Earnings Release • Feb 26, 2013
Earnings Release
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Embargo: Tuesday 26 February 2013 - 6:00 pm CET
"After two consecutive record years, our group faced a severe contraction in its markets. Belron suffered, much more significantly than expected, from the impact on vehicle glass breakage of depressed economies and from an exceptionally mild winter weather. D'Ieteren Auto faced a declining car market in Belgium due to the withdrawal of the $CO2$ incentives and to challenging economic conditions. Although our teams reacted with cost control and innovative business initiatives leading to market share gains in both activities - reflecting the competitiveness of our strategies, products and services -, our current consolidated result before tax, group's share, is down 33.6% to EUR 203 million."
Note1: at the start of 2012, D'leteren SA and Volkswagen Financial Services AG created a joint venture, Volkswagen D'Ieteren Finance SA (VDFin), to which D'Ieteren contributed its subsidiary D'Ieteren Lease. VDFin is accounted for using the equity method in 2012, while D'leteren Lease was accounted for using the full integration method in 2011. To facilitate the comparison of the 2012 and 2011 results, the percentage changes are first expressed as if D'leteren Lease had been accounted for using the equity method in 2011. Figures in parentheses indicate changes as reported.
D'leteren Auto and Corporate activities: EUR 50.2 million, down 45.4% due to lower sales and additional commercial investments. Market share of the distributed makes up to a record 22.12% (21.89% for 2011) in a new car market down 14.9%.
s.a. D'Ieteren n.v.
Rue du Mail 50 Maliestraat Bruxelles 1050 Brussel Belgium Tel. + 32 2 536 51 11 Fax + 32 2 536 91 39 www.dieteren.com
As previously announced, 2013 current consolidated result before tax, group's share2, $\bullet$ expected to be down by 10% to 15% compared with 2012. Excluding the impact in 2012 of the reversal of provision related to Belron's long term executive incentive scheme, it would remain roughly flat year-on-year.
| FY 2012 | FY 2011 | % change | ||||||
|---|---|---|---|---|---|---|---|---|
| Of which | ||||||||
| IFRS, €m | Total | Current items |
Unusual items and re- measurements |
Total | Current items |
Unusual items and re- measurements |
Total | Current items |
| Sales | 5.514.5 | 5.514.5 | 5,977.3 | 5.977.3 | $-7.7%$ | $-7.7%$ | ||
| Operating result | 284.0 | 252.6 | 31.4 | 351.5 | 377.2 | $-25.7$ | $-19.2%$ | $-33.0%$ |
| Net finance costs | $-46.4$ | $-44.4$ | $-2.0$ | $-54.1$ | $-55.2$ | 1.1 | 14.2% | 19.6% |
| Share of result of entities accounted for using the equity method |
$-4.0$ | 4.3 | $-8.3$ | $-0.1$ | $-0.1$ | 0.0 | n.s. | n.s. |
| Result before tax | 233.6 | 212.5 | 21.1 | 297.3 | 321.9 | $-24.6$ | $-21.4%$ | $-34.0%$ |
| Tax expense | $-36.2$ | $-42.8$ | 6.6 | $-43.7$ | $-49.5$ | 5.8 | 17.2% | 13.5% |
| Result from continuing operations | 197.4 | 169.7 | 27.7 | 253.6 | 272.4 | $-18.8$ | $-22.2%$ | $-37.7%$ |
| Discontinued operations | 0.0 | 0.0 | 0.0 | 122.4 | 86.1 | 36.3 | ||
| Result for the period | 197.4 | 169.7 | 27.7 | 376.0 | 358.5 | 17.5 | $-47.5%$ | n.s. |
| Result attributable to: | ||||||||
| Equity holders of D'Ieteren | 192.3 | 161.6 | 30.7 | 312.6 | 312.0 | 0.6 | $-38.5%$ | $-48.2%$ |
| Non-controlling interest | 5.1 | 8.1 | $-3.0$ | 63.4 | 46.5 | 16.9 | $-92.0%$ | n.s. |
| Group's share in the result for the period from continuing operations |
192.3 | 161.6 | 30.7 | 242.9 | 260.3 | $-17.4$ | $-20.8%$ | $-37.9%$ |
| Earnings per share for the period attributable to equity holders of the Parent | ||||||||
| Basic earnings per share (EUR) | 3.49 | 2.93 | 0.56 | 5.66 | 5.65 | 0.01 | $-38.3%$ | $-48.1%$ |
| Diluted earnings per share (EUR) | 3.48 | 2.92 | 0.56 | 5.63 | 5.62 | 0.01 | $-38.2%$ | $-48.0%$ |
