alternative Performance Measures ("APM") at the end of this press release.

² All comparisons are made with the comparable period of 2018, unless mentioned otherwise. Following the partial divestment from Proseat (Automotive – Seating) in February 2019, Proseat is now integrated in the 2019 combined figures according to the 'equity method', i.o. previously on a proportionate basis. For comparison purposes the 2018 data have been restated accordingly.

³ To facilitate comparisons and understanding of the Group's underlying performance, all comments in this document on developments in revenue or results are made on a like-for-like basis unless otherwise indicated; i.e. 2018 restated data compared to 2019 data before the impact of IFRS 16.

1. KEY FIGURES

1.1. CONSOLIDATED DATA¹

• Sales: from EUR 579.7 million to EUR 536.1 million (-7.5%), including a currency effect of 0.1%
• EBITDA: EUR 53.2 million, EUR 40.7 million³ before IFRS 16 (versus EUR 45.4 million²)
• EBIT: EUR 24.7 million, EUR 23.2 million³ before IFRS 16 (versus EUR 29.1 million²)
• Result of the period (share of the Group): EUR 16.1 million, EUR 16.7 million³ before IFRS 16 (versus EUR 18.7 million²)
• Net financial debt⁵ : EUR 183.6 million, EUR 73.8 million before IFRS 16 (30 June 2018: EUR 104.3 million; 31 December 2018: 84.6 million)

in million EUR	1H2018	1H2019 before IFRS 16	D %	1H2019 after IFRS 16	D
	(a)	(b)	(b)/(a)-1	(c)	(c) - (b)
Sales	579,7	536,1	-7,5%	536,1	0,0
Gross profit	102,2	99,7	-2,4%	101,2	1,4
as % of sales	17,6%	18,6%		18,9%
Income from joint ventures and associates	7,5	4,8	-35,3%	4,8	( 0,0)
EBITDA	45,4	40,7	-10,3%	53,2	12,5
as % of sales	7,8%	7,6%		9,9%
EBIT	29,1	23,2	-20,5%	24,7	1,6
as % of sales	5,0%	4,3%		4,6%
Financial result	( 4,4)	( 2,4)	-45,2%	( 4,6)	( 2,2)
Income taxes and deferred taxes	( 6,1)	( 4,0)	-33,3%	( 4,0)	0,0
Result of the period (share of the	18,7	16,7	-10,5%	16,1	( 0,6)
Group)
Result of the period (share of the Group) - base (per share, in EUR)	0,34	0,30	-11,2%	0,29	( 0,01)
	30 Jun 18	30 Jun 19		30 Jun 19
Total Equity	254,7	266,5	4,6%	265,9	-0,6
Net financial debt 5	104,3	73,8	-29,2%	183,6	109,8
Gearing ratio (Net financial debt/Total Equity)	41,0%	27,7%		69,1%
Leverage ratio (Net financial debt/EBITDA)	1,1	0,9		1,7

⁵ Excluding the drawn amounts under non-recourse factoring/forfeiting programs: EUR 60.2 million per 30 June 2019 versus EUR 62.3 million per 30 June 2018 and EUR 51.3 million per 31 December 2018.

Consolidated sales: from EUR 579.7 million to EUR 536.1 million (-7.5%)

Income from joint ventures and associates: from EUR 7.5 million to EUR 4.8 million

The decrease in 'Income from joint ventures and associates' results mainly from the lower result of Eurofoam, impacted by restructuring costs for the closure of the plant in Troisdorf (Germany).

Consolidated EBITDA: EUR 53.2 million, EUR 40.7 million before IFRS 16 versus EUR 45.4 million in 1H2018.

Consolidated EBIT: EUR 24.7 million, EUR 23.2 million before IFRS 16 versus EUR 29.1 million in 1H2018.

Consolidated financial result: EUR -4.6 million, EUR -2.4 million before IFRS 16 versus EUR -4.4 million in 1H2018.

Net interest charges: EUR -4.0 million, EUR -1.5 million before IFRS 16 versus EUR -2.1 million in 1H2018. The decrease on a comparable basis is a consequence of lower average financial debt and further improved borrowing costs.

'Other net financial income and expenses': EUR -0.6 million, EUR -0.9 million before IFRS 16 versus EUR -2.3 million in 1H2018. This item comprises mainly interest capitalisation costs under provisions for pension liabilities (EUR -0.4 million, similar to 1H2018) and exchange rate differences (EUR -0.2 million versus EUR -1.9 million in 1H2018).

Consolidated income taxes and deferred taxes: from EUR -6.1 million to EUR -4.0 million (-33.3%):

• Current income tax charge: EUR -4.1 million (1H2018: EUR -2.4 million);
• Deferred tax charge: EUR -0.03 million (1H2018: EUR -3.7 million).

Consolidated result of the period (share of the Group): EUR +16.1 million, EUR 16.7 million before IFRS 16 versus EUR 18.7 million in 1H2018.

1.2. COMBINED DATA¹

• Sales: from EUR 682.7 million³ to EUR 630.6 million (-7.6%) including currency effect (+0.1%)
• Adjusted EBITDA: EUR 58.4 million, EUR 44.9 million (-15.4%) before IFRS 16 (versus EUR 53.3 million)²
• EBITDA: EUR 58.7 million, EUR 45.2 million³ (-6.9%) before IFRS 16 (versus EUR 48.7 million)²
• EBIT: EUR 26.6 million, EUR 25.0 million³ (-16.1%) before IFRS 16 (versus EUR 29.9 million²)
• Net financial debt⁶ : EUR 201.1 million, EUR 83.9 million³ before IFRS 16 (30 June 2018: EUR 138.7 million³ ; 31 December 2018: 100.2 million³ )

