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Rockwool Interim / Quarterly Report 2016
3382_rns_2016-05-19_0fd58e34-0f5d-4b14-98c9-2bb8d8955265.pdf
Interim / Quarterly Report
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Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 1/11
19 May 2016
Report on the first quarter of 2016 for ROCKWOOL International A/S
Highlights:
- Sales in local currencies developed in line with expectations increasing by 1.4% compared to the same period in 2015.
- EBIT increased by 59% to EUR 41.4 million equal to 8.4% EBIT margin. The Insulation Business EBIT margin more than doubled in spite of challenges in the Industrial and Technical insulation markets.
- The Group’s business transformation program progressed well and contributed with EUR 7 million included in the EBIT result of the quarter.
- Free cash flow improved by EUR 28 million.
- Net profit reached EUR 28 million, an improvement of EUR 11 million.
Outlook for the Full Year 2016
- For the full year, the Group’s net sales are still expected to show a small positive growth in local currencies.
- With the improvements during the first months, we raise the expectation for the EBIT margin to above 9% before redundancy costs related to the Business Transformation Programme.
- Investment expenditure expectation for 2016 remains unchanged at around EUR 130 million excluding acquisitions.
Commenting on the Group’s performance, CEO Jens Birgersson says:
“We continue to improve the overall health of the business. I am especially pleased to see that our business transformation programme is contributing so significantly to the strong Q1 result. The growth in North America continues and in Europe we see good developments in both Northern and Southern Europe, a trend we would like to see spreading to the core markets of Germany and France. Russia is the main challenge at the moment, but even with this important market at a low level, we made solid progress in Group profitability”
Further information:
Kim Junge Andersen, Chief Financial Officer
ROCKWOOL International A/S
+45 46 56 03 00
ROCKWOOL FIRESAFE INSULATION
Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 2/11
Main figures / key figures for the Group
| 1st qtr. 2016 | 1st qtr. 2015 | Full year 2015 | |
|---|---|---|---|
| Unaudited | Audited | ||
| Income statement items in EUR million | |||
| Net sales | 494 | 499 | 2.208 |
| EBITDA | 83 | 66 | *337 |
| Depreciation, amortisation and write-downs | 42 | 40 | 187 |
| EBIT | 41 | 26 | *172 |
| Financial items | -2 | -2 | -4 |
| Profit before tax | 40 | 25 | 133 |
| Profit for the period | 28 | 18 | 91 |
| Balance sheet items in EUR million | |||
| Non-current assets | 1,432 | 1,512 | 1,446 |
| Current assets | 554 | 633 | 559 |
| Total assets | 1,986 | 2,144 | 2,005 |
| Equity | 1,400 | 1,378 | 1,367 |
| Non-current liabilities | 136 | 123 | 119 |
| Current liabilities | 450 | 644 | 519 |
| Net interest-bearing debt | 123 | 262 | 93 |
| Net working capital | 238 | 239 | 162 |
| Invested capital | 1,504 | 1,567 | 1,448 |
| Cash flow in EUR million | |||
| Cash flow from operating activities | 6 | -4 | 297 |
| Investments and acquisitions | 42 | 60 | 201 |
| Free cash flow | -36 | -65 | 97 |
| Other items | |||
| Number of employees at end of period | 10,515 | 11,034 | 10,601 |
| Ratios | |||
| EBITDA margin | 16.8% | 13.3% | *15.3% |
| EBIT margin | 8.4% | 5.2% | *7.8% |
| Return on invested capital (rolling 4 quarters) | *12.2% | 10.8% | *11.8% |
| Return on equity (rolling 4 quarters) | 7.3% | 8.4% | 6.8% |
| Equity ratio | 70.5% | 64.3% | 68.2% |
| Financial gearing | 0.09 | 0.19 | 0.07 |
| Stock market information (DKK) | |||
| Earnings per share | 9.6 | 6.0 | 31.3 |
| Cash flow per share | 2.0 | -1,5 | 103 |
| Book value per share | 475 | 427 | 463 |
| Share capital (million) | 220 | 220 | 220 |
| Price per A share | 1,020 | 853 | 944 |
| Price per B share | 1,036 | 852 | 963 |
| Market cap (million) | 22,204 | 18,349 | 20,580 |
| Number of own shares | 370,405 | 452,020 | 391,835 |
| Number of A shares of DKK 10 (10 votes) | 11,231,627 | 11,231,627 | 11,231,627 |
| Number of B shares of DKK 10 (1 vote) | 10,743,296 | 10,743,296 | 10,743,296 |
*) Excluding redundancy costs from the Business Transformation Programme and write-downs in Asia.