| Earnings per share from continuing operations attributable to equity holders of the Parent | ||||||||
| Basic earnings per share (EUR) | 3.49 | 2.93 | 0.56 | 4.40 | 4.71 | $-0.31$ | $-20.7%$ | $-37.8%$ |
| Diluted earnings per share (EUR) | 3.48 | 2.92 | 0.56 | 4.37 | 4.68 | $-0.31$ | $-20.4%$ | $-37.6%$ |
| IFRS. $\epsilon$ m | FY 2012 | FY 2011 | % change | |
|---|---|---|---|---|
| Current result before tax | 212.5 | 321.9 | $-34.0%$ | |
| Share of the group in tax on current result of equity accounted entities |
1.6 | 0.0 | n.S. | |
| Share of non-controlling interest in current result before tax |
$-11.1$ | $-162$ | $-31.5%$ | |
| Current result before tax, group's share | 203.0 | 305.7 | $-33.6%$ |
Segment contribution to the current result before tax, group's share (€m)
| IFRS - $\epsilon$ m | 31/12/2012 | 31/12/2011 | |
|---|---|---|---|
| Equity (group's share) | 1.677.3 | 1,530.5 | |
| Minority interest | 1.8 | 1.6 | |
| Equity | 1.679.1 | 1,532.1 | |
| Net financial debt 3 | 491.3 | 850.2 |
| FY 2012 Of which |
FY 2011 Of which |
% change Reported |
% change Like-for-like |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|
| $IFRS. \oplus n$ | Total | Current items |
Unusual items and re- measurements |
Total | Current items |
Unusual items and re- measurements |
Total | Current items |
Total | Current items |
| New vehicles delivered (in units) | 120.157 | $\overline{\phantom{a}}$ | 136,199 | $-11.8%$ | $-11.8%$ | $\overline{\phantom{a}}$ | ||||
| External sales | 2.787.3 | 2.787.3 | 3,208.3 | 3.208.3 | $-13.1%$ | $-13.1%$ | $-9.0%$ | $-9.0%$ | ||
| Operating result | 132.7 | 54.1 | 78.6 | 116.7 | 114.9 | 1.8 | 13.7% | $-52.9%$ | 37.5% | $-44.4%$ |
| Net finance costs | $-6.6$ | $-8.2$ | 1.6 | $-21.6$ | $-22.8$ | 1.2 | 69.4% | 64.0% | 40.0% | 17.2% |
| Current result before tax | 50.2 | $\overline{\phantom{0}}$ | 92.0 | $-45.4%$ | $-43.8%$ | |||||
| Current result before tax, group's share 2 | 52.5 | $\overline{\phantom{a}}$ | $\sim$ | 92.6 | . . | $-43.3%$ | $-42.0%$ |
D'Ieteren Auto's sales reached EUR 2,787.3 million, i.e. a year-on-year decline of 9.0% (-13.1% as reported). This decrease reflects the downturn in the Belgian car market, offset by an increase in the overall market share of the makes distributed by D'Ieteren Auto and a more favourable mix.
2012 new car registrations in Belgium totalled 486,737 units, down 14.9% on the previous year and down 11.1% compared with 2010, when the last main Brussels Motor Show was held. This expected decrease reflects the impact of the withdrawal on 31 December 2011 of the incentives for buying low CO2 emission vehicles, which affected the individuals market, as well as adverse economic conditions.
| FY 2012 | FY 2011 | |
|---|---|---|
| New car market (in units) | 486,737 | 572,211 |
| % change yoy | $-14.9%$ | 4.5% |
| Total market share new cars | 22.12% | 21.89% |
| Volkswagen | 10.70% | 10.82% |
| Audi | 6.44% | 5.54% |
| Seat | 1.23% | 1.82% |
| Škoda | 3.42% | 3.43% |
| Bentley/Lamborghini | 0.01% | 0.01% |
| Porsche | 0.33% | 0.27% |
| Market share commercial vehicles | 12.54% | 11.07% |
The market share of the makes distributed by D'Ieteren Auto amounted to a record 22.12% in 2012, compared with 21.89% for 2011. Audi gained 0.9 market share point and confirmed its leadership of the premium
segment as a result of faster deliveries and a dynamic commercial strategy in the fleet market. Porsche gained 0.06 point. The market shares of Volkswagen and Skoda were roughly stable despite the impact of the withdrawal of federal incentives which had an impact mostly on the broadline makes. Volkswagen remains the leader in the Belgian market. Seat's market share was significantly affected by the ending of the CO2 incentives and the lack of new models.
