Earnings Release • Feb 18, 2021
Earnings Release
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Levallois, February 18, 2021
| Guidance | Guidance | Second half 2020 | |
|---|---|---|---|
| at July 23, 2020 | at November 25, 2020 | Results | |
| Operating margin | > 4% of revenue | > 5% of revenue | 5.7% of revenue |
| Free cash-flow | > €250 million | > €400 million | €606 million |
In the second half of 2020, EBITDA totaled €477 million (11.6% of revenue) and net income amounted to €152 million (3.7% of revenue).
"2020 was a year of great upheaval, which led to faster progress in the Group's transformation. Worldwide automotive production saw a historic decline in the first half of the year. The recovery in production will take place at a moderate pace over several years, with large variations between regions. With our adaptable, responsive teams, our good geographical balance and the increased efficiency of our operations, we will be able to rise to these challenges.
Technological changes had already started to emerge, and their pace accelerated, particularly regarding the shift to electrified vehicles. Today, we have the ability to innovate, a diversified customer portfolio and a solid financial position, enabling us to turn this disruption into growth.
Social and environmental matters are also a central concern in terms of our performance and strategy. Our ambition of supporting sustainable mobility for the good of all our stakeholders is greater than ever."
Plastic Omnium is the world leader in intelligent exterior systems, clean energy systems and automotive modules.
The Group and its joint ventures employ more than 31,000 people in 135 plants, 25 R&D centers and 25 countries worldwide and serve 93 automotive brands.
Plastic Omnium is listed on Euronext Paris, compartment A. It is eligible for the Deferred Settlement Service (SRD) and is part of the SBF 120 and CAC Mid
Compagnie Plastic Omnium SE's Board of Directors, chaired by Mr. Laurent Burelle, met on February 17, 2021 and approved the consolidated financial statements for the year ended December 31, 2020.
| In € millions | 2019 | 2020 | Change | |
|---|---|---|---|---|
| Economic revenue1 | 9,183 | 7,732 | -15.8% | |
| Consolidated revenue2 | 8,494 | 7,073 | -16.7% | |
| Operating margin3 (% of consolidated revenue) |
511 6.0% |
118 1.7% |
-€393 million -4.3 pts |
|
| Impairment of assets | - | -255 | - | |
| Net result group share | 258 | -251 | -€509 million | |
| EBITDA4 % of consolidated revenue |
1,005 11.8% |
648 9.2% |
-€357 million -2.6 pts |
|
| Investments | 512 | 374 | -€138 million | |
| Real estate divestment | -129 | - | - | |
| Free cash flow5 | 347 | 34 | -€313 million | |
| Net debt6 at Dec. 31 Net debt / equity Net debt / EBITDA |
739 32% 0.7 |
807 41% 1.2 |
+€68 million +9 pts +0.5 pt |
Plastic Omnium's financial performance differed greatly between the first and second semesters of 2020.
In the first half of the year, the Group's results were strongly affected by the slump in worldwide automotive production (down 32.8% in the first half, including a 43.7% drop in the second quarter).
In the second half of 2020, worldwide automotive production was stable year-on-year and recovered more quickly than expected. This amplified the positive impact of plans to cut costs and boost cash generation. As a result, the Group's results improved relative to the second half of 2019.
