Earnings Release • Feb 27, 2014
Earnings Release
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REGULATED INFORMATION
Embargo: Thursday 27 February 2014 – 7:30 am CET
D'Ieteren announces a 2013 result which is at the high end of its estimate. Teams at D'Ieteren Auto have maintained the market share of the distributed makes at a high level in a declining market marked by strong competition. Belron, on the other hand, has achieved an organic sales growth of 5% in an ongoing market downtrend. Given these achievements, the Board of Directors of D'Ieteren has decided to propose an unchanged dividend.
Moreover, in a still challenging environment, both activities are taking initiatives to ensure their development and secure their future: D'Ieteren Auto plans to invest in its own dealership network in Brussels and to rethink its dealerships' locations, while Belron continues to strengthen its international presence and improve its operating profitability.
The consolidated sales amount to EUR 5,470.5 million, -0.8% compared with 2012. They are broken down as follows:
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Excluding the provision reversal relating to Belron's long-term executive incentive scheme in 2012, the current consolidated result before tax, group's share, is nearly flat (+0.1%2 ).
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The Board of Directors of D'Ieteren proposes to maintain the gross dividend at EUR 0.80 per share for 2013. If this dividend is approved by the General Meeting of Shareholders on 5 June 2014, it will be paid on 13 June 2014 (ex date: 10 June 2014).
D'Ieteren's activities are financed autonomously and independently of each other. Between December 2012 and December 2013, the group's consolidated financial net debt4 has slightly increased from EUR 491.3 million to EUR 505.3 million EUR.
During the period, the D'Ieteren group and its two activities have invested approximately EUR 100 million in acquisitions (increased stake in Belron's equity capital, acquisition by D'Ieteren Auto of two Joly dealerships (see page 6) and strengthening of Belron's presence in the US, Italy, Spain and Canada). The group has also paid a dividend of EUR 44 million to its shareholders.
The net financial position4 of the D'Ieteren Auto/Corporate segment decreased from a net cash position of EUR 251.2 million to a net cash position of EUR 226.4 million.
Belron's net financial debt4 decreased from EUR 742.5 million in December 2012 to EUR 731.7 million in December 2013.
D'Ieteren confirms its willingness to invest its available financial resources in order to ensure its long-term growth, on the one hand through its current activities and on the other hand through the acquisition, alone or in partnership, of one or several new activities whose search is ongoing.
The selection of this activity will be made through criteria such as the quality of the sector's long-term fundamentals – knowing that the sector should not necessarily be linked to the automobile –, the presence of barriers to entry, low risk of technological or regulatory breakdown and growth opportunities.
The systematic selection process combines a sector-based approach with an opportunistic approach.
Given the current outlook of its activities and the unfavourable weather conditions in Europe at the beginning of the year, D'Ieteren expects its 2014 current consolidated result before tax, group's share, to slightly decline compared with 2013.
Embargo: Thursday 27 February 2014 – 7:30 am CET
| FY 20122 | FY 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| IFRS, €m | Total | Unusual items and re measurements |
Current items |
% change current items |
Current items |
Unusual items and re measurements |
Total | % change total |
| New vehicles delivered (in units) | 120,157 | - | - | - | - | - | 112,877 | -6.1% |
| External sales | 2,787.3 | - | 2,787.3 | -5.7% | 2,627.4 | - | 2,627.4 | -5.7% |
| Operating result | 132.8 | 78.6 | 54.2 | -13.8% | 46.7 | -3.7 | 43.0 | -67.6% |
| Net finance costs | -6.7 | 1.6 | -8.3 | 12.0% | -7.3 | -1.6 | -8.9 | -32.8% |
| Current result before tax | - | - | 50.2 | -11.2% | 44.6 | - | - | - |
| Current result before tax, group's share3 | - | - | 52.5 | -10.3% | 47.1 | - | - | - |
D'Ieteren Auto's sales reach EUR 2,627.4 million in 2013, -5.7% year-on-year. This evolution reflects mainly a declining real market (excluding registrations of less than 30 days1 ) and a lower market share as well as to a reduction in dealer inventories.
Excluding registrations of less than 30 days1 in order to better reflect the actual market situation, the new car registrations in Belgium are down 1.5% year-on-year at 455,168 units. Including these registrations, the Belgian market totals 486,065 new car registrations, nearly flat year-on-year (-0.1%).