The ratios have been calculated in accordance with recommendations issued by the Danish Society of Financial Analysts (2015 edition).
ROCKWOOL FIRESAFE INSULATION
Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 3/11
Management report for the period 1 January to 31 March 2016
Sales development
The slight global market growth experienced in 2015 continued into the beginning of 2016 with the main exception being Russia, where the market still declined, although at a slower pace.
The ROCKWOOL Group generated sales in the first quarter of 2016 of EUR 494 million, an increase of 1.4% measured in local currencies. The effect from exchange rates is negative by 2.4% primarily due to the Russian Rouble devaluation, resulting in a slight decline of 1% in reported net sales in the first quarter.
Sales prices have seen a slightly improving trend with most upside in North America.
On a regional level, sales in Western Europe decreased by 1.9% compared to the same period last year in local currencies. Most counties showed stable development while Scandinavia performed especially well. Sales volumes in France were affected by a planned price increase earlier in the year while the market in Germany seems to be at the cusp of starting to improve.
Eastern European insulation sales in the first quarter increased 1.9% in local currencies. The growth in Poland levelled off while the sales decrease in Russia compared to Q1 2015 was as expected under the present difficult market conditions.
In North America and Asia, sales in the first quarter continued to show positive development with an increase of close to 10% in local currencies. The growth mainly came from North America but Asia is also improving.
Business segments
Sales in the Insulation Segment reached EUR 368 million in the first quarter, which is an increase of 1.0% in local currencies. The increase was mainly carried by the Building insulation segment whereas the Industrial & Technical insulation area was challenged by the low investment levels in the Oil & Gas related industries.
Key figures Insulation segment
| EUR million | Q1 2015 | Q1 2016 |
|---|---|---|
| External net sales | 375 | 368 |
| EBIT, segment profit | 8.7 | 21.8 |
| EBIT margin | 2.0% | 5.1% |
The Insulation Segment EBIT for the first quarter of 2016 reached EUR 21.8 million with an EBIT margin of 5.1%, an increase of 3.1%-points compared to the same period last year. Only Russia has a lower profitability than last year.
ROCKWOOL FIRESAFE INSULATION
Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 4/11
The Systems Segment’s sales in the first quarter amounted to EUR 127 million which is an increase by 2.5% in local currencies. The main contributor to this increase was the GRODAN horticultural business which continues to register solid growth in both North America and Europe. Also the ROCKPANEL cladding board business and the LAPINUS Fibres reinforcement business experienced solid growth. ROCKFON ceiling systems had a weak quarter compared to a strong Q1 2015, but expects to recover later in the year.
Key figures Systems segment
| EUR million | Q1 2015 | Q1 2016 |
|---|---|---|
| External net sales | 124 | 127 |
| EBIT, segment profit | 17.4 | 19.6 |
| EBIT margin | 14.0% | 15.5% |
The Systems Segment performed well and generated an EBIT of EUR 19.6 million with an EBIT margin of 15.5%, this is 1.5 %-points higher than the same period in 2015.
Group profitability
Strong increase in EBITDA for the first quarter, which reached EUR 83 million corresponding to a margin of 16.8% - an improvement of 3.6 %-points compared to last year. A significant contributor to this was good factory efficiency especially in North America and lower input costs throughout most markets.