| In € millions | H1 2020 | H2 2020 | H2 2019 |
|---|---|---|---|
| Economic revenue | 3,233 | 4,499 | 4,572 |
| Consolidated revenue | 2,962 | 4,111 | 4,225 |
| Operating margin % of consolidated revenue |
-116 -3.9% |
234 5.7% |
230 5.4% |
| Net result group share | -404 | 152 | 103 |
| EBITDA % of consolidated revenue |
171 5.8% |
477 11.6% |
494 11.7% |
| Investments | -226 | -148 | -204 |
| Free cash flow | -572 | 606 | 316 |
| of which real estate divestment | - | - | 129 |
| Net debt at end of period | 1,410 | 807 | 739 |
| Net debt / equity | 78% | 41% | 32% |
| Net debt / EBITDA (on a rolling 12-month basis) | 2.1 | 1.2 | 0.7 |
| Net debt / EBITDA (based on annualized half-year figures) | 4.1 | 0.8 | 0.7 |
| In € millions by business line |
2019 | 2020 | Change | Change LFL* |
|---|---|---|---|---|
| Plastic Omnium Industries | 6,919 | 5,628 | -18.7% | -17.1% |
| Plastic Omnium Modules | 2,264 | 2,104 | -7.0% | -3.8% |
| Economic revenue | 9,183 | 7,732 | -15.8% | -13.8% |
| Joint ventures | 689 | 659 | -4.4% | -1.5% |
| Plastic Omnium Industries | 6,398 | 5,143 | -19.6% | -18.2% |
| Plastic Omnium Modules | 2,096 | 1,931 | -7.9% | -4.6% |
| Consolidated revenue | 8,494 | 7,073 | -16.7% | -14.8% |
*Like-for-like: at constant scope and exchange rates
In 2020, worldwide automotive production fell by 14.4 million vehicles (down 16.8%), from 86.0 million to 71.6 million vehicles.
Plastic Omnium generated economic revenue of €7,732 million, down 15.8% compared with 2019 and down 13.8% at constant exchange rates. The figure includes a negative exchange-rate effect of €181 million. The Group achieved outperformance of 3 points relative to worldwide automotive production, driven by Plastic Omnium Modules (outperformance of 13.0 points).
Plastic Omnium's consolidated revenue totaled €7,073 million in 2020, down 16.7% and 14.8% at constant exchange rates, including a negative exchange-rate effect of €161 million.
Plastic Omnium's business activities fared significantly better than total automotive production in Europe (outperformance of 8.3 points), China (outperformance of 6.0 points) and in Asia excluding China (outperformance of 9.7 points). They also outperformed by 2.0 points in North America.
The Group's geographical mix led to a 3-point outperformance at the Group level.
| In € millions and as a % of revenue By region |
2019 | 2020 | Change | Change LFL* | Outperformance vs. automotive production |
|---|---|---|---|---|---|
| Europe | 4,799 52.3% |
4,131 53.4% |
-13.9% | -13.7% | +8.3 pts |
| North America | 2,630 28.6% |
2,045 26.4% |
-22.2% | -18.7% | +2.0 pts |
| China | 857 9.3% |
847 11.0% |
-1.2% | +0.5% | +6.0 pts |
| Asia excluding China | 624 6.8% |
537 6.9% |
-13.9% | -10.3% | +9.7 pts |
| Other | 273 3.0% |
172 2.3% |
-36.8% | -22.6% | -0.2 pt |
| Economic revenue1 | 9,183 | 7,732 | -15.8% | -13.8% | +3 pts |
| Joint ventures | 689 | 659 | -4.4% | -1.5% | - |
| Consolidated revenue2 | 8,494 | 7,073 | -16.7% | -14.8% | +2 pts |
*Like-for-like: at constant scope and exchange rates
In Europe, Plastic Omnium's revenue amounted to €4,131 million in 2020. Revenue in the region fell 13.7%, against a 22.0% decline in automotive production. This outperformance of 8.3 points was driven by Germany, Spain, France and Eastern Europe. The Group especially benefited from its successful positioning on new electric vehicle programs (Porsche and Volkswagen), and from the extension of its modules offering, which have increased its content per vehicle.
In North America, Plastic Omnium's revenue totaled €2,045 million in 2020. Revenue for the region fell 18.7% at constant exchange rates, while industry production was down 20.7%. The ramp-up of the five new plants opened in the last three years is now complete.