Registrations of new light commercial vehicles were down 11.3% to 55.135 units, mainly due to poor economic conditions. D'Ieteren Auto's share grew from 11.07% for 2011 to 12.54%. This remarkable performance is due in particular to the excellent positioning of the range and an exceptionally dynamic commercial strategy.
Total new vehicles, including light commercial vehicles, delivered by D'Ieteren Auto in 2012 amounted to 120,157 units, down 11.8% year-on-year. New vehicle sales were down 9.6% on a like-for-like basis1 (-7.2% as reported), reflecting the decrease in deliveries, partially offset by a more favourable mix as the withdrawal of $CO2$ incentives impacted mainly the smaller cars segment.
Sales of spare parts and accessories were slightly down 2.4% to EUR 173.8 million.
After-sales activities by D'Ieteren Car Centers increased by 4.4% on a like-for-like basis1 to EUR 63.8 million (+11.1% as reported).
Used vehicle sales amounted to EUR 23.2 million on a like-for-like basis1, up 35.0% in a strong market.
Sales by D'Ieteren Sport, mainly Yamaha motorcycles, quads and scooters, decreased by 13.0% to EUR 28.1 million due to an unfavourable motorcycle market and a decline in Yamaha's market share to 8.2% (10.1% for the whole of 2011), mainly due to a lack of new models.
The operating result stood at EUR 132.7 million, up 37.5% year-on-year on a like-for-like basis1 (+13.7% as reported). The current operating result, excluding unusual items and re-measurements, amounted to EUR 54.1 million, down 44.4% on a like-for-like basis1 (-52.9% as reported). This decrease is primarily due to reduced sales in an activity in which costs are essentially fixed and to additional commercial investments required in a declining market.
The unusual items and re-measurements comprised in the operating result are positive at EUR 78.6 million and mainly relate to the consolidated capital gain made on the contribution of D'Ieteren Lease to Volkswagen D'Ieteren Finance (EUR 39.1 million) and, following a change in the accounting estimate of credit notes to be received, to the impact of credit notes accounted for in 2012 but relating to previous accounting periods (EUR 34.3 million).
The net financial costs amounted to EUR 6.6 million, compared with EUR 11.0 million a year earlier on a likefor-like basis1 (EUR 21.6 million as reported). Excluding re-measurements of financial instruments (mainly interest rate swaps and the revaluation of puts granted to the family holding company of Belron's CEO) at fair value, current net financial costs amounted to EUR 8.2 million, compared with EUR 9.9 million a year earlier on a like-for-like basis1 (EUR 22.8 million as reported). This decline is due to the reduction in average net debt, mainly as a result of the receipt of the proceeds of the sale of Avis Europe in October 2011.
The current result before tax, group's share2, of the Automobile distribution & Corporate segment stood at EUR 52.5 million, down 43.3% year-on-year.
REGULATED INFORMATION
A series of models was successfully launched or revamped in 2012: the Volkswagen up! and Golf, the Audi A1 Sportback, the Seat Mii and Ibiza, the Škoda Citigo and the Porsche Carrera 4 and Boxster.
Febiac expects a stable new car market at around 485,000 registrations in 2013. On this basis, D'Ieteren Auto pursues its objective of market share growth. Several models have been and will be launched or revamped this year: the Volkswagen Jetta hybrid, Beetle convertible and e-up!, the Audi A3 Sportback and Saloon, the Škoda Rapid and Octavia Saloon and Combi, the Seat Leon and Toledo, and the Porsche Cayman.
Embargo: Tuesday 26 February 2013 - 6:00 pm CET
| FY 2012 | % change | |||||||
|---|---|---|---|---|---|---|---|---|
| IFRS, €m | Of which | |||||||
| Total | Current items |
Unusual items and re- measurements |
Total | Current items |
Unusual items and re- measurements |
Total | Current items |
|
| Total jobs (in million units) | 10.4 | 11.3 | $-8.6%$ | |||||
| External sales | 2.727.2 | 2.727.2 | 2,769.0 | 2.769.0 | $-1.5%$ | $-1.5%$ | ||
| Operating result | 151.3 | 198.5 | $-47.2$ | 234.8 | 262.3 | $-27.5$ | $-35.6%$ | $-24.3%$ |
| Net finance costs | $-39.8$ | $-36.2$ | $-3.6$ | $-32.5$ | $-32.4$ | $-0.1$ | $-22.5%$ | $-11.7%$ |
| Current result before tax | $\blacksquare$ | 162.3 | $\overline{\phantom{0}}$ | 229.9 | $\overline{\phantom{0}}$ | -29.4% | ||
| Current result before tax, group's share | $\overline{\phantom{a}}$ | 150.5 | ۰ | 213.1 | $\sim$ | ۰ | $-29.4%$ |
Sales decreased by 1.5% to EUR 2,727.2 million consisting of an organic decline of 6.4% partially offset by 1.0% growth from acquisitions and a 3.9% favourable currency impact.