Excluding registrations of less than 30 days1 , the market share of the makes distributed by D'Ieteren Auto reaches 22.39% in 2013 (vs 23.16% the previous year). Including these registrations, the market share remains high at 21.15% (vs 22.12% in 2012).
Volkswagen remains the Belgian market leader with a market share exceeding 10%, thanks notably to the success of the new Golf. Volkswagen's market share is nevertheless down on 2012. Audi's market share is
Embargo: Thursday 27 February 2014 – 7:30 am CET
the make's best performance in six years, only behind 2012. The year-on-year decline is due to the competition of recently revamped models of other makes, despite the success of the A3. The market share of Škoda, whose Fabia model faced strong competition, is also down. Seat is up, thanks notably to the success of the Ibiza and the new Leon.
Registrations of new light commercial vehicles are down 2.18% to 53,419 units. D'Ieteren Auto's share is down to 11.87% (vs 12.54% in 2012), due to strong competition impacting mainly the Crafter and Caddy Van.
The total number of new vehicles, including commercial vehicles, delivered by D'Ieteren Auto in 2013 reaches 112,877 units (-6.1% compared with 2012). Lower deliveries, offset by a slight price improvement, leads to new vehicle sales of EUR 2,319.3 million (-5.8% compared with 2012).
| FY 2012 | FY 2013 | |
|---|---|---|
| New car market (in units) | 486,737 | 486,065 |
| % change yoy | -14.9% | -0.1% |
| Total market share new cars | 22.12% | 21.15% |
| Volkswagen | 10.70% | 10.30% |
| Audi | 6.44% | 6.03% |
| Seat | 1.23% | 1.43% |
| Škoda | 3.42% | 3.10% |
| Bentley/Lamborghini | 0.01% | 0.01% |
| Porsche | 0.33% | 0.29% |
| Market share commercial vehicles | 12.54% | 11.87% |
The sales of spare parts and accessories are down 3.1% to EUR 164.3 million.
The after-sales activities of the D'Ieteren Car Centers are up 5.0% to EUR 67.0 million.
The used vehicle sales amount to EUR 23.9 million, down 28.9%, but up 3.0% on a like-for-like basis5 in a growing market.
The sales of D'Ieteren Sport, mainly Yamaha motorbikes, quads and scooters, are down 10.3% to EUR 25.2 million due to an unfavourable market for the motorbike segment, due notably to tougher conditions for obtaining a motorbike licence, partially offset by a rise in market share (from 8.98% in 2012 to 9.67%). The electrical two-wheeler distribution activity was discontinued in Q2 2013.
The operating result reaches EUR 43.0 million (EUR 132.8 million in 20122 ). The current operating result, which excludes unusual items and re-measurements, amounts to EUR 46.7 million (vs EUR 54.2 million in 20122 ). The difference is mainly due to lower sales in an activity in which costs are essentially fixed, partially offset by lower marketing costs.
The unusual items and re-measurements comprised in the operating result (EUR -3.7 million) include EUR 1.8 million of costs related to discontinuation of the electrical two-wheeler distribution activity.
The net financial costs amount to EUR 8.9 million, compared with EUR 6.7 million2 . Excluding unusual items and re-measurements, the current net financial costs amount to EUR 7.3 million, compared with EUR 8.3 million2 the previous year. This improvement is due to the repayment in July 2012 of a bond of EUR 100 million. The unusual items and re-measurements mainly include the revaluation of interest rate swaps and of puts granted to the family holding company of Belron's CEO.
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The current result before tax, group's share3 , of the Automobile distribution & Corporate segment stands at EUR 47.1 million (compared with EUR 52.5 million in 2012, -10.3%).
A series of models was successfully launched or revamped in 2013: the Volkswagen Beetle Cabriolet, Golf Variant and Jetta Hybrid, the Audi A3 Saloon and Sportback, the Seat Leon and Toledo, the Škoda Rapid, Superb, Yeti and Octavia, and the Porsche Cayman, Panamera S E-Hybrid and 911 Turbo.
D'Ieteren Auto has completed the acquisition of two Joly and ten Beerens dealerships, all located on the Brussels-Antwerp axis, respectively in November 2013 and January 2014. The Joly and Beerens families wanted to withdraw from their dealerships and D'Ieteren Auto decided to acquire them considering they are located in a strategic area, notably for the fleet market, and they represent together about 4% of the deliveries of Volkswagen, Audi, Seat and Škoda in Belgium in 2013. The acquisition of these dealerships represents a total investment of circa EUR 26 million (real estate included), of which EUR 10 million in 2013, and should not have a significant impact on the results for 2014.