in million EUR	1H2018 (as published)	1H2018 (restated) 2	1H2019 before IFRS 16	D %	1H2019 after IFRS 16	D
		(a)	(b)	(b)/(a)-1	(c)	(c) - (b)
Sales	755,9	682,7	630,6	-7,6%	630,6	0,0
Gross profit	122,4	114,7	116,1	1,2%	117,6	1,5
as % of sales	16,2%	16,8%	18,4%		18,7%
Adjusted EBITDA	56,2	53,3	44,9	-15,7%	58,4	13,5
as % of sales	7,4%	7,8%	7,1%		9,3%
EBITDA	51,6	48,7	45,2	-7,2%	58,7	13,5
as % of sales	6,8%	7,1%	7,2%		9,3%
Adjusted EBIT	36,2	35,1	25,5	-27,6%	27,0	1,6
as % of sales	4,8%	5,1%	4,0%		4,3%
EBIT	31,0	29,9	25,0	-16,5%	26,6	1,6
as % of sales	4,1%	4,4%	4,0%		4,2%
	30 Jun 18	30 Jun 18	30 Jun 19		30 Jun 19
Total Equity	254,7	254,7	266,5	4,6%	265,9	-0,6
Net financial debt 6	138,7	138,7	83,9	-39,5%	201,1	117,1
Gearing ratio (Net financial debt4 /Total Equity)	54,5%	54,5%	31,5%		75,6%
Leverage ratio (Net financial debt4 /EBITDA)	1,3	1,4	0,9		1,7

⁶ Excluding the drawn amounts under non-recourse factoring/forfeiting programs: EUR 60.2 million per 30 June 2019 versus EUR 62.3 million per 30 June 2018 and EUR 51.3 million per 31 December 2018.

2. COMMENTS ON THE GROUP RESULTS

Detailed comments on sales and results of the different segments are given in chapter 4 on the basis of the combined figures (joint ventures integrated following the proportionate consolidation method).

Changes in the scope of consolidation in 1H2019:

• Reduction of the participation in Proseat (Automotive Seating) from 51% to 25%. Consequently, Proseat is integrated in the combined figures of 2019 according to the 'equity method' and no longer on a proportionate basis.
• The Group increased its participation in Turvac (Insulation) from 50% to 74%, leading to its full consolidation.

Combined Sales: on a like-for-like basis sales decreased by 7.6% from EUR 682.8 million² (as published: EUR 755.9 million) to EUR 630.6 million, including a currency impact of +0.1%.

All divisions reported lower sales during 1H2019;

• Flexible Foams faced softer demand in the durable consumer goods and automotive endmarkets, leading to lower volumes. In parallel, the reduced chemical raw material costs led to progressively lower average selling prices.
• Bedding sales decreased by 3.8% over 1H2019, but 2Q2019 showed a noticeable +3.0% recovery.
• Insulation volumes increased by a double-digit percentage, offset by reduced selling prices following the lower raw material costs.
• The Automotive division reported lower sales on a like-for-like basis² as market demand dropped in overall weak Chinese and European automotive markets.

Breakdown of the combined sales by segment

		as published			restated 2						2019 versus 2018 restated
in million EUR		1Q2018 2Q2018	1H2018		1Q2018 2Q2018	1H2018		1Q2019 2Q2019	1H2019	D 1Q	D 2Q	D 1H
Flexible Foams	170,9	159,7	330,6	170,9	159,7	330,6	148,0	139,2	287,2	-13,4%	-12,8%	-13,1%
Bedding	70,7	54,0	124,6	70,7	54,0	124,6	64,3	55,6	119,8	-9,0%	3,0%	-3,8%
Insulation	60,1	72,6	132,7	60,1	72,6	132,7	62,5	67,4	129,8	4,0%	-7,3%	-2,2%
Automotive	95,5	100,1	195,6	58,3	63,2	121,5	54,1	61,0	115,1	-7,2%	-3,5%	-5,3%
Eliminations	( 15,0)	( 12,6)	( 27,6)	( 14,6)	( 12,1)	( 26,6)	( 11,2)	( 10,1)	( 21,4)	-23,0%	-16,0%	-19,8%
TOTAL COMBINED SALES	382,0	373,9	755,9	345,3	337,5	682,7	317,6	313,0	630,6	-8,0%	-7,2%	-7,6%
Adjustment for joint ventures by application of IFRS 11	( 90,8)	( 85,3)	( 176,2)	( 54,1)	( 48,9)	( 103,0)	( 49,4)	( 45,1)	( 94,5)	-8,7%	-7,8%	-8,3%
TOTAL CONSOLIDATED SALES	291,2	288,5	579,7	291,2	288,5	579,7	268,2	267,9	536,1	-7,9%	-7,2%	-7,5%

Combined Adjusted EBITDA: EUR 58.4 million, EUR 44.9 million³ before IFRS 16 versus EUR 53.3 million² (as published: EUR 56.2 million)

Adjusted EBITDA margin of 9.3% including an IFRS 16 impact of +2.1%, 7.1%³ before IFRS 16 versus 7.8%² in 1H2018 (as published: 7.4%).

Breakdown of the combined Adjusted EBITDA by segment

in million EUR	1H2018 (as published)	1H2018 (restated) 2	1H2019 before IFRS 16	D	1H2019 after IFRS 16
		(a)	(b)	(b)/(a)-1
Flexible Foams	21,6	21,6	26,1	20,8%	31,0
Bedding	5,4	5,4	4,7	-13,4%	6,9
Insulation	22,8	22,8	14,8	-35,1%	16,7
Automotive	14,7	11,8	8,3	-29,3%	12,5
Corporate	( 8,4)	( 8,4)	( 9,0)	7,8%	( 8,6)
TOTAL COMBINED ADJUSTED EBITDA	56,2	53,3	44,9	-15,7%	58,4

• Despite lower volumes and some selling price erosion, Flexible Foams continued to benefit from a positive product & price mix as well as from operational improvements.
• Bedding was driven by lower sales in difficult market conditions, especially in Germany.
• Despite substantially higher volumes, profitability in Insulation decreased mainly as a consequence of lower average selling prices following the drop in chemical raw material costs. The new plant in Finland which started production in 4Q2018 is still in ramp-up phase, leading to temporarily unabsorbed additional fixed costs.
• Profitability of Automotive was impacted by lower demand and by the ramp-up costs of new programs in the plant in Tuscaloosa (USA).

