15 February 2024
Q3 2023/24 Results
- In Q3 2023/24, Novem recorded revenue of €138.7m, falling short against previous year by -16.9%
- Top line was adversely affected by extended customer plant holidays over the turn of the year
- Market weakness underlined by several OEMs deploying short-time work and cutting back their production
- Notwithstanding, Novem was able to deliver a robust profit margin of 12.0% (Adj. EBIT of €16.6m)
- Italian operation based in Bergamo closed and successfully transferred to other European factories
- Crisis in the Red Sea jeopardises marine transport from and to China and requires additional safety stock
- Novem secured 2nd EV from Chinese carmaker Avatr, backed by Changan Automobile, CATL and Huawei
- Solid order intake in the current year is well supporting the mid-term guidance on revenue growth of 5-6%
Current market environment remains challenging but good prospects for the future
GROUP RESULTS
Revenue
- In Q3 2023/24, total revenue of €138.7m came down by €-28.2m or -16.9% in comparison to last year
- As previously, top line was affected by FX effects; revenue would have been higher by €+3.4m or +2.4% at constant FX rates
- Revenue Series of €123.1m declined considerably by €-24.3m or -16.5% contributing 88.7% to total revenue
- Drop in Series turnover was mainly driven by extended customer plant holidays and continued weak demand, especially in Europe
- In contrast, publicly available data from LMC showed remarkable growth in LVP from 22.0m to 24.4m units (+10.8% y/y)
- Revenue Tooling of €15.7m fell short of PY because of a different project phasing
-
On a twelve-month basis, total revenue recorded at €659.9m and decreased by -4.1% versus last quarter
-
Adj. EBIT in Q3 2023/24 fell short of previous year by €-2.4m but still resulted in a solid margin of 12.0% for the reporting period
- Bottom line was adversely affected by reduced turnover because of fewer working days and lower call-offs of the OEMs
- Again, this led to a mediocre utilisation of operations, primarily in Bergamo, Pilsen and Žalec
- Production in Italy was smoothly transferred to low-cost countries according to the restructuring plan
- Moreover, operating result was further diluted by an unfavourable product mix and model changes
- Adj. EBIT benefited from lower freight rates and factor input costs like material and leased workers
- Furthermore, operating result was supported by agreed customer compensation payments as well as the release of accruals
Free cash flow
- Free cash flow of €-3.9m turned slightly negative for the reporting period under review and was well below last year by €-28.4m
- Cash flow from operating activities (€-0.3m) fell short of prior year by €-28.8m due to the following reasons:
- Reduced provisions (€-10.4m) and other liabilities (€-8.2m), lower profit after tax (€-7.7m), higher trade receivables (€-5.2m) and Others (€-5.5m); conversely, other non-cash income PY (€+8.2m)
- Change in provisions was largely linked to the release of accruals and the decline in other liabilities was affected by lower advanced tooling payments – both aperiodic effects
- Cash flow from investing activities of €-3.6m recorded virtually on prior year's level of €-3.9m
- Free cash flow for the last rolling twelve months of €69.2m came down by -29.1% compared to last quarter (€97.7m)
Capital expenditure
- Capital expenditure of €4.6m in Q3 2023/24 remained almost flat compared to previous year (€4.7m)