In Asia excluding China, revenue came to €537 million in 2020, down 10.3% at constant exchange rates. Against a market decline of 20.0%, this represented an outperformance of 9.7 points. Business benefited from a strong recovery in South Korea, India and Thailand.
In China, which accounts for 11% of Group economic revenue, Plastic Omnium posted revenue of €847 million. Revenue was stable (up 0.5% at constant exchange rates), which represented an outperformance of 6.0 points. This was thanks to market share gains and growth in the modules business, which launched in China in 2018.
In the fourth quarter of 2020 more specifically, worldwide automotive production started growing again (up 2.1%) and Plastic Omnium generated economic revenue of €2,402 million, up 3.1% and 6.8% at constant exchange rates, representing an outperformance of 4.7 points. Per region, Plastic Omnium outperformed by 6.5 points in Europe, 8.7 points in China and 18.6 points in Asia excluding China. In North America, business growth was in line with automotive production.
Already expecting a significant drop in automotive production in 2020, the Group started implementing cost reduction and industrial footprint flexibility plans in late 2019. It stepped up all of those measures as soon as production stoppages were announced in the first quarter of 2020, first affecting China and then the rest of the world. Those measures were managed site-by-site and on a daily basis, and then adjusted as closely as possible to local conditions in order to support the resumption of activity, which varied widely between regions. In the second half, the faster-than-expected rebound in worldwide automotive production amplified the positive effects of these measures.
In 2020 as a whole, staff costs were reduced by 12% (down €153 million), while production costs and general expenses were cut by 10% (down €87 million).
In 2020, the Group's operating margin amounted to €118 million and represented 1.7% of consolidated revenue: €100 million for Plastic Omnium Industries (1.9% of revenue) and €19 million for Plastic Omnium Modules (1.0% of revenue).
In the second half of 2020, the Group's operating income amounted to €234 million and represented 5.7% of revenue (7.0% for Plastic Omnium Industries and 2.5% for Plastic Omnium Modules). Operating margin improved relative to the second half of 2019 (5.4% of revenue including 6.5% for Plastic Omnium Industries and 2.3% for Plastic Omnium Modules), while business levels were slightly lower (consolidated revenue down 2.7%).
| In € millions and as a % of revenue by business line |
2019 | 2020 | H2 2019 | H2 2020 |
|---|---|---|---|---|
| Consolidated revenue | 8,494 | 7,073 | 4,225 | 4,111 |
| Plastic Omnium Industries | 6,398 | 5,143 | 3,190 | 2,940 |
| Plastic Omnium Modules | 2,096 | 1,931 | 1,035 | 1,172 |
| Operating margin | 511 6.0% |
118 1.7% |
230 5.4% |
234 5.7% |
| Plastic Omnium Industries | 460 7.2% |
100 1.9% |
206 6.5% |
205 7.0% |
| Plastic Omnium Modules | 50 2.4% |
19 19 1.0% |
23 2.3% |
29 2.5% |
Along with these cost flexibility measures, the Group is adjusting its industrial facilities to take account of a market scenario in which worldwide automotive production is not expected recover to pre-crisis levels (92 million vehicles) before 2024 or 2025. Thus, the Group will achieve €40 million of annual cost savings by the end of 2022 by closing three plants (in Germany, Spain and Argentina), streamlining the German R&D footprint within the Intelligent Exterior Systems business, mothballing certain paint lines and achieving synergies in the organization of our Asian head office.
The action plan at the Greer plant in the United States is also moving forward as announced. During the plant shutdown in the second quarter, the Group completed work to transform its industrial and logistics processes, which has improved all industrial indicators. The plant is now operating at high output rates, and is delivering the quality and service expected by the customer. The Group confirms its target for the Greer plant to return to breakeven in 2021.
The Group recorded €334 million of non-recurring expenses in 2020. These included €255 million of impairment charges booked over the year, due to the slump in volumes caused by the Covid-19 pandemic and the assumption of a slow recovery in worldwide automotive production, which in the medium term will remain significantly below pre-crisis forecasts.