Febiac expects a nearly flat new car market at around 490,000 registrations in 2014. On this basis, D'Ieteren Auto banks on a stable annual market share.
This year, several models will be launched or revamped: the Volkswagen Golf Sportsvan, e-up!, e-Golf and XL1, the Audi A3 Convertible, TT Coupé, A8 Facelift and A3 Sportback e-tron and g-tron, the Škoda Rapid Spaceback, the Seat Leon ST and ST TGI, and the Porsche Macan and 911 Targa.
REGULATED INFORMATION
Embargo: Thursday 27 February 2014 – 7:30 am CET
D'Ieteren intends to invest by 2018 circa EUR 27 million in the D'Ieteren Car Centers, its corporately-owned car dealerships in Brussels and its outskirts, and to rethink their locations and organisation in order to improve their financial and commercial performance.
By 2018, the dealerships of Mail (Ixelles), Anderlecht, Zaventem and Drogenbos should be strengthened by hosting the activities of the current concessions of Meiser (Schaerbeek), Woluwe (Woluwe-Saint-Etienne), Fort Jaco (Uccle), Centre (Anderlecht) Expo (Laeken) and Vilvoorde. In addition, the bodywork activity of the Mail (Ixelles) site should be transferred to a larger location in the south of Brussels. At the end of this project, the network of the D'Ieteren Car Centers should total 7 locations with several makes, against 12 sites – half of whom being single-branded – today. This regrouping aims at responding optimally to the changing needs of the motorists and operating more functional and efficient sites both in sales after-sales, enabling increased productivity.
This reshaping should not lead to mass redundancies thanks to internal redeployment supported by suitable training, voluntary departures and early retirement cases expected in the next five years.
The whole project should spread over five years and will be supported by a total gross investment of circa EUR 27 million over this period. The possible sale of the vacant locations should in turn generate a cash income of circa EUR 10 million.
Ultimately, this project should allow the D'Ieteren Car Centers – which are currently recording an annual loss of approximately EUR 10 million – to return to break-even.
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| FY 20122 | FY 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| IFRS, €m | Total | Unusual items and re measurements |
Current items |
% change current items |
Current items |
Unusual items and re measurements |
Total | % change total |
| Total jobs (in million units) | 10.4 | - | - | - | - | - | 10.8 | 4.6% |
| External sales | 2,727.2 | - | 2,727.2 | 4.3% | 2,843.1 | - | 2,843.1 | 4.3% |
| Operating result | 148.8 | -47.2 | 196.0 | -11.5% | 173.5 | -16.6 | 156.9 | 5.4% |
| Net finance costs | -40.3 | -3.6 | -36.7 | 2.5% | -35.8 | -2.9 | -38.7 | 4.0% |
| Current result before tax | - | - | 159.3 | -13.6% | 137.7 | - | - | - |
| Current result before tax, group's share3 | - | - | 147.7 | -11.6% | 130.5 | - | - | - |
Sales increased by 4.3% to EUR 2,843.1 million consisting of an increase in organic sales of 5.0% and an increase of 2.4% from acquisitions partially offset by a negative currency impact of 3.1%. Organic sales reflect colder winter weather in both Northern Europe and North America. Total repair and replacement jobs increased by 4.6% to 10.8 million. The translation impact is primarily due to the strengthening of the euro against all of the major currencies. The acquired growth is mainly due to acquisitions in the UK, the US, Italy and Canada.
European sales increased by 8.0% comprising an increase in organic sales of 6.5% and acquisition growth of 2.7%, due to the acquisition of ADR in the UK during the second half of 2012 and Doctor Glass in Italy during the first half of 2013, partially offset by a negative currency impact of 1.2% due to a weaker GBP.
Embargo: Thursday 27 February 2014 – 7:30 am CET
Outside of Europe, the sales increased by 0.2% comprising an organic sales increase of 3.3%, a positive 2.1% impact due to acquisitions in the USA and Canada, partially offset by a negative currency impact of 5.2% due to the strengthening of the euro.