Total repair and replacement jobs declined 9.6% in the first half and continued to decline at a slower rate in the second half, to reach 10.4 million at year end, a 8.6% decrease compared to 2011. Most markets were affected throughout the year by the weak economic environment and high fuel prices which
had a negative impact on levels of damage and the propensity of motorists to get that damage fixed. In addition, the extraordinarily mild winter weather in North America and a milder than average winter in Northern Europe severely impacted sales. The acquired growth was mainly due to further acquisitions in Canada. The translation impact was primarily due to a stronger US dollar and GB pound.
European sales declined by 7% comprising a reduction in organic sales of 9% partially offset by acquired growth of 1% and a positive currency impact of 1% due to the strong GB pound. The acquisition growth was due to acquisitions in Italy and Spain during 2012 and in Russia in 2011 when Belron acquired the Mobiscar wholesale business.
Outside of Europe, sales increased by 4% comprising an organic sales reduction of 4% offset by a 1% impact due to acquisitions in Canada, Australia and China, and a positive currency impact of 7% due to the stronger
US dollar. Belron is continuing to increase its market share in almost all countries however not sufficiently to offset the market declines.
The current operating result was EUR 198.5 million (2011: EUR 262.3 million). This directly reflects the decline in sales. A series of cost reduction initiatives, both in the business units and at the corporate centre, were implemented during the first half of the year which had a positive impact on the results, most notably during the second half. The previously charged long term executive incentive scheme accrual was released (EUR 24.5 million) reflecting the lower operating result.
The unusual costs and re-measurements comprised in the operating result were EUR 47.2 million and mainly relate to restructuring actions in the UK, Netherlands and German business units and at the corporate centre (EUR 27.0 million), costs associated with the Canadian acquisition programme (EUR 6.3 million), an impairment of Greek assets (EUR 4.6m) and the amortisation of intangibles capitalized from recent acquisitions (EUR 9.8m).
Net finance costs were EUR 39.8 million (2011: EUR 32.5 million). Before re-measurements resulting from the changes in the fair value of derivatives, current net finance costs increased from EUR 32.4 million in 2011 to EUR 36.2 million due to higher average net debt, notably as a result of exchange rates, lower profits and restructuring costs.
Current result before tax, group's share, declined by 29.4% to EUR 150.5 million.
In response to the extremely challenging environment, exceptional actions have been taken to both protect and gain market share as well as adjusting the cost base. The business has undertaken a strategic restructuring at the corporate centre to reduce the level of centralised activities and focus more on governance and support. There were also restructuring actions in the UK, the Netherlands and Germany. The restructure in the UK comprised the closure of branches and of the second call centre. In the Netherlands, the field operations were reorganized from a branch based structure to a cluster based approach.
While facing all of the market challenges, the business has continued to focus on delivering an outstanding service to all of its customers and many of the Belron businesses have achieved new records in customer service levels. In addition to focussing on delivering an outstanding service to its customers, Belron continued to work closely with its insurance and fleet partners in every country by focussing on the total value delivered to these partners through the combination of service and cost. Many new initiatives were undertaken in order to add additional value to customers such as wiper promotions and additional claims management offering.
In addition, Belron continued to pursue its goal of targeted geographic expansion. There were acquisitions in Guangzhou and Wuhan in China and there was also the purchase of the Hungarian business from our former franchising partner. Elsewhere Belron completed several fill in acquisitions and signed a franchise agreement in the Ukraine bringing the total number of countries in which Belron operates to 34. In Canada, more acquisitions of former franchisees were undertaken as part of the transformation project. Negotiations are ongoing with a number of other franchisees with a view to further acquisitions during 2013.
Long term, the growth potential of Belron remains, we believe, significant.
The outlook for 2013 is for moderate organic sales growth due to the expected continuing adverse economic trends partially offset by a more favourable winter. In order to improve its operational and financial results, the business will continue to be innovative in all areas, increase the flexibility of its operations and look for further efficiency initiatives. In addition, the release of the long term incentive plan accrual will not recur. While focussing on its results, Belron remains committed to delivering an outstanding service to its customers, its insurance and fleet partners, and improving its operational efficiency.