Net financial expense amounted to €69 million in 2020 (1.0% of revenue) as opposed to €78 million in 2019, as a result of a lower average cost of debt.
In 2020, the Group recorded tax income of €31 million versus an expense of €90 million in 2019, mainly because of the impact of deferred taxes.
As a result, the Group released a net result group share of -€251 million compared to €258 million in 2019. In the second half of the year, the Group generated a net result group share of €152 million (3.7% of revenue) compared to €103 million in the second half of 2019 (2.4% of revenue).
EBITDA totaled €648 million in 2020 (9.2% of consolidated revenue) versus €1,005 million (11.8% of consolidated revenue) in 2019. In the second half of the year, EBITDA amounted to €477 million (11.6% of revenue) as opposed to €494 million in the second half of 2019 (11.7% of revenue) and €171 million in the first half of 2020 (5.8% of revenue).
Investments totaled €374 million or 5.3% of consolidated revenue (€512 million or 6.0% of consolidated revenue in 2019), a reduction of €138 million (-27%). After an extensive capital expenditure program in recent years, the Group's current installed capacity is sufficient to support its future growth. As a result, investments will equal less than 6% of revenue in the coming years, even as the Group pursues its large-scale innovation program.
The working capital requirement (WCR) fell by €45 million year-on-year. In the first half of 2020, it deteriorated by €415 million due to the slump in business levels in Europe and North America in the second quarter. In the second half of the year, the WCR improved by €370 million relative to the first half as business levels recovered.
Accordingly:
In 2020, the Group generated free cash flow of €34 million, equal to 0.5% of consolidated revenue. After an outflow of €572 million in the first half of the year, Plastic Omnium achieved positive free cash flow of €606 million in the second half. In 2019, the Group's free cash flow totaled €347 million, including €129 million from the disposal of non-industrial real-estate assets to Sofiparc. Excluding that disposal, it amounted to €218 million.
At December 31, 2020, net debt totaled €807 million, quite similar to the end-2019 figure of €739 million.
On May 29, 2020, the Group repaid €500 million bonds as expected. During the year, it also obtained €560 million of new credit facilities from its banking partners.
In 2020, Compagnie Plastic Omnium SE paid €71 million of dividends with respect to 2019 (dividend of €0.49 per share, down 34% from the €0.74 dividend paid in the previous year and initially proposed with respect to 2019).
At December 31, 2020, the Group had €2.6 billion of liquidity, up €200 million compared with December 31, 2019, including:
At the Shareholders' General Meeting of April 22, 2021, the Board of Directors will propose a dividend of €0.49 per share, in line with that of the previous year.
The dividend will be paid on May 3, 2021, after approval by the Shareholders' General Meeting.
In its meeting of February 17, 2021, Compagnie Plastic Omnium SE's Board of Directors decided to cancel 1,443,954 shares held in treasury, equal to 0.97% of the share capital.
The transaction will take place on February 25, 2021.
Following that capital reduction through the cancellation of treasury shares, Compagnie Plastic Omnium SE's share capital will be reduced from 148,566,107 shares to 147,122,153 shares with par value of €0.06 each, making a total amount of €8,827,329.18.
After that transaction, the percentage of control of the holding company Burelle SA will rise from 58.78% to 59.35%.
Operational excellence: transformation and digitalization of the Group
In 2020, Plastic Omnium launched a transformation plan called Omega, with the aim of improving the way the Group's organization operates and giving it greater industrial efficiency and agility by simplifying processes, accelerating digitization, and facilitating a more cross-functional approach.
The first two phases of the Omega plan are currently in progress, focusing on indirect purchasing and on project design and development. This will allow the Group to achieve efficiency gains of €200 million by the end of 2022.
