Earnings Release • Jul 22, 2015
Earnings Release
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Regulated information – 1H 2015 results Under embargo until Wednesday 22 July 2015 at 7:00 a.m. CET
Recovery of building activity in Europe remains brittle.
"The clear improvement of our 1H2015 results confirms that Deceuninck is on track with its projects and its margins. Increasing positive signals from the market in Western Europe, continued good performance in the US and the normalising availability of PVC make us more optimistic than at the start of the year.
At comparable scope, volumes increased by 4.0% for the first half year. We were pleased by the volume growth in Belgium during the 2nd quarter and we expect sales in France to bottom out. Various incentives from the French government to revitalize building activity should have a positive impact in the second half of the year.
Our strategy of launching ground-breaking innovations to the market such as the slimline glass fibre reinforced iSlide#neo sliding door helps us win new customers and new projects in a highly competitive market. We are truly perceived as the innovators in our sector.
Growth continued at double digit rate in the US. Volumes in Turkey remained stable, while gaining market share.
Sales in Russia are substantially lower due to the ruble devaluation and the impact of the sanctions on consumer confidence and construction activity.
Meanwhile we accelerate the integration of Pimapen in Turkey. Production of the Pimapen window profiles will be consolidated in Kocaeli from early 2016. Preparation for the construction of the new Menemen site near Izmir is progressing well.
We remain cautious for the full year 2015. Building and renovation activity in Europe remains brittle, driven by a subdued economic environment The PVC supply in Europe has returned to normal, after the force majeures were lifted. However, at historic high price levels.
We are convinced that our continued actions to launch innovations, to improve productivity, to reduce structure costs, and our discipline to pass on increased material cost to the market will sustain our margins and will allow further growth of net profits."
| (in € million) | 1H 2014 | 1H 2015 | Var (%) |
|---|---|---|---|
| Sales | 264.2 | 312.1 | 18.1% |
| Gross profit | 72.3 | 90.7 | 25.5% |
| Gross-margin (%) | 27.4% | 29.1% | |
| EBITDA | 15.2 | 27.2 | 78.9% |
| EBITDA-margin (%) | 5.7% | 8.7% | |
| REBITDA | 15.2 | 28.7 | 89.2% |
| REBITDA-margin (%) | 5.7% | 9.2% | |
| EBIT | 4.0 | 12.0 | 198.2% |
| EBIT-margin (%) | 1.5% | 3.9% | |
| Financial result | -3.5 | -4.6 | |
| EBT | 0.5 | 7.5 | |
| Income taxes | -0.1 | -2.7 | |
| Net profit | 0.4 | 4.7 | |
| Net profit-margin (%) | 0.1% | 1.5% |
* Scope change : Pimapen Turkey, Enwin Russia
| Var. 1Q | Var. 2Q | 1H | Var. 1H | Var. 1H | |
|---|---|---|---|---|---|
| (in € million) | 2014/2015 | 2014/2015 | 2015 | 2014/2015 | Loc. Curr. |
| Western Europe | 1.0% | 9.7% | 101.6 | 5.5% | |
| Central & Eastern Europe | -4.6% | -9.1% | 65.4 | -7.2% | -1.7% |
| Turkey & Emerging Markets | 58.6% | 48.8% | 92.4 | 53.0% | 47.9% |
| North America | 47.1% | 39.5% | 52.7 | 42.4% | 15.3% |
| Total | 18.0% | 18.2% | 312.1 | 18.1% |
1H 2015 sales in Western Europe increased 5.5% to € 101.6 million (1H 2014: € 96.3 million). Sales increase in the 2Q was strong with a 9.7% increase to € 54.7 million. Double digit sales growth in UK, The Netherlands, Spain and Italy continued and even accelerated in most countries.
Belgium and France recorded again sales growth in 2Q, a reversal of the trend observed in the previous quarters. In France various residential building market indicators do not yet show any improvement, in spite of the numerous government incentives to revitalize the market.
The strategy in Western Europe of launching true innovations such as the glass fibre reinforced Zendow#neo premium window and the slimline iSlide#neo patio door result in gaining new customers and increasing market share in a highly competitive market.
The launching of a unique "slide and swing" patio door and a fully reversible window boosted sales in the UK.
1H 2015 sales in Central & Eastern Europe decreased year-on-year by 7.2% to € 65.4 million (1H 2014: € 70.5 million - at constant exchange rates 1.7%).