- As a result of the weaker top line, the underlying capex ratio rose to 3.3% of revenue (2.8% PY)
- Nearly half of the capital expenditure for the quarter under review was invested in China (€-2.3m)
- Majority of capex was linked to new projects and the necessary preparation of the production infrastructure
- On a last-twelve-month basis, capital expenditure of €18.3m was unchanged to previous quarter (€18.3m)
- Capex ratio for the last twelve months remained at a stable level of 2.8% based on LTM total revenue of €659.9m
Total working capital
LTM total working capital (€m)
- As of 31 December 2023, total working capital of €149.2m stood 8.8% higher than last year (€137.1m)
- Deviation of €-12.1m y/y attributable to trade payables (€-14.2m), tooling net (€-12.3m) and contract assets (€-2.3m) but also lower trade receivables (€+11.2m) and inventories (€+5.5m)
- Decrease in trade payables came from lower volume and tooling net was driven by lower cash in-flow versus previous year; partly offset by sales-related decline in trade receivables
- Total working capital expressed as a percentage of LTM revenue recorded at 22.6% as of 31 December 2023 (20.0% PY)
- On the other hand, trade working capital (without both tooling net and contract assets) improved from €60.6m to €58.1m
- Reported in days outstanding, DIO of 47 (43 PY) and DPO of 45 (53 PY) deteriorated, while DSO remained stable at 33 (33 PY)
Capital structure
- Gross financial debt of €307.4m increased by €+25.0m versus last year, largely attributable to a step-up in lease liabilities
- Lease liabilities rose considerably to €57.7m (€34.2m PY) due to the renewal of the existing lease contracts in Querétaro
- Principal sources of funds included €125.1m cash (€132.4m PY) and €37.2m from non-recourse factoring (€38.2m PY)
- As of 31 December 2023, net financial debt was at €182.3m and showed a sharp increase versus PY (€150.0m)
- As a result, the net leverage ratio moved up to 1.7x compared to previous year (1.3x Adj. EBITDA)
- However, the ratio would have been at 1.5x only, when adjusted for the special leasing impact in Querétaro
Revenue by operating segments
- On a segmental basis, revenue decreased in all regions, in total by €-28.2m y/y, to the largest extend in Europe
- Weaker revenue in Europe (€-23.3m y/y) basically resulted from longer customer plant holidays and generally poor call-offs
- At platform level, the negative ranking was led by BMW 5-series (EOP), MB E-class, S-class and GLC
- Minor decline in Americas (€-1.8m y/y) caused by Tooling, while Series developed favourably despite a weaker US dollar
- Revenue in Asia (€-3.0m y/y) was negatively affected by several model changes (especially SOP/EOP of MB E-class) and a slow ramp-up of local business (Avatr, Hongqi, Lotus Lambda)
- LTM revenue showed the following allocation across all regions: 46.0% Europe, 40.3% Americas and 13.7% Asia
Adj. EBIT by operating segments
- Adj. EBIT increased considerably in Americas, moved sideways in Asia and declined sharply in Europe compared to prior year
- Adj. EBIT in Europe dropped to €-3.9m (€10.2m PY) because of significantly lower revenue, volume-related inefficiencies as well as a negative product mix
- Improved material costs (purchasing savings, enhanced quality), customer compensation payments and reduced leased workers mitigated the unfavourable market effects
- In Americas, Adj. EBIT of €19.1m (€7.1m PY) was supported by buoyant Series revenue, continued lower freight and input costs and the release of accruals (customer pricing)