The business transformation program continues to progress as planned. The directly measurable EBIT impact in 2015 was EUR 4 million, and in the first quarter of 2016 it amounted to EUR 7 million.
We had no business transformation related restructuring costs during the first quarter.
The 59% growth in EBIT for the first quarter was driven by favourable product mix including a reduced sales of less profitable products; cost savings in production with a better efficiency of the new manufacturing line in the US; and the positive impact from the Group’s business
ROCKWOOL FIRESAFE INSULATION
Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 5/11
transformation program. EBIT reached EUR 41.4 million, or 8.4% EBIT margin compared to EUR 26.1 million last year (5.2% EBIT margin) – an increase of 3.2 %-point with no significant exchange rate effect.
Net financial costs for the first quarter of 2016 ended at EUR 2.0 million, an increase of EUR 0.2 million compared to the same period last year.
Net profit for the first quarter of 2016 amounted to EUR 28 million, which is EUR 11 million better than last year.
Cash flow
The strong development in earning reflected positively in cash generation during the first quarter.
The net working capital saw the usual seasonal build-up and increased EUR 54 million during the first quarter of 2016, which is EUR 7 million less than the increase over the same period last year. Total net working capital amounted to EUR 238 million compared to EUR 239 million end of the same period last year.
Cash flow from operating activities at the end of the first quarter of 2016 was EUR 6 million, which is EUR 10 million better than same period last year. The improvement mainly comes from a combination of higher EBITDA result (+17 million) and improved net working capital (+7 million) while higher tax payments (-11 million) pulled in the other direction.
Capital expenditure during the first quarter of 2016 was EUR 42 million. The biggest individual investment relates to the factory re-engineering project in Poland.
Balance sheet
Total assets at the end of the 2016 first quarter amounted to EUR 1,986 million. The equity ratio at the end of the period was 70.5%.
ROCKWOOL FIRESAFE INSULATION
Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 6/11
Outlook for the Full Year 2016
- For the full year, the Group’s net sales are still expected to show a small positive growth in local currencies.
- With the improvements during the first months, we raise the expectation for the EBIT margin to above 9% before redundancy costs related to the Business Transformation Programme.
- Investment expenditure expectation for 2016 remains unchanged around EUR 130 million excluding acquisitions.
2016 outlook overview
| 26 February 2016 | 19 May 2016 | |
|---|---|---|
| Net sales | Slight organic growth in local currencies | Slight organic growth in local currencies |
| EBIT margin excl. redundancy costs related to the business transformation programme | Above 8.5% | Above 9.0% |
| Investments excl. acquisitions | Around EUR 130 million | Around EUR 130 million |
Disclaimer
The statements on the future in this report, including expected sales and earnings, are associated with risks and uncertainties and may be affected by factors influencing the activities of the Group, e.g. the global economic environment, including interest and exchange rate developments, the raw material situation, production and distribution-related issues, breach of contract or unexpected termination of contract, price reductions due to market-driven price reductions, market acceptance of new products, launches of competitive products and other unforeseen factors.
ROCKWOOL FIRESAFE INSULATION
Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 7/11
Management statement
The Board of Directors and the Registered Directors have today considered and approved this interim report of ROCKWOOL International A/S for the first quarter of 2016.
This interim report, which has not been audited or reviewed by the ROCKWOOL Group auditor, has been prepared in accordance with IAS 34 Interim Financial Reporting, as approved by the EU and additional Danish interim reporting requirements for listed companies.
We believe that the accounting policies applied – which are unchanged from those of the 2015 annual report - are appropriate and that the accounting estimates made are reasonable. In our opinion, this interim report presents a true and fair view of Group’s assets and liabilities, and the financial position at 31 March 2016 and the result from Group’s operations and cash flow for the period 1 January to 31 March 2016.
