18 August 2022
Q1 2022/23 Results
- Very dynamic start into 2022/23 with Q1 revenue of €181.9m, +16.5% y/y despite facing a number of headwinds
- Top line benefited from currency effects but also suffered from Covid-related customer plant shutdowns in China
- Inflationary pressures and continued inefficiencies weighed on the Adj. EBIT margin of 11.8% (16.5% PY)
- Q1 2022/23 free cash flow of €-2.5m turned negative, largely driven by increased working capital requirements
- Despite being slightly higher than at the end of previous quarter, net leverage ratio stood at a robust level of 1.6x
- Novem acquired the long-range SUV called Gravity from Silicon Valley-based EV start-up Lucid Motors
- First results concerning compensation of higher input costs achieved, but negotiations with OEMs still ongoing
- Novem proposed to the AGM a dividend distribution of €0.40 per share exceeding the target payout ratio of 35%
Revenue growth amid continued challenging trading environment and low operational visibility
GROUP RESULTS
Revenue
- In Q1 2022/23, total revenue of €181.9m exceeded previous year of €156.1m by +16.5%
- Strong top line growth was supported by favourable FX effects: If foreign exchange rates, primarily USD and RMB, had remained constant at PY level, revenue would have been lower by -4.9%
- Higher revenue Series (€+8.4m or +5.8% y/y) was anchored on decent underlying growth
- Most recently available LMC figures showed a slight increase of light vehicle production of +1.4% y/y
- Tooling revenue saw a significant rise by >100.0% or €+17.4m in the period under review due to the closure of major projects
- In a twelve-months view, total revenue of €640.3m increased by +4.2% compared to previous quarter
Adj. EBIT
- Adj. EBIT in Q1 2022/23 declined by €-4.4m resulting in a margin of 11.8% for the period under review
- Decrease in Adj. EBIT was largely caused by higher input costs and inefficiencies resulting from the volatile customer call-offs (stop-and-go approach)
- Price increases for certain raw materials such as chrome parts, granulates and electrical elements as well as soaring energy and logistics expenses continued to impact bottom line
- As in the past, operational performance was again hampered by the unsteady customer call-offs leading to inefficiencies in the plants, especially in Europe
- Furthermore Adj. EBIT margin was diluted by the relatively high share of Tooling in the overall revenue
- Compared to previous quarter, LTM Adj. EBIT in the amount of €76.5m decreased by €-4.4m q/q
Free cash flow
- Free cash flow of €-2.5m in Q1 2022/23 turned slightly negative and came down by €-12.6m from previous year
- While cash flow from investing activities remained almost on PY level, cash flow from operating activities was €-13.2m lower than last year due to the following reasons:
- Higher trade receivables (€-27.0m) primarily attributable to lower factoring, provisions (€-5.4m) and Others (€-2.3m); conversely, reduced inventories (€+21.5m) predominantly driven by Tooling
- Notwithstanding, inventories for the underlying Series business (excluding Tooling) remained high because of increased safety stock requirements from the OEMs
- On a last twelve month basis, free cash flow of €52.5m showed a decline by €-12.6m or -19.3% q/q
Capital expenditure
- Capital expenditure of €3.7m in Q1 2022/23 exceeded PY level by €+1.7m or +82.0%
- As a result of the higher investments, the underlying capex ratio rose to 2.1% of revenue (1.3% PY)
- LTM capital expenditure of €20.3m led to a capital expenditure ratio of 3.2%
- As previously reported, the takeover of the Faurecia aluminium business implied higher capex last year, notably in Q4 2021/22
- Q1 2022/23 contained a remaining impact of €1.1m
- It should be noted that, in this presentation, capital expenditure excludes any currency translation effects
Total working capital
LTM total working capital (€m)
- As of 30 June 2022, total working capital recorded well above last year at €154.8m (+9.8% y/y)
- Variance of €-13.8m y/y due to higher trade receivables (€-9.4m), increased tooling net (€-6.7m), higher stock (€-4.3m) and contract assets (€-0.7m); conversely, higher trade payables (€+7.2m)
- Measured as a percentage of LTM revenue, total working capital stood at 24.2% as of 30 June 2022