Combined Adjusted EBIT: EUR 27.0 million, EUR 25.5 million³ before IFRS 16 versus EUR 35.1 million² (as published: EUR 36.2 million)

Adjusted EBIT margin of 4.3% including an IFRS 16 impact of +0.25%, 4.0%³ before IFRS 16 versus 5.1%² in 1H2018 (as published: 4.8%).

in million EUR	1H2018 (as published)	1H2018 (restated) 2	1H2019 before IFRS 16	D	1H2019 after IFRS 16
		(a)	(b)	(b)/(a)-1
Flexible Foams	15,4	15,4	19,8	28,3%	20,3
Bedding	3,2	3,2	2,3	-28,2%	2,5
Insulation	19,6	19,6	10,9	-44,4%	11,4
Automotive	6,7	5,6	2,0	-64,9%	2,4
Corporate	( 8,7)	( 8,7)	( 9,5)	9,1%	( 9,5)
TOTAL COMBINED Adjusted EBIT	36,2	35,1	25,5	-27,6%	27,0

Breakdown of the combined Adjusted EBIT by segment

Adjustments to EBIT: (on combined basis, including pro rata share in joint ventures)

in million EUR	1H2018	1H2019
Gain/(loss) on disposals Restructuring charges and provisions	0,0 ( 0,2)	5,0 ( 3,2)
Net impact fire incident Automotive Interiors	( 0,8)	0,0
Other	( 3,7)	( 1,5)
Total impact on EBITDA	( 4,6)	0,3
Impairments	( 0,6)	( 0,7)
Total impact on EBIT	( 5,2)	( 0,4)

Adjustments to EBIT in 1H2019 include the net gain realised upon the reduction of the participation in Proseat from 51% to 25% (cfr. press release dd. 19.02.2019) and the fair value of the put/call option structure defining the terms of divestment of the remaining 25 % participation in Proseat, as well as various additional restructuring measures in execution of the Group's rationalisation plan.

Impairment charges of EUR -0.7 million (1H2018: EUR -0.6 million) relate to idle tangible assets in (i) Bedding (EUR -0.3 million) following the closure of the plant in Hassfurt (Germany) and in (ii) Automotive Interiors in China (EUR -0.4 million).

Combined EBITDA: EUR 58.7 million, EUR 45.2 million³ before IFRS 16 versus EUR 48.7 million² (as published: EUR 51.6 million)

EBITDA margin of 9.3% including an IFRS 16 impact of +2.1%, 7.2%³ before IFRS 16 versus 7.1%² in 1H2018 (as published: 6.8%).

Breakdown of EBITDA by segment

in million EUR	1H2018 (as published)	1H2018 (restated) 2	1H2019 before IFRS 16	D	1H2019 after IFRS 16
		(a)	(b)	(b)/(a)-1
Flexible Foams	18,8	18,8	24,6	30,5%	29,4
Bedding	5,5	5,5	4,5	-18,5%	6,8
Insulation	22,8	22,8	14,8	-35,1%	16,7
Automotive	13,2	10,4	13,3	28,1%	17,4
Corporate	( 8,9)	( 8,9)	( 12,0)	34,9%	( 11,6)
TOTAL COMBINED EBITDA	51,6	48,7	45,2	-7,1%	58,7
Adjustment for joint ventures by application of IFRS 11	( 6,1)	( 3,2)	( 4,5)	37,5%	( 5,5)
TOTAL CONSOLIDATED EBITDA	45,4	45,4	40,7	-10,3%	53,2

Combined EBIT: EUR 26.6 million, EUR 25.0 million³ before IFRS 16 versus EUR 29.9 million² (as published: EUR 31.0 million)

EBIT margin of 4.2% including an IFRS 16 impact of +0.25%, 4.0%³ before IFRS 16 versus 4.4%² in 1H2018 (as published: 4.1%).

Breakdown of EBIT by segment

in million EUR	1H2018 (as published)	1H2018 (restated) 2	1H2019 before IFRS 16	D	1H2019 after IFRS 16
		(a)	(b)	(b)/(a)-1
Flexible Foams	11,6	11,6	18,2	56,9%	18,8
Bedding	3,7	3,7	1,8	-51,3%	2,0
Insulation	19,6	19,6	10,9	-44,6%	11,3
Automotive	5,2	4,2	6,6	56,4%	7,0
Corporate	( 9,2)	( 9,2)	( 12,4)	35,2%	( 12,4)
TOTAL COMBINED EBIT	31,0	29,9	25,0	-16,5%	26,6
Adjustment for joint ventures by application of IFRS 11	( 1,8)	( 0,8)	( 1,8)	127,3%	( 1,9)
TOTAL CONSOLIDATED EBIT	29,1	29,1	23,2	-20,5%	24,7

3. FINANCIAL POSITION

in million EUR	30 JUN 2018	31 DEC 2018	30 JUN 2019
TOTAL EQUITY - before IFRS 16	254,7	265,0	266,5
Combined debt figures
Net financial debt on balance sheet + Impact of application IFRS 16 + Drawn amounts under factoring programs	138,7 - 62,3	100,2 - 51,3	83,9 117,1 60,2
TOTAL COMBINED NET FINANCIAL DEBT	201,0	151,5	261,3
Gearing - combined before IFRS16 Leverage - combined before IFRS16	54,5% 1,3	37,8% 1,1	31,5% 0,9
Consolidated debt figures
Net financial debt on balance sheet + Impact of application IFRS 16 + Drawn amounts under factoring programs	104,3 - 62,3	84,6 - 51,3	73,8 109,8 60,2
TOTAL CONSOLIDATED NET FINANCIAL DEBT	166,6	135,9	243,9
Gearing - consolidated before IFRS16 Leverage - consolidated before IFRS16	41,0% 1,1	31,9% 1,1	27,7% 0,9

The Group further reduced its financial debt and improved its gearing and leverage ratios to new historical bests on a comparable basis³ .

End-June 2109, the application of IFRS 16 to outstanding operating lease arrangements led to an addition of EUR 117.1 million to the combined net financial debt and EUR 109.8 million to the consolidated net financial debt.