Furthermore we believe that the management report gives a true and fair review of the development of the Group’s activities and financial matters, the result for the period and the Group’s financial position as a whole as well as a description of the most significant risks and uncertainties which the Group is facing.
Besides what has been disclosed in this interim report, no changes in the Group’s most significant risks and uncertainties have occurred relative to what was disclosed in the consolidated annual report for 2015.
19 May 2016
The Registered Directors
Jens Birgersson
Kim Junge Andersen
Board of Directors
Bjørn Høi Jensen
Carsten Bjerg
Søren Kähler
Lars Frederiksen
Thomas Kähler
Andreas Ronken
Lars Elmekilde Hansen
Dorte Hanne Page Larsen
Connie Enghus Theisen
ROCKWOOL FIRESAFE INSULATION
Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 8/11
Income statement
| EUR million | 1st qtr. 2016 | 1st qtr. 2015 | Full year 2015 |
|---|---|---|---|
| Unaudited | Audited | ||
| Net sales | 494.3 | 499.3 | 2,207.9 |
| Operating income | 496.1 | 501.8 | 2,220.6 |
| Operating costs | 413.1 | 435.6 | 1,898.9 |
| EBITDA | 83.0 | 66.2 | 321.7 |
| Adjustments for depreciation, amortisation and write-downs | 41.6 | 40.1 | 186.8 |
| EBIT | 41.4 | 26.1 | 134.9 |
| Income from investments in associated companies | 0.2 | 0.3 | 2.3 |
| Financial items | -2.0 | -1.8 | -3.8 |
| Profit before tax | 39.6 | 24.6 | 133.4 |
| Tax on profit for the period | 11.3 | 7.0 | 42.7 |
| Profit for the period | 28.3 | 17.6 | 90.7 |
| Attributable to: | |||
| Non-controlling interests | 0.0 | 0.0 | -0.5 |
| Shareholders in the parent company | 28.3 | 17.6 | 91.2 |
| 28.3 | 17.6 | 90.7 | |
| Earnings per share of DKK 10 (EUR 1.3) | 1.3 | 0.8 | 4.2 |
| Earnings per share of DKK 10 (EUR 1.3), diluted | 1.3 | 0.8 | 4.2 |
| Statement of comprehensive income | |||
| Profit for the period | 28.3 | 17.6 | 90.7 |
| Items that will not be reclassified to the income statement: | |||
| Actuarial gains and losses of pension obligations | 0.0 | 0.0 | -1.0 |
| Tax on other comprehensive income | 0.0 | 0.0 | -0.2 |
| Items that may be subsequently reclassified to the income statement: | |||
| Exchange rate adjustments of foreign subsidiaries | 1.6 | 69.2 | 12.2 |
| Hedging instruments, value adjustments | 1.4 | -3.6 | 0.7 |
| Tax on other comprehensive income | -0.3 | 0.9 | -2.4 |
| Other comprehensive income | 2.7 | 66.5 | 9.3 |
| Comprehensive income for the period | 31.0 | 84.1 | 100.0 |
| Attributable to: | |||
| Non-controlling interests | 0.0 | 0.1 | -1.1 |
| Shareholders in the parent company | 31.0 | 84.0 | 101.1 |
| 31.0 | 84.1 | 100.0 |
ROCKWOOL FIRESAFE INSULATION
Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 9/11
Segment reporting
| Unaudited | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1st qtr. | Insulation segment | Systems segment | Eliminations | The ROCKWOOL Group | ||||
| EUR million | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
| External net sales | 367.6 | 374.9 | 126.7 | 124.4 | 0.0 | 0.0 | 494.3 | 499.3 |