The same trends from 1Q more or less continued. Double digit growth in Poland and in the cluster of Czech Republic, Slovak Republic and Hungary as a result of competitive wins and increased demand from key accounts.
Inoutic window sales on the domestic market in Germany were stable from the 2nd quarter onwards. The German window market continues to be impacted by increasing imports from Eastern European cheap labour countries. Further weakening consumer confidence fed by the economic sanctions and strong devaluation of the Russian ruble (-35% Y-o-Y) severely hit newbuild and renovation activity in Russia
Sales in Turkey & Emerging Markets increased by 53.0% to € 92.4 million (at constant exchange rates +47.9%). Sales include Pimapen sales in Turkey.
Deceuninck owns 3 brands in the top segment of the worldwide second largest PVC window market: Egepen Deceuninck, Winsa and Pimapen.
Organic domestic sales and exports to Northern Africa remained more or less stable. The outcome of the June parliamentary elections did not substantially change the trend.
A new corporate identity for the Pimapen brand, the most recognised brand for PVC windows in Turkey and a new Pimapen advertising campaign supported sales.
Turkey as Deceuninck's export hub for developing Emerging Markets continued to build up new markets in South America and India.
Sales increased 42.4% to € 52.7 million. (At constant exchange rates +15.3%) Market indicators reflect a stable and growing U.S. economy with unemployment at the lowest point since 2008 (5.3%) while GDP for 1Q has been revised upward. NAHB/Wells Fargo Housing Market Index in July has risen to the highest level since November 2005 and remodelling activity has been consistent, but market growth has continued to be constrained by a shortage of experienced labour and credit availability. Deceuninck North America (DNA) has been accelerating its efforts to convert new and existing customers to its latest innovative products and materials while maintaining "Zero Back-orders" and expanding brand awareness. This resulted in higher than market sales growth.
Gross-margin increased to 29.1% (1H 2014: 27.4%). Raw material costs increased in Europe from March onwards. Force majeure declarations by raw material producers in Europe resulted in sharp price increases. Raw material prices increased in Turkey due to a weakening of the Turkish lira against the US dollar. Gross margin was favourably impacted by a changed regional mix and by the elimination of operational inefficiencies.
EBITDA increased to € 27.2 million or 8.7% of sales (1H 2014: € 15.2 million or 5.7% of sales) as a result of higher gross margin combined with stable OPEX margins.
REBITDA was € 28.7 million or 9.2% of sales (1H 2014: € 15.2 million). Restructuring costs in Western Europe and Turkey amounted to € 1.5 million.
REBITDA was favourably impacted by a € 2.4 million gain on the sale of the Izmir site. Productivity improvement projects are implemented worldwide and already resulted in the first half year in a positive contribution to EBITDA.
Operating result (EBIT) was € 12.0 million (1H 2014: € 4.0 million) resulting in an EBIT-margin of 3.9% compared to 1.5% in 1H 2014.
Non cash costs amount to € 15.1 million against € 11.2 million in 1H 2014.
Financial result was € -4.6 million (1H 2014: € -3.5 million). This is € 1.1 million higher mainly as a result of higher interest charges in Turkey due to the changed scope with Pimapen and due to increased cost for hedging the Russian ruble as a result of higher interest rates in Russian ruble.
In May 2015 Deceuninck extended its credit facilities with 3 years (until 2020) at improved conditions.
Income tax expense was € 2.7 million against € 0.1 million in 1H 2014 as a result of higher EBT (Earnings Before Taxes).
The net profit 1H 2015 was € 4.7 million versus € 0.4 million in 1H 2014.
Working capital increased from € 124.6 million on 31 December 2014 to € 151.7 million on 30 June 2015 (30 June 2014: € 113.3 million).
Inventories were € 15.1 million higher as compared to 30 June 2014 due to the Pimapen acquisition and to support growth in US and Turkey & Emerging Markets.
Trade receivables increased € 18.9 million as compared to 30 June 2014 due to higher sales volume. Days outstanding (DSO) decreased slightly year-on-year. The impact of the Pimapen customer base on trade receivables and DSO was offset by strict receivables management and expanding factoring to the UK customer base. Total factoring amounted to € 30.5 million at 30 June 2015.
Trade payables decreased year-on-year by € 4.5 million.
The operating working capital on 30 June 2015 was 22.0% of the Last Twelve Month (LTM) sales as compared to 17.5% on 30 June 2014.