The sales for the period benefitted from the colder winter weather in the first quarter together with additional marketing campaigns in several countries. The underlying market conditions in developed economies remained challenging.
The current operating result was EUR 173.5 million (20122 : EUR 196.0 million). Excluding the provision reversal relating to a long term incentive plan in 2012 (EUR 24.5 million), the current operating result is up 1.2%2 due to profit growth in most markets, as a result of sales volume increases and their impact on margins, partially offset by profit declines in Brazil and Australia as a result of adverse market environments.
The unusual costs and re-measurements comprised in the operating result were EUR 16.6 million and mainly relate to costs associated with the Canadian acquisition programme (EUR 7.2 million) and to the amortisation of intangible assets.
The net finance costs were EUR 38.7 million (20122 : EUR 40.3 million). Before re-measurements resulting from the changes in the fair value of derivatives, the current net finance costs decreased from EUR 36.7 million in 20122 to EUR 35.8 million due to a lower average net debt.
The current result before tax, group's share3 , decreased by 11.6%2 to EUR 130.5 million. Excluding the provision reversal relating to a long term incentive plan in 2012 (EUR 22.8 million in group's share), the current result before tax, group's share, increased by 4.5%2 .
Although colder weather during Q1 in both Northern Europe and North America did provide additional opportunities, the impact of the weather has generally been largely offset by continued underlying market declines. The major factors are considered to be lower discretionary incomes, lower speeds and less vehicle crime. In response, actions have been taken to protect or gain segment share as well as adjust the cost base. In 2013 headcount realignments were carried out in the Australian, UK and Canadian businesses. The 2013 results reflect both these and the full year impact from realignments that took place during 2012.
In 2013, Belron faced particularly adverse conditions in Brazil and Australia. In Brazil, the business gained market share in the face of severe price competition. The additional volumes necessitated additional subcontractor and set up costs thereby adversely impacting profit. In Australia, the business suffered from market declines combined with lower market share due to two key accounts reducing Belron's share in the handling of their VGRR claims.
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. New technological solutions have been implemented to enable customers to book and track their services more easily, particularly when they change their approach during the customer journey, for example by using the internet, mobile devices, telephones and directly in the branch. In addition to focussing on delivering an outstanding service to its customers, Belron continues 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 value to customers and consumer promotions including wipers were run in several countries.
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Belron continued to pursue its goal of targeted geographic expansion and signed a franchise agreement in Indonesia bringing the total number of countries in which Belron operates to 35. In Canada, more acquisitions of former franchisees were undertaken as part of the transformation project and incremental acquisitions were made in the US, Italy and Spain.
The outlook for 2014 is for moderate organic sales growth due to expected continuing adverse market trends and to unfavourable weather conditions in Europe at the beginning of the year. In order to improve its financial results, the business will continue to be innovative in all areas, increase the flexibility of its operations and look for further efficiency initiatives.
Embargo: Thursday 27 February 2014 – 7:30 am CET
The financial report of the annual results 2013 is available on D'Ieteren's website (www.dieteren.com) or can be obtained on request.
| 2 FY 2012 |
FY 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| IFRS, €m | Total | Unusual items | Current | % change | Current | Unusual items | Total | % change |
| and re measurements |
items | current items |
items | and re measurements |
total | |||
| Sales | 5,514.5 | 5,514.5 | -0.8% | 5,470.5 | 5,470.5 | -0.8% | ||
| Operating result | 281.6 | - 31.4 |
250.2 | -12.0% | 220.2 | - -20.3 |
199.9 | -29.0% |
| Net finance costs | -47.0 | -2.0 | -45.0 | 4.2% | -43.1 | -4.5 | -47.6 | -1.3% |
| Share of result of entities accounted for using | -4.0 | -8.3 | 4.3 | 20.9% | 5.2 | -4.7 | 0.5 | n.s. |