- Trade working capital (excluding tooling net and contract assets) showed a further increase of +12.3% y/y from €52.7m to €59.1m in order to weather the challenges from the distorted supply chain
- While DIO and DPO stood fairly stable at 40 days (40 PY) and 55 days (54 PY), respectively, DSO increased to 35 days (31 PY)
Capital structure
- As of 30 June 2022, both gross financial debt and cash declined considerably in comparison to 30 June 2021
- Lease liabilities, by definition forming part of gross financial debt, amounted to €34.0m (€33.8m PY)
- Principal sources of funds consisted of €111.6m cash and cash equivalents (€177.8m PY) and €40.6m non-recourse factoring (€48.5m PY)
- Net financial debt as of 30 June 2022 amounted at €170.3m and showed a sharp decrease versus previous year (€253.9m)
- As a result, Novem could successfully de-lever its balance sheet through the post-IPO refinancing
- Since then, net leverage ratio oscillated at a solid level of around 1.6x (net financial debt / Adj. EBITDA)
Revenue by operating segments
- From a geographical perspective, revenue increased in all regions (in total by €+25.8m y/y), to the largest extent in Europe, primarily driven by Tooling
- Sharp rise in Americas was directly linked to Series business and strongly supported by a positive FX impact from the USD
- Favourable deviation in Asia mainly attributable to Tooling, whilst Series was badly affected by several customer plant shutdowns relating to China's zero-tolerance policy
- In comparison to previous quarter, LTM revenue rose by €+25.8m from €614.5m to €640.3m
- LTM revenue showed the following distribution across the regions: 51.8% Europe, 35.9% Americas and 12.4% Asia
- On a last twelve month basis, total revenue gained momentum in Q1 2022/23 as the strongest quarter
Adj. EBIT by operating segments
- On a segmental basis, Adj. EBIT was strongly built on Americas contributing almost half of the quarterly result, while Europe and Asia showed a relatively weak performance
- In Europe, Adj. EBIT of €7.2m (€12.7m PY) was badly impacted by soaring inflation and ongoing inefficiencies due to the volatile customer call-offs
- In Asia, Adj. EBIT of €3.6m (€6.3m PY) was severely hampered by the reduced revenue in Series business in relation to China's zero-Covid policy leading to plant shutdowns of OEMs
- Both operating segments in Europe and Asia reported a dilution of their Adj. EBIT margin because of the relatively high share of Tooling in the total revenue of each region
- In Americas, the improved Adj. EBIT of €10.5m (€6.7m PY) was primarily driven by higher revenue
- LTM Adj. EBIT came down from €80.9m in Q4 2021/22 to €76.5m in Q1 2022/23 (€-4.4m or -5.5% q/q)
Profit and loss statement
Profit and loss statement (€m)
|
Q1
2021/22 |
Q1
2022/23 |
|
|
|
| Revenue |
156
1 |
181
9 |
Increase
or decrease
in
finished
goods
and
work
in
process |
9
0 |
-1
3 |
Total
operating
performance |
165
0 |
180
6 |
|
|
|
Other
operating
income |
2
7 |
4
5 |
Cost
of
materials |
78
8 |
93
4 |
Personnel
expenses |
40
0 |
41
4 |
Depreciation
, amortisation
and
impairment |
7
6 |
8
0 |
Other
operating
expenses |
15
6 |
20
9 |
Adj
EBIT |
25
8 |
21
4 |
|
|
|
| Adjustments |
0
6 |
0
3 |
|
|
|
Operating
result
(EBIT) |
25
2 |
21
1 |
|
|
|
Finance
income |
2
9 |
0
8 |
Finance
costs |
12
7 |
8
4 |
Financial
result |
-9
8 |
-7
5 |
|
|
|
Income
taxes |
6
3 |
4
6 |
Deferred
taxes |
1
0 |
0
5 |
Income
result
tax |
3
7 |
1
5 |
|
|
|
Profit
for
the
period |
8
2 |
8
5 |
Balance sheet
Balance sheet
(€m) |
|
|
|
|
|
|
|
|
|
|
|
|
30
Jun
2021 |
30
Jun
2022 |
|
30
Jun
2021 |
30
Jun
2022 |
|
|
|
|
|
|
|
|
|
Total
equity |
-497
7 |
85
3 |
|
|
|
|
|
|
Intangible
assets |
3
5 |
2
9 |
Pensions
and
similiar
obligations |
34
9 |
35
1 |
Property
, plant
and
equipment |
182
0 |
182
6 |
Tax
liabilities |
0
0 |
0
0 |
Trade
receivables |
48
5 |
50
1 |
Other
provisions |
2
5 |
3
2 |
Other
non-current
assets |
14
6 |
12
6 |
Financial
liabilities |
863
2 |
247
8 |
Deferred
tax
assets |
8
0 |
18
9 |
Other
liabilities |
32
3 |
29
2 |
|
|
|
Deferred
liabilities
tax |
3
7 |
4
0 |
|
|
|
|
|
|
Total
non-current
assets |
256
7 |
267
0 |
liabilities
Total
non-current |
939
3 |
319
3 |
|
|
|
|
|
|
| Inventories |
107
2 |
125
1 |
Tax
liabilities |
18
8 |