- Stable profit in Asia with an Adj. EBIT of €1.4m (€1.8m PY) due to strong Tooling business and improved input costs
- LTM Adj. EBIT recorded at €75.8m with a moderate reduction of €-2.4m or -3.1% in comparison to last quarter
Profit and loss statement (€m)
|
Q3
2022/23 |
Q3
2023/24 |
2022/23
YTD |
2023/24
YTD |
|
|
|
|
|
| Revenue |
166
9 |
138
7 |
526
2 |
485
8 |
Increase
or decrease
in
finished
goods
and
work
in
process |
-0
8 |
2
5 |
-6
1 |
-9
0 |
performance
Total
operating |
166
2 |
141
3 |
520
1 |
476
8 |
|
|
|
|
|
Other
operating
income |
4
9 |
8
2 |
14
4 |
13
1 |
Cost
of
materials |
-82
2 |
-67
7 |
-266
3 |
-231
6 |
Personnel
expenses |
-41
0 |
-40
5 |
-123
1 |
-125
9 |
Depreciation
, amortisation
and
impairment |
-8
1 |
-8
2 |
-24
2 |
-24
7 |
Other
operating
expenses |
-20
6 |
-16
5 |
-60
4 |
-53
1 |
Adj
EBIT |
19
0 |
16
6 |
60
5 |
54
6 |
|
|
|
|
|
| Adjustments |
-0
6 |
-1
4 |
-1
1 |
-6
0 |
|
|
|
|
|
(EBIT)
Operating
result |
18
5 |
15
3 |
59
5 |
48
6 |
|
|
|
|
|
Finance
income |
9
9 |
6
7 |
2
4 |
8
7 |
Finance
costs |
-2
9 |
-5
1 |
-13
5 |
-14
4 |
Financial
result |
7
1 |
2
5 |
-11
0 |
-6
6 |
|
|
|
|
|
Income
taxes |
-6
0 |
-2
1 |
-13
8 |
-8
3 |
Deferred
taxes |
1
5 |
-2
4 |
1
1 |
-2
2 |
Income
tax
result |
-4
6 |
-4
5 |
-12
7 |
-10
5 |
|
|
|
|
|
Profit
for
the
period |
21
0 |
13
3 |
35
8 |
31
4 |
Balance sheet
Balance sheet
(€m) |
|
|
|
|
|
|
|
|
|
|
|
|
31
Dec
2022 |
31
Dec
2023 |
|
31
Dec
2022 |
31
Dec
2023 |
|
|
|
|
|
|
|
|
|
Total
equity |
89
9 |
83
6 |
Intangible
assets |
2
4 |
2
0 |
Pensions
and
similiar
obligations |
35
4 |
27
1 |
Property
, plant
and
equipment |
179
6 |
197
6 |
Other
provisions |
3
2 |
2
1 |
Trade
receivables |
50
8 |
54
3 |
Financial
liabilities |
248
1 |
248
6 |
Other
non-current
assets |
11
8 |
14
8 |
Other
liabilities |
28
0 |
56
2 |
Deferred
tax
assets |
20
3 |
4
6 |
Deferred
liabilities
tax |
4
0 |
-0
8 |
Total
non-current
assets |
264
9 |
273
3 |
Total
liabilities
non-current |
318
7 |
333
2 |
| Inventories |
122
3 |
110
6 |
Tax
liabilities |
19
8 |
14
4 |
Trade
receivables |
43
3 |
39
1 |
Other
provisions |
48
3 |
46
4 |
Other
receivables |
33
7 |
28
2 |
Financial
liabilities |
1
4 |
1
1 |
Other
current
assets |
15
2 |
17
5 |
Trade
payables |
52
1 |
40
1 |
Cash
and
cash
equivalents |
132
4 |
125
1 |
Other
liabilities |
81
5 |
75
2 |
Total
current
assets |
346
9 |
5
320 |
Total
liabilities
current |
203
2 |
177
0 |
| Assets |
611
8 |
593
8 |
Equity
and
liabilities |
611
8 |
593
8 |
Cash flow statement
Cash flow statement (€m)
|
Q3
2022/23 |
Q3
2023/24 |
YTD
2022/23 |
YTD
2023/24 |
|
|
|
|
|
Profit
for
the
period |
21
0 |
13
3 |
35
8 |
31
4 |
expense (+)/income
(-)
Income
tax |
6
0 |
2
1 |
13
8 |
8
3 |
Financial
result
(+)/(-)
net |
2
1 |
4
1 |
4
2 |
10
1 |
Depreciation
, amortisation
and
impairment
(+) |
8
1 |
8
7 |
24
2 |
25
2 |
Other
expenses (+)/income
(-)
non-cash |
-7
1 |
1
1 |
-6
9 |
-0
6 |
(-)/decrease
(+)
Increase
in
inventories |
-3
4 |
-5
7 |
7
1 |
6
8 |
Increase
(-)/decrease
(+)
in
trade
receivables |
8
6 |
3
4 |
-9
5 |
-1
2 |
Increase
(-)/decrease
(+)
in
other
assets |
0
5 |
-1
2 |
-1
6 |
6
5 |
(-)/decrease
Increase
(+)
in
deferred
taxes |
-1
5 |
2
4 |
-1
1 |
2
2 |
(-)/decrease
(+)
expenses/deferred
Increase
in
prepaid
income |
1
0 |
0
3 |
0
9 |
-1
3 |
Increase
(+)/decrease
(-)
in
provisions |
2
2 |
-8
2 |
6
5 |
-4
4 |
Increase
(+)/decrease
(-)
in
trade
payables |
-14
5 |
-17
0 |
-14
6 |
-21
9 |
(+)/decrease
(-)
Increase
in
other
liabilities |
8
9 |
0
6 |
2
9 |
-10
9 |
Gain
(-)/loss
(+)
of