The application of IFRS 16 has no consequences for the Group's financial covenant testing, as the syndicated bank financing agreement includes a 'frozen GAAP' provision.

The Group confirms that all conditions under the financial arrangements with its banks are respected.

4. MARKET SEGMENTS

IFRS 8 requires operating segments to be identified on the basis of the internal reporting structure of the Group that allows a regular performance review by the chief operating decision maker and an adequate allocation of resources to each segment. Therefore, the Group will continue to comment on the development of the different segments on the basis of the combined figures, consistent with the managerial reporting and in line with IFRS 8.

4.1. FLEXIBLE FOAMS

in million EUR	1H2018	1H2019 before IFRS 16	D	1H2019 after IFRS 16
	(a)	(b)	(b)/(a)-1
Sales	330,6	287,2	-13,1%	287,2
Adjusted EBITDA	21,6	26,1	20,8%	31,0
as % of sales	6,5%	9,1%		10,8%
EBITDA	18,8	24,6	30,5%	29,4
as % of sales	5,7%	8,6%		10,2%
Adjusted EBIT	15,4	19,8	28,3%	20,3
as % of sales	4,7%	6,9%		7,1%
EBIT	11,6	18,2	56,9%	18,8
as % of sales	3,5%	6,3%		6,5%

Sales

After a weak 1Q2019 (-13.4%), combined sales further decreased from EUR 159.7 million in 2Q2018 to EUR 139.2 million in 2Q2019 (-12.8%), including a -0.4% impact from exchange rate differences. Excluding intersegment sales, combined external sales decreased by 12.9% from EUR 150.0 million to EUR 130.7 million.

Over 1H2019, combined sales decreased from EUR 330.6 million to EUR 287.2 million (- 13.1%), including a -0.1% impact from exchange rate differences. Excluding intersegment sales, combined external sales decreased by 12.7% from EUR 308.3 million to EUR 269.3 million.

Both sub-segments Comfort (EUR 157.2 million; -14.8%) and Technical Foams (EUR 129.9 million; –2.2%) reported lower sales, due to lower volumes and to selling price erosion as a consequence of falling chemical raw material prices.

Profitability

Adjusted EBITDA margin of 10.8%, 9.1%³ before IFRS 16 versus 6.5%² in 1H2018. The increase is driven by a positive net pricing effect including increased prices for trim foam, an improved product-mix and operational efficiency improvements.

EBITDA includes non-recurring elements for EUR -1.5 million (1H2018: EUR -2.8 million) mainly restructuring charges following the closure of the Eurofoam Flexible Foams plant in Troisdorf (Germany)

4.2. BEDDING

in million EUR	1H2018	1H2019 before IFRS 16	D	1H2019 after IFRS 16
	(a)	(b)	(b)/(a)-1
Sales	124,6	119,8	-3,8%	119,8
Adjusted EBITDA	5,4	4,7	-13,4%	6,9
as % of sales	4,3%	3,9%		5,8%
EBITDA	5,5	4,5	-18,5%	6,8
as % of sales	4,4%	3,8%		5,6%
Adjusted EBIT	3,2	2,3	-28,2%	2,5
as % of sales	2,6%	1,9%		2,0%
EBIT	3,7	1,8	-51,3%	2,0
as % of sales	3,0%	1,5%		1,7%

Sales

After a weak 1Q2019 (-9.0%), the sales trend reversed in 2Q2019. Combined sales increased by 3.0% from EUR 54.0 million in 2Q2018 to EUR 55.6 million in 2Q2019, including a -0.7% impact from exchange rate differences. Excluding intersegment sales, combined external sales increased by 3.6% to reach EUR 54.4 million in 2Q2019.

Over 1H2019, combined sales decreased from EUR 124.6 million to EUR 119.8 million (-3.8%). Excluding intersegment sales, combined external sales decreased by 3.3% from EUR 121.2 million to EUR 117.3 million.

The sub-segment "Branded Products" held firm thanks to the new innovative Geltex 2.0 and boxsprings product lines and progressed by 1.0%, while the sub-segment "Non-Branded/Private Label" receded by 10.9%, as a result of low shop traffic and competition from e-commerce players, and also due to the specific market situation in Germany.

Profitability

Adjusted EBITDA margin of 5.8%, 3.9%³ before IFRS 16 versus 4.3%² in 1H2018.

EBITDA decreased from EUR 5.5 million to EUR 4.5 million; including non-recurring elements for EUR -0.2 million (1H2018: EUR +0.1 million) following the closure of the Bedding plant in Hassfurt (Germany).

The improved product-mix and operational efficiency partly mitigated the lower volumes and increased advertising spend in 1H2019.

Volume growth, cost reduction as a result of the closure of the Hassfurt plant and lower advertising expenditures, are expected to drive profitability improvements in 2H2019 vs 2H2018.

4.3. INSULATION

in million EUR	1H2018	1H2019 before IFRS 16	D	1H2019 after IFRS 16
	(a)	(b)	(b)/(a)-1
Sales	132,7	129,8	-2,2%	129,8
Adjusted EBITDA	22,8	14,8	-35,1%	16,7
as % of sales	17,2%	11,4%		12,8%
EBITDA	22,8	14,8	-35,1%	16,7
as % of sales	17,2%	11,4%		12,8%
Adjusted EBIT	19,6	10,9	-44,4%	11,4
as % of sales	14,8%	8,4%		8,8%
EBIT	19,6	10,9	-44,6%	11,3
as % of sales	14,8%	8,4%		8,7%

Sales

After the 1Q2019 (+4.0%), sales decreased by 7.3% in 2Q2019, on a less favourable comparison basis, from EUR 72.6 million to EUR 67.4 million.

Despite double-digit volume growth during 1H2019, sales decreased over 1H2019 by 2.2% from EUR 132.7 million to EUR 129.8 million, including a currency impact of +0.2%. Intense price competition to recapture lost market share to the fiber insulation material, as a consequence of the 2017 isocyanate shortage and price hikes, has indeed more than offset the positive volume impact. In parallel, we observed a softer activity trend in the United Kingdom when compared to the other markets where we are present.