Innovation: acceleration on electric vehicles (BEVs and FCEVs)
Numerous new programs for 100% electric vehicles are coming on stream. They represent an opportunity for Plastic Omnium to increase its content per vehicle and broaden its customer base. For example, Plastic Omnium equips the following vehicles, which have either been recently launched or are due to be launched in the near future:
Plastic Omnium is confident that hydrogen will play a key role in the clean mobility of the future, and has since 2015 been investing in hydrogen technologies with the ambition of being a leading player across the whole hydrogen value chain:
In hydrogen vessels, Plastic Omnium is certified for all types of pressurization and has promising commercial prospects, aiming for a 25% market share by 2030.
In fuel cells, the Group is aiming for a 10-15% market share by 2030. Plastic Omnium is strengthening its position in this market with the creation of specialist joint venture EKPO Fuel Cell Technologies with German supplier ElringKlinger. The joint venture should be in place by the end of the first quarter of 2021, and the Group will invest €100 million in it over the next four years.
As a result, Plastic Omnium has a major technological and industrial edge, since it is currently the only player that can offer a comprehensive product range covering the whole hydrogen value chain, with production capacity already installed.
The FCEV market is predicted to grow to at least 2 million vehicles by 2030, and Plastic Omnium is aiming for revenue of €3 billion in this market in 2030 (compared to €300 million in 2025).
To achieve that target, the Group will invest around €100 million per year in the next few years, both directly and via its EKPO Fuel Cell Technologies joint venture. These investments will give it an industrial presence in all regions, with around 15 production lines deployed in existing sites and new plants by 2030.
Sustainability: confirmed commitment to social and environmental responsibility with ACT FOR ALL™
Plastic Omnium's sustainability strategy is a key driver of performance and excellence. The Group has formally set out its commitments in a global program called ACT FOR ALL™. This ambitious program, in which the Group will regularly measure its progress toward clear objectives, seeks to engage all of the Group's stakeholders around three aims: a responsible company, care for people, and sustainable production.
To better reflect the fact that sustainability is central to the Group's performance and strategy, the Group is changing its compensation policy for its executive directors and main senior managers from 2021 onward to increase the portion of variable compensation determined by extra-financial criteria, particularly environmental, social and human resources criteria, and to integrate those criteria into long-term compensation arrangements.
The Group will provide details about its carbon-neutral ambition in the second half of 2021. It will also announce medium-term targets approved by the SBTi.
In April 2020, Plastic Omnium created the Covid-19 ACT FOR ALLTM solidarity fund, to enable each of its sites, in line with the situation on the ground locally, to help and support people impacted by the coronavirus health crisis. With a budget of €1 million, it is intended to support recognized local nonprofit organizations. Priority has been given to helping medical personnel and vulnerable people. In total, 124 causes in 22 countries have been supported to date.
In 2021 as a whole, worldwide automotive production is forecasted to grow by 14% to 81.5 million vehicles. For its own business planning purposes, Plastic Omnium is applying a 5% discount to that forecast.
For 2021, Plastic Omnium expects:
Supply disruptions, especially of semiconductor components, are currently leading many OEMs to cut production. Plastic Omnium, indirectly affected, manages the situation on a daily basis and site by site. The evolution of the situation will be the subject of regular information from the Group.
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Compagnie Plastic Omnium SE's full-year 2020 results will be presented in a webcast at 9am (Paris time) on Thursday February 18, 2021.
To sign up for the webcast, click on the following link: https://onlinexperiences.com/Launch/QReg/ShowUUID=1BAB668A-B160-46D5-BC57-A14957419F4C
If you would like to access the conference call, please call one of the following numbers:
Participant PIN: 88549456#
More detailed financial information is available on the website www.plasticomnium.com.
All references to worldwide automotive production come from IHS data for January 2021.
As of the date of this press release, the financial statements have been audited and the statutory auditors' report includes a full certification of the consolidated financial statements, without qualification.
This press release is published in French and in English. In the event of any divergence between the two versions, the original French version shall prevail.
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