on disposals
non-current
assets |
0
0 |
0
0 |
0
1 |
0
0 |
Cash
received
(+)
from/cash
paid
(-)
for
income
taxes |
-3
5 |
-4
2 |
-7
8 |
-11
6 |
Cash
flow
from
operating
activities |
28
5 |
-0
3 |
53
9 |
37
9 |
Cash flow statement (€m)
|
Q3
2022/23 |
Q3
2023/24 |
YTD
2022/23 |
YTD
2023/24 |
|
|
|
|
|
Cash
received
(+)
from
disposals
of
, plant
and
equipment
property |
0
0 |
0
0 |
0
8 |
0
0 |
Cash
paid
(-)
for
investments
in
intangible
assets |
-0
0 |
-0
1 |
-0
1 |
-0
2 |
Cash
paid
(-)
for
investments
in
, plant
and
equipment
property |
-4
7 |
-4
5 |
-12
2 |
-12
4 |
(+)
Interest
received |
0
8 |
1
0 |
2
4 |
4
3 |
Cash
flow
from
investing
activities |
-3
9 |
-3
6 |
-9
0 |
-8
3 |
|
|
|
|
|
Cash
paid
(-)
for
subsidies/grants |
- |
- |
-0
0 |
-0
0 |
Cash
(-)
for
finance
paid
leases |
-2
5 |
-2
7 |
-6
9 |
-7
7 |
Interest
paid
(-) |
-2
3 |
-4
4 |
-5
2 |
-12
5 |
Dividends
paid
(-) |
- |
- |
-17
2 |
-49
5 |
Cash
flow
from
financing
activities |
-4
8 |
-7
1 |
-29
4 |
-69
7 |
|
|
|
|
|
Net
increase
(+)/decrease
(-)
in
cash
and
cash
equivalents |
19
8 |
-11
0 |
15
6 |
-40
1 |
Effect
of
exchange
fluctuations
on cash
and
cash
equivalents
rate |
-0
8 |
-0
5 |
-0
1 |
-0
3 |
Cash
and
cash
equivalents
the
beginning
of
the
reporting
period
at |
113
5 |
136
6 |
117
0 |
165
5 |
Cash
of
and
cash
equivalents
the
end
the
reporting
period
at |
132
4 |
125
1 |
132
4 |
125
1 |
EBIT adjustments
EBIT adjustments (€m)
|
Q3
2022/23 |
Q3
2023/24 |
2022/23
YTD |
2023/24
YTD |
|
|
|
|
|
| Revenue |
166
9 |
138
7 |
526
2 |
485
8 |
|
|
|
|
|
| EBIT |
18
5 |
15
3 |
59
5 |
48
6 |
EBIT
margin |
11
1% |
11
0% |
11
3% |
10
0% |
|
|
|
|
|
| Restructuring |
- |
0
7 |
- |
2
5 |
Covid-19
costs |
0
1 |
- |
0
3 |
- |
| Others |
0
4 |
0
7 |
0
7 |
0
8 |
Exceptional
items |
0
6 |
0
7 |
1
1 |
0
8 |
|
|
|
|
|
Discontinued
operations |
- |
- |
- |
- |
|
|
|
|
|
| Adjustments |
0
6 |
1
4 |
1
1 |
6
0 |
|
|
|
|
|
Adj
EBIT |
19
0 |
16
6 |
60
5 |
54
6 |
Adj
EBIT
margin |
11
4% |
12
0% |
11
5% |
11
2% |
Definitions and basis of preparation of the financial information
- Adj. EBIT is defined as EBIT as adjusted for certain adjustments which management considers to be non-recurring in nature, as Novem believes such items are not reflective of the ongoing performance of the business
- Adj. EBIT margin is defined as Adj. EBIT divided by revenue
- Adj. EBITDA is defined as profit for the year before income tax result, financial result and amortisation, depreciation and write-downs as adjusted for certain adjustments which management considers to be non-recurring in nature, as Novem believes such items are not reflective of the ongoing performance of the business
- Adj. EBITDA margin is defined as Adj. EBITDA divided by revenue
- Capital expenditure is defined as the sum of cash paid for investments in property, plant and equipment and cash paid for investments in intangible assets excluding currency translation effects
- Cash conversion is defined as free cash flow divided by Adj. EBITDA
- Days inventory outstanding (DIO) is defined by dividing inventories (as shown in the consolidated statement of financial position, but excluding tooling) by revenue generated from the sale of series trim elements in the last three months
- Days sales outstanding (DSO) is defined by dividing trade payables (as shown in the consolidated statement of financial position, but excluding tooling) by revenue generated from the sale of series trim elements in the last three months