Profitability

Adjusted EBITDA margin of 12.8%, 11.4%³ before IFRS 16 versus 17.2%² in 1H2018.

Profitability receded as the growth in sales volumes was more than offset by lower average selling prices. The new plant in Finland which started production in 4Q2018 is still in ramp-up phase and hence induced incremental fixed costs which are not yet absorbed by the additional sales contribution. It is expected that this new plant will generate a positive contribution to the results as from 2020 onwards. As of the beginning of 3Q2019, the division's profitability margin has returned to normal levels.

4.4. AUTOMOTIVE

in million EUR	1H2018 (as published)	1H2018 (restated) 2	1H2019 before IFRS 16		1H2019 after IFRS 16
		(a)	(b)	(b)/(a)-1
Sales	195,6	121,5	115,1	-5,3%	115,1
of which Interiors	104,7	104,7	94,9	-9,4%	94,9
of which sale of chemicals to Proseat	8,2	16,7	20,2	21,0%	20,2
Adjusted EBITDA	14,7	11,8	8,3	-29,3%	12,5
as % of sales Interiors	7,5%	9,7%	7,2%		10,9%
EBITDA	13,2	10,4	13,3	28,1%	17,4
as % of sales Interiors	6,8%	8,5%	11,5%		15,1%
Adjusted EBIT	6,7	5,6	2,0	-64,9%	2,4
as % of sales Interiors	3,4%	4,6%	1,7%		2,1%
EBIT	5,2	4,2	6,6	56,4%	7,1
as % of sales Interiors	2,7%	3,4%	5,7%		6,2%

Sales

Sales comprise the Interiors business (1H2019: EUR 94.9 million) as well as sales of chemical raw materials at cost to the Proseat companies (1H2019: EUR 20.2 million).

After a weak 1Q2019 (-7.2%), like-for-like² sales decreased from EUR 63.2 million in 2Q2018 to EUR 61.0 million (-3.5%) in 2Q2019, including a currency impact of +2.5%.

Sales decreased over 1H2019 by 5.3% from EUR 121.5 million to EUR 115.1 million, including a currency impact of +1.4% (i.e. CZK).

Sales volumes remained adversely affected by the continued weakness of the European and Chinese Automotive markets.

Profitability

Adjusted EBITDA margin of 10.9%, 7.2%³ before IFRS 16 versus 9.6%² in 1H2018 (as published: 7.5%).

The profitability decrease in Automotive is due to lower volumes.

EBITDA includes non-recurring elements for EUR +5.0 million (1H2018: EUR -1.4 million) representing the gain linked to the partial divestment from the Proseat companies in February 2019 and the revaluation of the option structure determining the minimum value of the remaining participation.

APPENDICES

All figures and tables contained in these annexes have been compiled in accordance with the IFRS accounting and valuation principles, as adopted within the European Union. The applied valuation principles, as published in the latest annual report at 31 December 2018, were - with the exception of IFRS 16 which has been applied as from 01 January 2019 - consistently applied for the figures included in this press release.

The analysis of the risk management is described in the annual report which is be available from www.recticel.com.

1. Condensed consolidated income statement

Group Recticel in thousand EUR	1H2018	1H2019 after IFRS 16	1H2019 before IFRS 16	D
	(a)		(b)	(b)/(a)-1
Sales	579 730	536 072	536 072	-7,5%
Distribution costs	(29 404)	(30 983)	(31 023)	5,5%
Cost of sales	(448 157)	(403 923)	(405 300)	-9,6%
Gross profit	102 169	101 166	99 749	-2,4%
General and administrative expenses	(35 328)	(37 986)	(38 076)	7,8%
Sales and marketing expenses	(34 399)	(37 074)	(37 137)	8,0%
Research and development expenses	(6 919)	(6 003)	(6 012)	-13,1%
Impairment Goodwill	(1 000)	0	0	-100,0%
Impairments tangible and intangible assets	430	( 693)	( 693)	-261,2%
Other operating revenues (1)	5 015	10 652	10 652	112,4%
Other operating expenses (2)	(8 296)	(10 140)	(10 140)	22,2%
Other operating result (1)+(2)	(3 281)	512	512	-115,6%
Income from joint ventures & associates	7 468	4 811	4 830	-35,3%
EBIT	29 140	24 733	23 173	-20,5%
Interest income	280	192	192	-31,4%
Interest expenses	(2 344)	(4 159)	(1 732)	-26,1%
Other financial income	3 260	7 832	7 832	140,2%
Other financial expenses	(5 577)	(8 448)	(8 693)	55,9%
Financial result	(4 381)	(4 583)	(2 401)	-45,2%
Result of the period before taxes	24 759	20 150	20 772	-16,1%
Income taxes	(6 073)	(4 049)	(4 049)	-33,3%
Result of the period after taxes	18 686	16 101	16 723	-10,5%
of which attributable to the owners of the parent	18 686	16 107	16 729	-10,5%
of which attributable to non-controlling interests	0	( 6)	( 6)	n.m.

2. Earnings per share

Earnings per share
Group Recticel in EUR	1H2018	1H2019	D
	(a)	(b)	(b)/(a)-1
Number of shares outstanding (including treasury shares)	54 998 850	55 293 406	0,5%
Weighted average number of shares outstanding (before dilution effect)	54 527 800	54 917 196	0,7%
Weighted average number of shares outstanding (after dilution effect)	55 139 945	55 128 831	0,0%
EBITDA	0,83	0,97	16,4%
EBIT	0,53	0,45	-15,7%
Result for the period before taxes	0,45	0,37	-19,2%
Result for the period after taxes	0,34	0,29	-14,4%
Result for the period (share of the Group) - basic	0,343	0,293	-14,4%
Result for the period (share of the Group) - diluted	0,339	0,292	-13,8%
Net book value	4,63	4,81	3,8%