| the equity method | ||||||||
| Result before tax | 230.6 | 21.1 | 209.5 | -13.0% | 182.3 | -29.5 | 152.8 | -33.7% |
| Tax expense | -35.6 | 6.6 | -42.2 | 1.9% | -41.4 | 6.6 | -34.8 | 2.2% |
| Result from continuing operations | 195.0 | 27.7 | 167.3 | -15.8% | 140.9 | -22.9 | 118.0 | -39.5% |
| Discontinued operations | - | - | - | - | - | - | - | - |
| Result for the period | 195.0 | 27.7 | 167.3 | -15.8% | 140.9 | -22.9 | 118.0 | -39.5% |
| Result attributable to: Equity holders of D'Ieteren |
190.1 | 30.7 | 159.4 | -14.6% | 136.1 | -22.1 | 114.0 | -40.0% |
| Non-controlling interest | 4.9 | -3.0 | 7.9 | n.s. | 4.8 | -0.8 | 4.0 | -18.4% |
| Earnings per share for the period attributable to equity holders of the Parent |
||||||||
| Basic earnings per share (EUR) | 3.45 | 0.56 | 2.89 | -14.5% | 2.47 | -0.40 | 2.07 | -40.0% |
| Diluted earnings per share (EUR) | 3.44 | 0.56 | 2.88 | -14.6% | 2.46 | -0.40 | 2.06 | -40.1% |
| 31/12/20122 IFRS - €m |
31/12/2013 | |
|---|---|---|
| Equity (group's share) | 1,677.4 | 1,723.6 |
| Minority interest | 1.8 | 1.6 |
| Equity | 1,679.2 | 1,725.2 |
| Net financial debt4 | 491.3 | 505.3 |
| €m | FY 20122 | FY 2013 | % change |
|---|---|---|---|
| Current result before tax | 209.5 | 182.3 | -13.0% |
| Share of the group in tax on current result of equity | 1.6 | 2.2 | 37.5% |
| accounted entities | |||
| Share of non-controlling interest in current result | -10.9 | -6.9 | -36.7% |
| before tax | |||
| Current result before tax, group's share | 200.2 | 177.6 | -11.3% |
REGULATED INFORMATION
Embargo: Thursday 27 February 2014 – 7:30 am CET
1 In order to provide a more accurate picture of the car market, Febiac now publishes market figures excluding registrations that have been cancelled within 30 days. Most of them relate to vehicles that are unlikely to have been put into circulation in Belgium by the end customer.
2 After restatement in 2012 following the retrospective application of IAS 19 revised relating to post-employment advantages. See note 2.2 of the 2013 consolidated financial statements.
3 The current result before tax, group's share, is not an IFRS indicator. D'Ieteren uses this concept to reflect its underlying performance and does not represent it as an alternative to financial measures determined in accordance with IFRS. See note 9 of the 2013 consolidated financial statements for the definition of this performance indicator.
4 The net financial debt is defined as the sum of the borrowings minus cash, cash equivalents and investments in non-current and current financial assets.
5 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'Ieteren contributed its subsidiary D'Ieteren Lease, and which is accounted for using the equity method since 1st January 2012. So that the 2013 performance can be compared with 2012, sales of used cars by D'Ieteren S.A. on behalf of VDFin during January-February 2012 have been restated as if they were made by VDFin.
"[…] Our audit work of the consolidated financial statements of D'Ieteren Group is substantially completed 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 2014 at 9:30 am, is available by clicking on the following link: https://engage.vevent.com/rt/dieteren~20140227\_fyr2013
Embargo: Thursday 27 February 2014 – 7:30 am CET
D'Ieteren is a group of services to the motorist founded in 1805, serving some 12 million corporate and end customers in 35 countries in two areas:
- D'Ieteren 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 21% and more than one million vehicles of the distributed makes on the road. Sales in 2013: EUR 2.6 billion.
- Belron (94.85% owned) is the worldwide leader in vehicle glass repair and replacement. 2,400 branches and 8,600 mobile vans, trading under more than 10 major brands including Carglass® , Autoglass® and Safelite® AutoGlass, serve customers in 35 countries. Sales in 2013: EUR 2.8 billion.
| Last five press releases | Next five events | ||||
|---|---|---|---|---|---|
| 16 January 2014 | Pierre-Olivier Beckers | 14 April 2014 | Annual Report 2013 | ||
| appointed independent | |||||
| director | |||||
| 3 December 2013 | Repurchase of own shares | 15 May 2014 | Interim Management | ||
| Statement | |||||
| 21 November 2013 | Repurchase of own shares | 5 June 2014 | General Meeting | ||
| 14 November 2013 | Interim Management | 10 June 2014 | Ex date | ||
| Statement | |||||
| 8 November 2013 | Repurchase of own shares | 13 June 2014 | Payment date |
Axel Miller, 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
Annual Report 2012 dedicated website: 2012.dieteren.com
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