Capital expenditures (capex) in 1H 2015 were € 12.5 million against € 13.6 million at 30 June 2014.
Expansion capex (€ 4.1 million) was mainly spent on the new extrusion site Menemen in Turkey and investments in the US warehouse to meet growth and Zero Back orders target. Deceuninck further started foiling activity and distribution in Croatia to better meet the customer requirements in Italy.
€ 5.4 million was spent on new tools and products. Maintenance capex was € 3.0 million.
The net financial debt at 30 June 2015 amounted to € 92.1 million against € 71.0 million at 31 December 2014. The acquisition of Pimapen results in higher working capital needs. Net financial debt is traditionally higher at the end of June as compared to the end of December due to the seasonality of the business.
Equity slightly decreased by € 0.2 million to € 264.3 million from € 264.5 million at 31 December 2014. The net profit, unfavourable currency translation adjustments and the € 2.7million dividend payment combined had a minor impact on equity as compared to 31 December 2014. The gearing was 34.8% at 30 June 2015 against 26.8 % at 31 December 2014.
On 30 June 2015 Deceuninck employed worldwide 3,600 full time equivalents (FTEs) (including temporary workers and external staff) (30 June 2014: 2,959).
21 October 2015 3Q 2015 trading update
End of press release
At Deceuninck, our commitment towards innovation, ecology and design provides us with a clear focus: building a sustainable home. A home that is more energy-efficient to live in and more attractive to look at. Deceuninck works worldwide with state-of-the-art materials, resulting in low maintenance, top insulating and long lasting products that can be fully recycled at end of life. Moreover, our values of Candor, Top performance and Entrepreneurship help us build a better world for our Partners and end users. Deceuninck has strong ambitions. We want to build a work environment in which people are proud to contribute, and strengthen our position within the top three market players. Alongside our ecological sustainability, Deceuninck also pursues financial sustainability.
Deceuninck employs 3400 people in 25 countries. Deceuninck has production facilities in Belgium, Chili, Czech Republic, France, Germany, Poland, Russia, Thailand, Turkey, UK and US.
Deceuninck sales in 2014 were € 552.8 million with a net positive result of € 10.5 million.
Contact Deceuninck: Ludo Debever • T +32 51 239 248 • M +32 473 552 335 • [email protected]
| For the six month period ended 30 June Notes |
2014 | 2015 | ||
|---|---|---|---|---|
| (in € thousand) | Unaudited | Unaudited | ||
| Sales | 2 | 264,221 | 312,114 | |
| Cost of goods sold | -191,955 | -221,426 | ||
| Gross profit | 72,266 | 90,688 | ||
| Marketing, sales and distribution expenses | -46,664 | -54,732 | ||
| Research and development expenses | -3,292 | -4,131 | ||
| Administrative and general expenses | -18,750 | -21,358 | ||
| Other net operating result | 482 | 1,582 | ||
| Operating profit (EBIT) | 4,041 | 12,048 | ||
| Financial charges | -7,353 | -16,200 | ||
| Financial income | 3,820 | 11,629 | ||
| Profit before taxes (EBT) | 508 | 7,478 | ||
| Income taxes | 4 | -150 | -2,745 | |
| Net profit | 358 | 4,732 |
| The net profit is attributable to: | ||
|---|---|---|
| Shareholders of the parent company | 295 | 4,748 |
| Non-controlling interests | 62 | -16 |
| Earnings per share distributable to the shareholders of the parent company (in €): |
||
|---|---|---|
| Normal earnings per share | 0.00 | 0.04 |
| Diluted earnings per share | 0.00 | 0.03 |
| (in € thousand) | 31 December 2014 | 30 June 2015 | |
|---|---|---|---|
| Audited | Unaudited | ||
| Assets | |||
| Intangible fixed assets | 5,922 | 5,924 | |
| Goodwill | 10,871 | 10,755 | |
| Tangible fixed assets | 215,649 | 213,670 | |
| Financial fixed assets | 66 | 65 | |
| Deferred tax assets | 21,080 | 21,887 | |
| Long-term receivables | 1,068 | 1,188 | |