3. Condensed consolidated statement of comprehensive income

Group Recticel in thousand EUR	1H2018	1H2019
Result for the period after taxes	18 686	16 101
Other comprehensive income
Items that will not subsequently be recycled to profit and loss
Actuarial gains (losses) on employee benefits recognized in equity	4 478	( 4 333)
Deferred taxes on actuarial gains (losses) on employee benefits	( 568)	759
Currency translation differences	( 41)	( 18)
Joint ventures & associates	491	( 655)
Total	4 360	( 4 247)
Items that subsequently may be recycled to profit and loss
Hedging reserves	582	0
Currency translation differences	528	371
Foreign currency translation reserve difference recycled in the income statement	0	305
Deferred taxes on hedging interest reserves	( 101)	0
Deferred taxes on retained earnings	0	( 68)
Joint ventures & associates	( 1 406)	158
Total	( 397)	766
Other comprehensive income net of tax	3 963	( 3 481)
Total comprehensive income for the period	22 649	12 620
Total comprehensive income for the period	22 649	12 620
of which attributable to the owners of the parent	22 649	12 626
of which attributable to non-controlling interests	0	( 6)

4. Condensed consolidated statement of financial position

Group Recticel in thousand EUR	31 Dec 2018	30 Jun 2019 after IFRS 16	30 Jun 2019 before IFRS 16	D
	(a)		(b)	(b)/(a)-1
Intangible assets	12 045	13 226	13 226	9,8%
Goodwill	23 354	23 641	23 641	1,2%
Property, plant & equipment	232 541	206 657	206 657	-11,1%
Right-of-use assets	0	135 075	26 847	n.m.
Investment property	3 289	3 289	3 289	0,0%
Investments in joint ventures and associates	68 631	61 862	61 881	-9,8%
Other financial investments	791	911	911	15,2%
Non-current receivables	15 655	21 962	21 962	40,3%
Other non-current contract assets	15 326	11 447	11 447	-25,3%
Deferred taxes	20 468	20 929	20 929	2,3%
Non-currrent assets	392 099	498 999	390 790	-0,3%
Inventories	103 789	108 298	108 298	4,3%
Trade receivables	107 680	128 533	128 533	19,4%
Other current contract assets	13 782	12 920	12 920	-6,3%
Other receivables and other financial assets	55 226	31 656	31 122	-43,6%
Income tax receivables	5 587	5 393	5 393	-3,5%
Other investments	138	138	138	0,1%
Cash and cash equivalents	39 554	41 316	41 316	4,5%
Assets held for sale	19 201	5 638	5 638	-70,6%
Current assets	344 958	333 892	333 358	-3,4%
TOTAL ASSETS	737 057	832 891	724 148	-1,8%
Capital	138 068	138 234	138 234	0,1%
Share premium	129 941	130 087	130 087	0,1%
Share capital	268 009	268 321	268 321	0,1%
Treasury shares	( 1 450)	( 1 450)	( 1 450)	0,0%
Other reserves	( 19 214)	( 23 202)	( 23 202)	20,8%
Retained earnings	39 636	42 405	43 028	8,6%
Hedging and translation reserves	( 22 003)	( 20 868)	( 20 876)	-5,1%
Equity (share of the Group)	264 978	265 206	265 821	0,3%
Equity attributable to non-controlling interests	0	710	710	n.m.
Total equity	264 978	265 916	266 531	0,6%
Pensions and similar obligations	48 055	53 861	53 861	12,1%
Provisions	14 318	13 007	13 482	-5,8%
Deferred taxes	9 650	9 345	9 345	-3,2%
Financial leases	17 505	89 922	16 025	-8,5%
Bank loans	15 500	13 768	13 768	-11,2%
Other loans	1 701	1 599	1 599	-6,0%
Financial liabilities	34 706	105 289	31 392	-9,5%
Non-current contract liabilities	24 096	20 003	20 003	-17,0%
Other amounts payable	202	205	205	1,5%
Non-current liabilities	131 027	201 710	128 288	-2,1%
Pensions and similar obligations	4 720	3 106	3 106	-34,2%
Provisions	2 573	979	979	-62,0%
Financial liabilities	90 021	120 626	84 709	-5,9%
Trade payables	90 756	98 508	98 509	8,5%
Current contract liabilities	44 964	44 979	44 979	0,0%
Income tax payables	3 061	2 580	2 580	-15,7%
Other amounts payable	104 957	94 487	94 466	-10,0%
Current liabilities	341 052	365 265	329 328	-3,4%
TOTAL EQUITY AND LIABILITIES	737 057	832 891	724 147	-1,8%

5. Condensed consolidated statement of cash flow

Group Recticel	1H2018	1H2019	1H2019	D
in thousand EUR		after IFRS 16	before IFRS 16
EBIT	(a) 29 141	24 733	(b) 23 173	(b)/(a) -1 -20,5%
Depreciation, amortisation and impairment losses on assets	16 275	28 513	17 599	8,1%
Write-offs (-back) on assets	- 295	79	79	nr
Changes in provisions	-4 825	-3 309	-3 454	-28,4%
Income from associates and joint ventures	-7 468	-4 833	-4 852	-35,0%
Valorisation call/put option Proseat	0	-2 860	-2 860	nr
Gain/(Loss) on disposal of assets	0	-3 642	-3 642	nr
Other non-cash elements	- 42	0	0	-100,0%
Gross operating cash flow	32 786	38 681	26 043	-20,6%
Changes in working capital	-14 744	-8 120	-8 120	-44,9%
Gross operating cash flow after changes in working capital	18 042	30 561	17 923	-0,7%
Income taxes paid	-3 998	-2 484	-2 484	-37,9%
Net cash flow from operating activities (a)	14 044	28 077	15 439	9,9%
Net cash flow from investment activities (b)	-18 059	7 460	7 460	nr
Paid interest charges on financial debt (1.a.)	-3 268	-1 355	-1 355	-58,5%
Paid interest charges on lease debt (1.b.)	- 80	- 101	- 101	26,3%
Paid dividends (2)	-12 029	-13 204	-13 204	9,8%
Increase (Decrease) of capital (3)	1 568	312	312	-80,1%
Increase (Decrease) of financial debt (4.a.)	2 231	11 507	11 507	415,8%
Increase (Decrease) of lease debt (4.b.)	- 978	-12 638	0	nr
Net cash flow from financing activities (c)	-12 556	-15 479	-2 841	-77,4%
Effect of exchange rate changes (d)	- 42	2 268	2 268	nr
Changes in cash and cash equivalents (a)+(b)+(c)+(d)+(e)	-16 613	22 326	22 326	nr
FREE CASH FLOW (a)+(b)+(1.a.)+(1.b.)+(4.b)	-7 363	21 443	21 443	nr