The activities of the D'Ieteren group are financed autonomously and independently of each other. Between December 2011 and December 2012, D'Ieteren's consolidated net financial debt3 decreased from EUR 850.2 million to EUR 491.3 million.
The net financial position3 of the D'Ieteren Auto/Corporate segment improved by EUR 322.8 million to reach a net cash position of EUR 251.2 million, mainly thanks to the deconsolidation of D'Ieteren Lease's net financial debt following the creation of Volkswagen D'Ieteren Finance at the beginning of 2012.
Belron's net financial debt3 declined from EUR 778.6 million in December 2011 to EUR 742.5 million in December 2012.
D'Ieteren's objective is to redeploy, in a long-term perspective, the funds freed-up by the sale of Avis Europe in 2011 in a new activity for which the search is ongoing.
As previously announced, given the current outlook of its activities as well as the uncertain economic environment, D'Ieteren expects its 2013 current consolidated result before tax, group's share, to decline by 10% to 15% compared with 2012. Excluding the impact in 2012 of the reversal of provision related to Belron's long term executive incentive scheme, it would remain roughly flat year-on-year.
The Board of Directors has decided to maintain Jean-Pierre Bizet, who will be 65 at the end of February 2013, in his responsibilities as CEO; his Director mandate expires at the May 2015 General Meeting.
The financial report of the annual results 2012 is available on D'Ieteren's website (www.dieteren.com) or can be obtained on request.
1 At the start of 2012, D'Ieteren SA and Volkswagen Financial Services AG created a joint venture, Volkswagen D'Ieteren Finance SA (VDFin), to which D'leteren contributed its subsidiary D'leteren Lease. VDFin is accounted for using the equity method in 2012, while D'leteren Lease was accounted for using the full integration method in 2011. To facilitate the comparison of the 2012 and 2011 results, the percentage changes are first expressed as if D'Ieteren Lease had been accounted for using the equity method ("like-for-like") in 2011. Figures in parentheses indicate changes as reported. (The restatements include the removal of the results of D'Ieteren Lease, the attribution of the results on sales of used vehicles from defleeting to the entity accounted for using the equity method - in 2011 and in January-February 2012 - and the recognition of the sales of D'Ieteren Auto to D'Ieteren Lease).
2 Following the creation of Volkswagen D'leteren Finance, whose results are accounted for using the equity method, and in order to reflect all the group's activities, the current result before tax, group's share, now includes the group's share in the current result before tax of the entities accounted for using the equity method.
$3$ Net financial debt is defined as the sum of the borrowings minus cash, cash equivalents and investments in non-current and current assets.
"[...] Our audit work of the consolidated financial statements of D'Ieteren Group is substantially complete and has not revealed any significant matters requiring adjustments to the accounting information as shown in the press release."
SCRL BDO, Réviseurs d'entreprises
This document contains forward-looking information that involves risks and uncertainties, including statements about D'Ieteren's plans, objectives, expectations and intentions. Readers are cautioned that forward-looking statements include known and unknown risks and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of D'Ieteren. Should one or more of these risks, uncertainties or contingencies materialise, or should any underlying assumptions prove incorrect, actual results could vary materially from those anticipated, expected, estimated or projected. As a result, D'Ieteren does not assume any responsibility for the accuracy of these forward-looking statements.
End of press release
A live webcast of the presentation to the analysts (in English and listen-only), which will take place on 27 February 2013 at 9:30 am, is available on our website or by clicking HERE.
REGULATED INFORMATION
D'Ieteren is a group of services to the motorist founded in 1805, serving some 11 million corporate and end customers in 34 countries in two areas:
D'leteren Auto distributes Volkswagen, Audi, Seat, Škoda, Bentley, Lamborghini, Bugatti, Porsche and Yamaha vehicles across Belgium. It is the country's number one car distributor, with a market share of more than 22% and more than one million vehicles of the distributed makes on the road. Sales in 2012: EUR 2.8 billion.
Belron (92.7% owned) is the worldwide leader in vehicle glass repair and replacement. 2,200 branches and 8,900 mobile vans, trading under more than 10 major brands including Carglass, Autoglass and Safelite AutoGlass, serve customers in 34 countries. Sales in 2012: EUR 2.7 billion.
Jean-Pierre Bizet. Chief Executive Officer Benoit Ghiot, Chief Financial Officer Vincent Joye, Financial Communication - Tel: + 32 (0)2 536.54.39 E-mail: [email protected] - Website: www.dieteren.com
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