- Days payables outstanding (DPO) is defined by dividing trade payables (as shown in the consolidated statement of financial position, but excluding tooling) by net costs series incurred in the three months
- EBIT is defined as profit for the year before income tax result and financial result
- EBITDA is defined as profit for the year before income tax result, financial result and amortisation and depreciation
- Free cash flow is defined as the sum of cash flow from operating and investing activities
- Gross financial debt is defined as the sum of liabilities to banks, hedging and lease liabilities
- Net financial debt is defined as gross financial debt less cash and cash equivalents
- Net leverage ratio is defined as the ratio of net financial debt to Adj. EBITDA
- Total operating performance is defined as the sum of revenue and increase or decrease in finished goods
- Total working capital is defined as the sum of inventories, trade receivables and contract assets excluding expected losses less trade payables, tooling received advance payments received and other provisions related to tooling
- Trade working capital is defined as the sum of inventories non-tooling and trade receivables related to non-tooling less trade payables related to non-tooling
Date of publication
15 February 2024
Contact
[email protected] | All information is constantly updated and available. Please visit the Investor Relations Portal on the Company website: https://ir.novem.com
Editor
Novem Group S.A. | 19, rue Edmond Reuter | 5326 Contern | Luxembourg | www.novem.com
Financial information
This presentation contains unaudited financial information for Novem, which may be subject to change.
Disclaimer
Novem Group S.A. (the "Company", "Novem") has prepared this presentation solely for your information. It should not be treated as giving investment advice. Neither the Company, nor any of its directors, officers, employees, direct or indirect shareholders and advisors nor any other person shall have any liability whatsoever for any direct or indirect losses arising from any use of this presentation. While the Company has taken all reasonable care to ensure that the facts stated in this presentation are accurate and that the opinions contained in it are fair and reasonable, this presentation is selective in nature. Any opinions expressed in this presentation are subject to change without notice and neither the Company nor any other person is under any obligation to update or keep current the information contained in this presentation. Where this presentation quotes any information or statistics from any external source, you should not interpret that the Company has adopted or endorsed such information or statistics as being accurate. This presentation contains forward-looking statements, which involve risks, uncertainties and assumptions that could cause actual results, performance or events to differ materially from those described in, or expressed or implied by, such statements. These statements reflect the Company's current knowledge and its expectations and projections about future events and may be identified by the context of such statements or words such as "anticipate", "believe", "estimate", "expect", "intend", "plan", "project" and "target". No obligation is assumed to update any such statement. Numbers were rounded to one decimal. Due to rounding, the numbers presented may not add up precisely to the totals provided.
Novem Group S.A. 19, rue Edmond Reuter | 5326 Contern | Luxembourg
Email: [email protected] www.novem.com