16
4 |
Trade
receivables |
42
0 |
51
4 |
Other
provisions |
54
5 |
47
6 |
Other
receivables |
28
8 |
30
7 |
Financial
liabilities |
3
0 |
4
8 |
Other
current
assets |
17
4 |
15
6 |
Trade
payables |
50
6 |
61
6 |
Cash
and
cash
equivalents |
177
8 |
111
6 |
Other
liabilities |
62
8 |
66
4 |
Assets
held
for
sale |
1
2 |
0
0 |
|
|
|
|
|
|
|
|
|
Total
current
assets |
374
6 |
334
3 |
Total
liabilities
current |
189
6 |
196
8 |
|
|
|
|
|
|
| Assets |
631
2 |
601
3 |
Equity
and
liabilities |
631
2 |
601
3 |
Cash flow statement
Cash flow statement (€m)
|
Q1
2021/22 |
Q1
2022/23 |
|
|
|
Profit
for
the
period |
8
2 |
8
5 |
expense (+)/income
(-)
Income
tax |
6
3 |
4
6 |
(+)/(-)
Financial
result
net |
12
0 |
0
9 |
Depreciation
, amortisation
and
impairment |
7
6 |
8
0 |
Other
non-cash
expenses (+)/income
(-) |
-6
7 |
0
5 |
(-)/decrease
(+)
Increase
in
inventories |
-16
0 |
5
5 |
(-)/decrease
(+)
Increase
in
trade
receivables |
12
1 |
-14
9 |
Increase
(-)/decrease
(+)
in
other
assets |
-1
4 |
-1
1 |
Increase
(-)/decrease
(+)
in
deferred
taxes |
1
0 |
0
5 |
(-)/decrease
expenses/deferred
Increase
(+)
in
prepaid
income |
-3
3 |
-0
4 |
(+)/decrease
(-)
Increase
in
provisions |
6
6 |
1
2 |
Increase
(+)/decrease
(-)
in
trade
payables |
-11
3 |
-2
8 |
Increase
(+)/decrease
(-)
in
other
liabilities |
0
4 |
-8
7 |
Gain
(-)/loss
(+)
on disposals
of
non-current
assets |
-0
0 |
0
0 |
Cash
from
(+)/cash
for
(-)
for
received
paid
income
taxes |
-2
4 |
-2
1 |
Cash
flow
from
operating
activities |
12
9 |
-0
3 |
Cash flow statement (€m)
|
Q1
2021/22 |
Q1
2022/23 |
|
|
|
Cash
received
(+)
from
disposals
of
intangible
assets |
0
0 |
0
0 |
Cash
(+)
received
from
disposals
of
, plant
and
equipment
property |
0
0 |
0
8 |
Cash
paid
(-)
for
investments
in
intangible
assets |
-0
1 |
-0
0 |
Cash
paid
(-)
for
investments
in
, plant
and
equipment
property |
-3
4 |
-3
7 |
Interest
received
(+) |
0
7 |
0
8 |
(+)
Dividends
received |
|
|
Cash
flow
from
investing
activities |
-2
8 |
-2
2 |
|
|
|
Cash
loans/cash
(-)
of
received
from
(+)
loans
repayments |
-0
0 |
0
0 |
Cash
from
(+)
of
received
shareholders
the
parent
company |
-0
0 |
-0
0 |
Cash
(-)
of
shareholders
loans
repayments |
0
0 |
0
0 |
Cash
(-)
of
bond/cash
received
from
(+)
issuance
of
bond
repayments |
0
4 |
0
0 |
Cash
subsidies/grants
paid
for
(-) |
-0
0 |
-0
0 |
Cash
for
(-)
finance
paid
leases |
-2
4 |
-2
0 |
Interest
paid
(-) |
-5
6 |
-1
3 |
Dividends
paid
(-) |
|
0
0 |
Cash
flow
from
financing
activities |
-7
6 |
-3
3 |
|
|
|
Net
increase
(+)/decrease
(-)
in
cash
and
cash
equivalents |
2
5 |
-5
8 |
Effect
of
exchange
fluctuations
on cash
and
cash
equivalents
rate |
0
0 |
0
4 |
Cash
and
cash
equivalents
the
beginning
of
the
reporting
period
at |
175
3 |
117
0 |
Cash
and
cash
equivalents
the
end
of
the
reporting
period
at |
177
8 |
111
6 |
EBIT adjustments
| EBIT adjustments (€m) |
|
|
|
|
|
|
|
|
|
|
Q1
2021/22 |
Q1
2022/23 |
|
|
| Revenue |
156
1 |
181
9 |
|
|
|
|
|
|
|
| EBIT |
25
2 |
21
1 |
|
|
EBIT
margin |
16
2% |
11
6% |
|
|
| Restructuring |
|
|
|
|
Material
quality
claims
Single
impairments |
0
0
0
0 |
0
0 |
|
|
Covid-19
costs |
0
2 |
0
2 |
|
|
Transaction
costs |
0
2 |
|
|
|
| Others |
0
1 |
0
1 |
|
|
Exceptional
items |
0
6 |
0
3 |
|
|
Discontinued
operations |
|
|
|
|
|
|
|
|
|
| Adjustments |
0
6 |
0
3 |
|
|
Adj
EBIT |
25
8 |
21
4 |
|
|
Adj
EBIT
margin |
16
5% |
11
8% |
|
|
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. 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. EBIT margin is defined as Adj. EBIT divided by revenue
- 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 rate is defined as Adj. EBITDA less capital expenditure 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, depreciation and write-downs
- Gross financial debt is defined as the sum of liabilities to banks, hedging and lease liabilities
- Net leverage ratio is defined as the ratio of net financial debt to Adj. EBITDA
- Net financial debt is defined as gross financial debt less cash and cash equivalents
- Free cash flow is defined as the sum of cash flow from operating and investing activities
- 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
- 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
Date of publication
18 August 2022
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