6. Condensed consolidated statement of changes in shareholders' equity

Group Recticel in thousand EUR	Capital	Share premium	Treasury shares	Other reserves	Retained earnings	Translation differences reserves and Hedging reserves	Total shareholders' equity	Non-controlling interests	Total equity, non controlling interests included
At the end of the period (31 December 2018)	138 068	129 941	-1 450	-19 214	39 636	-22 003	264 977	0	264 977
Dividends	0	0	0	0	-13 254	0	-13 254	0	-13 254
Stock options (IFRS 2)	0	0	0	243	0	0	243	0	243
Capital movements	166	146	0	0	0	0	312	0	312
Shareholders' movements	166	146	0	243	-13 254	0	-12 699	0	-12 699
Profit or loss of the period	0	0	0	0	16 107	0	16 107	- 6	16 101
Other comprehensive income'	0	0	0	-4 247	- 68	834	-3 481	0	-3 481
Change in scope	0	0	0	81	- 81	302	302	716	1 018
Reclassification	0	0	0	- 67	67	0	0	0	0
At the end of the period (30 June 2019)	138 234	130 087	-1 450	-23 204	42 407	-20 867	265 206	710	265 916

7. Reconciliation with alternative performance measures (consolidated)

in thousand EUR		30 JUN 2018 Adjustement for			30 JUN 2019 Adjustement for
Group Recticel	Combined	joint ventures by	Consolidated	Combined	joint ventures by	Consolidated
		application of IFRS 11			application of IFRS 11
Income statement
Sales Gross profit	755 895 123 195	( 176 165) ( 21 026)	579 730 102 169	630 575 117 629	( 94 503) ( 16 463)	536 072 101 166
EBITDA	51 549	( 6 134)	45 415	58 702	( 5 457)	53 245
EBIT	30 982	( 1 842)	29 140	26 614	( 1 881)	24 733
EBIT Amortisation intangible assets	30 982 1 970	( 1 842) ( 718)	29 140 1 252	26 614 2 022	( 1 881) ( 668)	24 733 1 354
Depreciation tangible assets	16 896	( 3 296)	13 600	16 549	( 2 356)	14 193
Depreciation right-of-use assets Impairments on goodwill, intangible and	0	0	0	11 914	( 550)	11 364
tangible fixed assets	570	0	570	693	( 0)	693
Amortisation other operational assets1	1 131	( 279)	852	911	( 2)	908
EBITDA	51 549	( 6 134)	45 415	58 702	( 5 457)	53 245
1 Mainly the release of upfront payments in Automotive to profit and loss account.
EBITDA	51 549	-	-	58 702	-	-
Net impact of fire incident in Most Restructuring charges	765 180	- -	- -	0 3 378	- -	- -
Gain/(loss) on disposals	0	-	-	( 6 840)	-	-
Costs and fees for remediation and litigation	3 698	-	-	3 210	-	-
Other	0	-	-	0	-	-
Adjusted EBITDA	56 192	-	-	58 451	-	-
EBIT	30 982	-	-	26 614	-	-
Net impact of fire incident in Most Restructuring charges	765 180	- -	- -	0 3 378	- -	- -
Gain/(loss) on disposals	0	-	-	( 6 840)	-	-
Costs and fees for remediation and litigation	3 698	-	-	3 210	-	-
Impairments	570	-	-	692	-	-
Adjusted EBIT	36 195	-	-	27 055	-	-
		31 DEC 2018			30 JUN 2019
Total net financial debt Non-current interest-bearing borrowings	47 205	( 12 499)	34 706	133 619	( 28 330)	105 289
Current interest-bearing borrowings	90 437	( 2 237)	88 200	116 188	4 438	120 626
Cash	( 36 780)	( 953)	( 37 733)	( 47 798)	6 482 6	( 41 316) ( 951)
Other financial assets 1 Net financial debt on statement of	( 691)	83	( 608)	( 957)
financial position	100 171	( 15 606)	84 565	201 052	( 17 404)	183 648
Factoring programs Total net financial debt	51 320 151 491	0 ( 15 606)	51 320 135 885	60 241 261 293	( 0) ( 17 404)	60 241 243 889
1 Hedging instruments and interest advances
Gearing ratio (Net financial debt / Total equity)
Total equity	264 978	0	264 978	265 916	0	265 916
Net financial debt on statement of financial	37,8%	-	31,9%	75,6%	-	69,1%
position / Total equity Total net financial debt / Total equity	57,2%	-	51,3%	98,3%	-	91,7%
Leverage ratio (Net financial debt / EBITDA)
EBITDA (for 1H2018, annualised by
multiplying amounts by 2)	104 673	( 11 880)	92 793	117 404	( 10 914)	106 490
Net financial debt on statement of financial position / EBITDA	1,0	-	0,9	1,7	-	1,7
Total net financial debt / EBITDA	1,4	-	1,5	2,2	-	2,3
Net working capital
Inventories and contracts in progress	-	-	103 789	-	-	108 298
Trade receivables Current contract assets	- -	- -	107 680 13 782	- -	- -	128 533 12 920
Other receivables	-	-	55 227	-	-	31 656
Income tax receivables	-	-	5 587	-	-	5 393
Trade payables Current contract liabilities	- -	- -	( 90 756) ( 44 964)	- -	- -	( 98 508) ( 44 979)
Income tax payables	-	-	( 3 061)	-	-	( 2 580)
Other amounts payable Net working capital	- -	- -	( 104 957) 42 327	- -	- -	( 94 487) 46 246
Current ratio (= Current assets / Current liabilities)
Current assets	-	-	343 137	-	-	333 892
Current liabilities Current ratio (factor)	- -	- -	339 774 1,0	- -	- -	365 265 0,9

8. Auditor's report ^a

To the Board of Directors

The auditor confirms that the review is substantially completed, and did not reveal any significant adjustments to the financial information included in the press release.