| Non-current assets | 254,657 | 253,490 | |
| Inventories | 93,417 | 109,576 | |
| Trade receivables | 115,826 | 124,571 | |
| Other receivables | 8,677 | 13,979 | |
| Cash and cash equivalents | 29,046 | 28,735 | |
| Fixed assets held for sale | 2,060 | 1,961 | |
| Current assets | 249,026 | 278,823 | |
| Total assets | 503,684 | 532,313 | |
| Equity and liabilities | |||
| Issued capital | 52,912 | 52,978 | |
| Share premiums | 85,927 | 86,073 | |
| Consolidated reserves | 169,423 | 171,762 | |
| Cash flow hedge reserve | -91 | -55 | |
| Actuarial gains / losses | -3,864 | -3,594 | |
| Treasury shares | -261 | -261 | |
| Currency translation adjustments | -44,316 | -47,113 | |
| Equity excluding non-controlling interest | 259,731 | 259,792 | |
| Non-controlling interest | 4,758 | 4,471 | |
| Equity including non-controlling interest | 264,489 | 264,261 | |
| Interest-bearing loans | 14,635 | 51,709 | |
| Long-term provisions | 24,962 | 25,391 | |
| Deferred tax liabilities | 5,771 | 6,060 | |
| Non-current liabilities | 45,368 | 83,161 | |
| Interest-bearing loans | 85,396 | 69,097 | |
| Trade payables | 84,670 | 82,425 | |
| Tax liabilities | 6,224 | 10,936 | |
| Employee related liabilities | 9,702 | 14,066 | |
| Short-term provisions | 777 | 777 | |
| Other liabilities | 7,058 | 7,591 | |
| Current liabilities Press release |
193,826 | 184,891 | |
| Total equity and liabilities Regulated information – 1H 2015 results |
503,684 | www.deceuninck.com 532,313 |
| 2014 | 2015 | |
|---|---|---|
| For the six month period ended in 30 June (in € thousand) | Unaudited | Unaudited |
| Operating activities | ||
| Net profit | 358 | 4,732 |
| Depreciations of (in)tangible fixed assets | 10,749 | 12,756 |
| Impairments on (in)tangible fixed assets | 370 | 590 |
| Provisions for pensions and other risks & charges | -539 | 687 |
| Impairments on current assets | 570 | 1,093 |
| Net financial charges | 3,533 | 4,571 |
| Profit on sale of tangible fixed assets | -34 | -1,610 |
| Loss on sale of tangible fixed assets | 88 | 147 |
| Income taxes | 150 | 2,745 |
| Share-based payment transactions settled in equity | 210 | 270 |
| Cash flow from operating activities before movements in working | ||
| capital and provisions | 15,455 | 25,982 |
| Decrease / (increase) in trade and other receivables | -15,228 | -17,026 |
| Decrease / (increase) in inventories | -17,497 | -15,270 |
| Increase / (decrease) in trade payables | 22,712 | -140 |
| Decrease / (increase) in other non-current assets | -79 | -89 |
| Decrease / (increase) in other current assets | -771 | -8,269 |
| Increase / (decrease) in other non-current liabilities | 0 | 7 |
| Increase / (decrease) in other current liabilities | 3,047 | 8,355 |
| Cash flow generated from operating activities | 7,638 | -6,450 |
| Interest received | 629 | 584 |
| Income taxes paid (-) / received (+) | -114 | -447 |
| Cash flow from operating activities | 8,153 | -6,313 |
| Investing activities | ||
| Cash receipts on sale of tangible fixed assets | 208 | 5,510 |
| Purchases of tangible fixed assets | -13,636 | -11,874 |
| Purchases of intangible fixed assets | -13 | -647 |
| Other transactions | -7 | 1 |
| Cash flow from investing activities | -13,125 | -7,011 |
| Financing activities | ||
| Capital increase | 99 | 213 |
| New (+) / repayments (-) of long-term debts | -5,030 | 11,272 |
| New (+) / repayments (-) of short-term debts | 14,907 | 11,363 |
| Interests paid | -2,175 | -4,471 |
| Dividends paid | -61 | -2,679 |
| Other financial items | -276 | -2,735 |
| Cash flow from financing activities | 4,787 | 12,963 |
| Net increase (+) / decrease (-) in cash and cash equivalents | -185 | -360 |
| Press release Cash and cash equivalents as per beginning of period |
21,715 | 29,046 |
| Regulated information – 1H 2015 results Impact of exchange rate fluctations |
-26 | www.deceuninck.com 49 |
| Cash and cash equivalents as per end of period | 21,503 | 28,735 |
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