Earnings Release • Dec 19, 2016
Earnings Release
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REGULATED INFORMATION
Monday 19 December 2016 – 5:45 pm CET
All businesses deliver solid sales and results in 2016, leading to a slight guidance increase at unchanged perimeter versus 2015 (from "stable or slightly lower" to "an improvement in the order of 3-5%" of the current consolidated result before tax, group's share1).
Belron started to deliver on its service extension strategy with the acquisition of CARe in Belgium.
Moleskine, close to being 100% owned by D'Ieteren and to be delisted from the Milan stock exchange in 2017, adds a new growth pillar to the group.
At the end of October, D'Ieteren Auto's sales were up 8.0% year-to-date compared to the same period last year, implying a slight acceleration over the July-October period compared to H1 2016.
Excluding registrations of less than 30 days2, the number of new car registrations in Belgium rose by 11.0% year-on-year to 451,568 units during the first ten months of 2016. Excluding registrations of less than 30 days2, the market share of the brands distributed by D'Ieteren Auto reached 21.49% (22.34% year-to-date in October 2015 and FY 2015). Volkswagen remained the leading brand on the Belgian new car market with a share of 9.90%, supported by the success of the Touran and the Tiguan.
Registrations of new light commercial vehicles in Belgium totalled 58,462, up 10.8% year-on-year. D'Ieteren Auto's share in this market improved from 9.38% during the first 10 months of 2015 to 10.12%.
The total number of new vehicles, including light commercial vehicles, delivered by D'Ieteren Auto was up 5.5% to 102,458 units. Higher deliveries combined with a positive price/mix effect led to an 8.5% rise in new vehicle sales. This compares with an 8.1% increase in H1 2016. The positive mix effect is explained by the success of the Audi A4 and Q7, the Volkswagen Tiguan and Touran, the Škoda Superb and Octavia and the Porsche 911 and Cayman.
At Belron, year-to-date sales from continuing operations were up 5.2% at the end of October 2016 compared to the same period last year, comprising a 4.3% organic increase, 0.9% growth from acquisitions and a positive trading-day impact of 1.2%, partially offset by a negative currency translation effect of 1.2%. The total number of repair and replacement jobs increased by 4.8% to 9.8 million during the first 10 months of the year.
European sales increased by 2.8%, comprising an increase in organic sales of 1.8%, 1.5% growth from acquisitions and a positive trading-day impact of 2.0%, partially offset by an adverse currency impact of 2.4%. The organic growth primarily reflects the continuing recovery of the UK business and market share gains in Germany. The acquired growth mainly relates to the 2015 acquisitions in the Netherlands and Germany together with the acquisition of the former Finnish franchisee and smaller 2016 acquisitions in Spain and Sweden. The negative currency impact was due to a weaker British pound following the UK's EU referendum.
REGULATED INFORMATION
Monday 19 December 2016 – 5:45 pm CET
Outside of Europe, sales increased by 7.3%, comprising an organic sales increase of 6.5%, primarily in the USA due to increased marketing activity and continued progress with insurance partners, a positive 0.4% impact due to acquisitions in the USA and a 0.5% positive impact from trading days, partially offset by a negative 0.1% of currency translation.
On 7 November, Moleskine released its results for the first 9 months of 2016. Sales rose by 11.0% at actual exchange rates with solid growth across regions, product categories and channels. EBITDA was up 1.9% at constant foreign exchange rates but declined by 4.1% at actual exchange rates. The press release and Interim Management Report can be found on www.moleskine.com.
While D'Ieteren had previously communicated that, excluding the contribution from Moleskine and related acquisition costs, it expected a stable or slightly lower current consolidated result before tax, group's share1 in FY 2016, it now anticipates a 3-5% improvement.
Moleskine's results will be fully consolidated in D'Ieteren's accounts as from 1 October 2016. The noncontrolling or minority interest in the income statement, which will be calculated on a pro rata temporis basis, should reach about 33% in Q4 2016 and 0% in FY 2017. Acquisition costs estimated at EUR 8 million will be booked at the level of D'Ieteren Auto and Corporate activities in H2 2016. These acquisition costs will be more than compensated by the contribution of Moleskine to the current consolidated result before tax, group's share1.
Sales are expected to increase mid-to-high-single-digit in FY 2016, underpinned by higher volumes in a strong market and a positive price/mix effect. Excluding the above-mentioned acquisition costs (EUR 8 million) related to Moleskine, the operating result, excluding unusual items and re-measurements1, is expected to improve in the high single digits with the positive impact from higher sales, partly offset by higher marketing costs and commercial initiatives.
At the end of November 2016, D'Ieteren Auto's order book was 15.9% higher year-on-year. The order intake should continue to benefit from the attractive pipeline. Recent new model launches include two SUVs: the SEAT Ateca in Q3 2016 and the Audi Q2 in Q4 2016. Model replacements during the current quarter include the Porsche Panamera and the Audi A5 coupé. The attractive pipeline for 2017 includes the launches of the Volkswagen 7-seater Tiguan, the Škoda Kodiaq and the Porsche Panamera Sport Turismo, the replacement of the Volkswagen CC, the Audi Q5, A5 sportback and A5 cabriolet and the SEAT Ibiza and facelifts for the Volkswagen Golf and the Škoda Octavia, Citigo and Rapid.
Belgian new car registrations are expected to decrease slightly in 2017. D'Ieteren Auto aims to improve its market share on the back of the promising pipeline of new models and commercial initiatives.