Ghent, 29 August 2019

The Statutory Auditor

DELOITTE Bedrijfsrevisoren CVBA/SCRL

______________________________________

Represented by Kurt Dehoorne

^a For the full version of the review report we refer to the half-year consolidated financial statements on our website www.recticel.com under the chapter Investor Relations > Annual and half-year Reports > Condensed financial statements per 30 June 2019

Glossary

• IFRS measures

Consolidated (data) : financial data following the application of IFRS 11, whereby Recticel's joint ventures are integrated on the basis of the equity method.

• Alternative Performance Measures

In addition, the Group uses alternative performance measures (Alternative Performance Measures or "APM") to express its underlying performance and to help the reader to better understand the results. APM are not defined performance indicators by IFRS. The Group does not present APM as an alternative to financial measures determined in accordance with IFRS and does not give more emphasis to APM than the defined IFRS financial measures.

Adjusted EBIT (previously labelled REBIT) : EBIT before Adjustments to EBIT

Adjusted EBITDA (previously labelled REBITDA) : EBITDA before Adjustments (to EBIT)

Adjustments to EBIT (previously "Non-recurring elements") :

	include operating revenues, expenses and provisions that pertain to restructuring programmes (redundancy payments, closure & clean-up costs, relocation costs,), reorganisation charges and onerous contracts, impairments on assets ((in)tangible assets and goodwill), revaluation gains or losses on investment property, gains or losses on divestments of non-operational investment property, and on the liquidation of investments in affiliated companies, gains or losses on discontinued operations, revenues or charges due to important (inter)national legal issues.
Combined (data)	: financial data including Recticel's pro rata share in the joint ventures, after elimination of intercompany transactions, in accordance with the proportional consolidation method.
Current ratio	: Current assets / Current liabilities
EBIT	: Earnings before interest and tax. Earnings comprise income from joint ventures and associates
EBITDA	: EBIT + depreciation, amortisation and impairment on assets.
Gearing	: Net financial debt / Total equity
Leverage	: Net financial debt / EBITDA. For half-year figures, EBITDA equals 2 times EBITDA of the period.
Net free cash-flow	: Net free cash flow: is the sum of the (i) Net cash flow after tax from operating activities, (ii) the Net cash flow from investing activities and (iii) the Interest paid on financial liabilities; as shown in the consolidated cash flow statement.
Net financial debt	: Interest bearing financial liabilities and lease liabilities at more than one year + interest bearing financial liabilities and lease liabilities within maximum one year + accrued interests – cash and cash equivalents + Net marked-to-market value position of hedging derivative instruments. The interest-bearing borrowings do not include the drawn amounts under non recourse factoring/forfeiting programs
Net working capital	: Inventories and contracts in progress + Trade receivables + Other receivables + Income tax receivables – Trade payables – Income tax payables – Other amounts payable
Total net financial debt : Net financial debt + the drawn amounts under off-balance sheet non-recourse factoring/forfeiting programs

Uncertainty risks concerning the forecasts made

This press report contains forecasts which entail risks and uncertainties, including with regard to statements concerning plans, objectives, expectations and/or intentions of the Recticel Group and its subsidiaries. Readers are informed that such forecasts entail known and unknown risks and/or may be subject to considerable business, macroeconomic and competition uncertainties and unforeseen circumstances which largely lie outside the control of the Recticel Group. Should one or more of these risks, uncertainties or unforeseen or unexpected circumstances arise or if the underlying assumptions were to prove to be incorrect, the final financial results of the Group may possibly differ significantly from the assumed, expected, estimated or extrapolated results. Consequently, neither Recticel nor any other person assumes any responsibility for the accuracy of these forecasts.

Financial calendar

First half-year 2019 results 30.08.2019 (at 07:00 AM CET) Third quarter 2019 trading update 30.10.2019 (at 07:00 AM CET) Annual results 2019 28.02.2020 (at 07:00 AM CET) First quarter 2020 trading update 28.04.2020 (at 07:00 AM CET) Annual General Meeting 26.05.2020 (at 10:00 AM CET) First half-year 2020 results 28.08.2020 (at 07:00 AM CET) Third quarter 2020 trading update 30.10.2020 (at 07:00 AM CET)

For additional information

RECTICEL - Olympiadenlaan 2, B-1140 Brussels (Evere)
PRESS	INVESTOR RELATIONS
Mr Olivier Chapelle	Mr Michel De Smedt
Tel: +32 2 775 18 01	Mobile: +32 479 91 11 38
chapelle.olivier@recticel.com	desmedt.michel@recticel.com

Recticel in a nutshell

Recticel is a Belgian Group with a strong European dimension, but it also operates in the rest of the world. Recticel (excluding minority stakes in joint ventures) employs 7,266 people in 83 establishments in 29 countries.

Recticel contributes to daily comfort with foam filling for seats, mattresses and slat bases of top brands, insulation material, interior comfort for cars and an extensive range of other industrial and domestic applications.

Recticel is the Group behind well-known bedding brands (Beka®, Lattoflex®, Literie Bultex®, Schlaraffia®, Sembella®, Swissflex®, Superba®, etc.) and GELTEX® inside. Within the Insulation sub-segment high-quality thermal insulation products are marketed under the well-known brands Eurowall®, Powerroof®, Powerdeck®, Powerwall® and Xentro®. Technological progress and innovation have led to breakthrough at the biggest names in the Automotive industry thanks to Colo-Fast®, Colo-Sense® and Colo-Sense Lite®.

In 2018 Recticel achieved combined sales of EUR 1.45 billion (IFRS 11 consolidated sales: EUR 1.1 billion).

Recticel (Euronext: REC – Reuters: RECTt.BR – Bloomberg: REC:BB) is listed on Euronext in Brussels.

The press release is available in English, Dutch and French on the website www.recticel.com