REGULATED INFORMATION
Monday 19 December 2016 – 5:45 pm CET
Belron's current result before tax, group share1, is expected to be marginally up in FY 2016 with improving results in Europe, especially in the UK. In the USA, the fall through from higher sales to the current operating result continues to be influenced by growth related investments. The improved trading profit3 will lead to higher charges (EUR 10 million expected in FY16 compared to EUR 5 million in FY15) related to management longterm incentive programmes.
Belron's sales are planned to increase next year especially in the US and Germany due to continued market share gains.
Moleskine provided the following guidance in the press release dated 7 November 2016: "Full year guidance (revenues of EUR 148-153 million and EBITDA of EUR 46-48 million at constant exchange rates) reaffirmed and expected at the low end of the range. Fourth-quarter performance to be underpinned by execution of strategic initiatives, including the global roll-out of the Smart Writing Set, a strong pipeline of B2B projects and continued momentum of direct-to-consumer channels."
Moleskine is expecting double-digit sales growth in 2017.
D'Ieteren's stake in Moleskine has recently surpassed the 95% threshold. The current sell-out offer, which has started on 12 December 2016 and which will terminate on 11 January 2017, will be followed by a squeeze out procedure allowing D'Ieteren to acquire 100% of Moleskine's shares by the end of January 2017. D'Ieteren will proceed thereafter with the delisting of Moleskine from the Milan Stock Exchange.
In accordance with the requirements of IAS 36 "Impairment of Assets", the annual review of goodwill and intangible assets with indefinite useful lives is now complete, offering the latest view on expected future cash flows and assumptions, including discount rates and the allocation of shared costs
The review concluded that a non-cash impairment charge of EUR 134 million will be necessary in relation to the activities in Italy (EUR 61 million), the United Kingdom (EUR 32 million), the Netherlands (EUR 33 million), Russia (EUR 5 million), Greece (EUR 2 million) and Ireland (EUR 1 million).
Trading conditions continue to be extremely challenging in Italy on the back of steep market declines. The impairment in the UK reflects the expected impact of the EU referendum vote and the associated weakening of the British Pound versus the euro. The trading conditions in the Netherlands remain challenging and have led to lower-than-expected profitability. Given the persistently challenging market conditions in Russia, Greece and Ireland, as well as the changes to the forecasts, the remaining goodwill and intangible assets of these business units will be impaired.
Following the impairment, the remaining value of goodwill and intangible assets in Italy, the UK and the Netherlands will amount to respectively EUR 41 million, EUR 72 million and EUR 50 million.
REGULATED INFORMATION
Monday 19 December 2016 – 5:45 pm CET
D'Ieteren Auto has announced plans to set up a nationwide franchise network of body shops together with its dealers. Segmentation of the jobs and the use of the most efficient techniques (e.g. 'smart repair') will lead to cost savings, shorter repair times and improved cost transparency. In addition to the brands that are distributed by D'Ieteren Auto, the network will also repair vehicles of other brands. The name of the franchise and other related details will be communicated during the upcoming Brussels car show. The first body shops under the new concept are scheduled to open in the second quarter of 2017.
Last week, Carglass Belgium, a subsidiary of Belron, announced the acquisition of CARe Carrosserie, a specialist in vehicle body repair. The transaction fits with Belron's aim to extend its services beyond vehicle glass repair and replacement. Carglass Belgium and CARe Carrosserie will join forces in order to offer their customers complementary services. Both networks will continue to exist alongside each other at first. Certain services, such as 'smart repair', will also be offered in a number of larger Carglass service centres over the course of 2017.
As the body repair market is very fragmented, there is significant growth potential for both the D'Ieteren Auto and Carglass networks.
1 In order to better reflect its underlying performance and assist investors in gaining a better understanding of its financial performance, D'Ieteren uses Alternative Performance Measures ("APMs"). These APMs are non-GAAP measures, i.e. their definitions are not addressed by IFRS. D'Ieteren does not present APMs as an alternative to financial measures determined in accordance with IFRS and does not give APMs greater prominence than defined IFRS measures. See note 4 of the 2016 Half-Yearly Financial Report for the definition of these performance indicators.
2 In order to provide an accurate picture of the car market, Febiac 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.
3 The trading profit is the operating profit before charges related to long-term management incentive programmes.
End of press release
Monday 19 December 2016 – 5:45 pm CET
In existence since 1805 across several generations of the founding family, D'Ieteren pursues growth and value creation based on a long-term strategy that actively supports its businesses to strengthen their positions in their respective markets or regions. The group currently has three activities articulated around strong brands:
| Last five press releases (with the exception of press releases linked to the repurchase or sale of own shares) |
Next events | ||
|---|---|---|---|
| 19 December 2016 | Roland D'Ieteren to retire as Chairman | 6 March 2017 | 2016 Full-Year Results |
| 13 December 2016 | of the Board of Directors in 2017 D'Ieteren holds more than 95% of the shares in Moleskine |
1 June 2017 | General Meeting & Trading Update |
| 2 December 2016 | Provisional results of the MTO on Moleskine shares |
31 August 2017 | 2017 Half-Year Results |
| 10 November 2016 | Launch of the mandatory tender offer on Moleskine shares |
||
| 6 October 2016 | Closing of the agreement to acquire a 41% stake in Moleskine |
Axel Miller, Chief Executive Officer Arnaud Laviolette, Chief Financial Officer
Pascale Weber, Financial Communication - Tel: + 32 (0)2 536.54.39 E-mail: [email protected] – Website: www.dieteren.com
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