| Internal net sales | 56.6 | 51.2 | 0.0 | 0.0 | -56.6 | -51.2 | 0.0 | 0.0 |
| Total net sales | 424.2 | 426.1 | 126.7 | 124.4 | -56.6 | -51.2 | 494.3 | 499.3 |
| EBIT, segment profit | 21.8 | 8.7 | 19.6 | 17.4 | 0.0 | 0.0 | 41.4 | 26.1 |
| EBIT margin | 5.1% | 2.0% | 15.5% | 14.0% | 8.4% | 5.2% |
Geographical split of external net sales
| EUR million | 1st qtr. 2016 | 1st qtr. 2015 | Full year 2015 |
|---|---|---|---|
| Western Europe | 299.3 | 307.6 | 1,290.0 |
| Eastern Europe including Russia | 72.5 | 76.1 | 408.1 |
| North America, Asia and others | 122.5 | 115.6 | 509.8 |
| Total external net sales | 494.3 | 499.3 | 2,207.9 |
Balance sheet
| EUR million | 1st qtr. 2016 | 1st qtr. 2015 | Full year 2015 |
|---|---|---|---|
| Assets | Unaudited | Audited | |
| Intangible assets | 144.8 | 158.4 | 139.5 |
| Tangible assets | 1,187.7 | 1,265.9 | 1,192.6 |
| Other financial assets | 54.6 | 49.9 | 53.3 |
| Deferred tax assets | 44.5 | 37.3 | 60.9 |
| Total non-current assets | 1,431.6 | 1,511.5 | 1,446.3 |
| Inventories | 179.2 | 198.8 | 168.4 |
| Receivables | 301.1 | 349.1 | 302.6 |
| Cash | 73.8 | 85.0 | 87.5 |
| Total current assets | 554.1 | 632.9 | 558.5 |
| Total assets | 1,985.7 | 2,144.4 | 2,004.8 |
| Equity and liabilities | |||
| Share capital | 29.5 | 29.5 | 29.5 |
| Foreign currency translation | -137.1 | -80.1 | -138.7 |
| Proposed dividend | 33.9 | 33.4 | 33.9 |
| Retained earnings | 1,472.2 | 1,396.8 | 1,442.1 |
| Hedging | -1.3 | -5.7 | -2.4 |
| Non-controlling interests | 2.6 | 3.8 | 2.6 |
| Total equity | 1,399.8 | 1,377.7 | 1,367.0 |
| Non-current liabilities | 136.2 | 122.9 | 119.0 |
| Current liabilities | 449.7 | 643.8 | 518.8 |
| Total liabilities | 585.9 | 766.7 | 637.8 |
| Total equity and liabilities | 1,985.7 | 2,144.4 | 2,004.8 |
ROCKWOOL FIRESAFE INSULATION
Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 10/11
Cash flow statement
| EUR million | 1st qtr. 2016 | 1st qtr. 2015 | Full year 2015 |
|---|---|---|---|
| Unaudited | Audited | ||
| EBIT | 41.4 | 26.1 | 134.9 |
| Adjustments for depreciation, amortisation and write-downs | 41.6 | 40.1 | 186.8 |
| Other adjustments | -1.1 | 1.3 | 7.8 |
| Change in net working capital | -53.5 | -60.6 | 12.2 |
| Cash flow from operations before financial items and tax | 28.4 | 6.9 | 341.7 |
| Cash flow from operating activities | 5.7 | -4.4 | 297.3 |
| Cash flow from investing activities | -41.8 | -60.1 | -170.0 |
| Cash flow from acquisitions | 0.0 | 0.0 | -30.7 |
| Cash flow from operating and investing activities (free cash flow) | -36.1 | -64.5 | 96.6 |
| Cash flow from financing activities | 1.0 | -5.3 | -35.4 |
| Change in cash available | -35.1 | -69.8 | 61.2 |
| Cash available – beginning of period | -88.2 | -139.7 | -139.7 |
| Exchange rate adjustments | 4.7 | -5.1 | -9.7 |
| Cash available – end of period | -118.6 | -214.6 | -88.2 |
| Unutilised, committed credit facilities | 331.6 | 286.3 | 350.8 |
Statement of changes in the equity
| Unaudited | |||||||
|---|---|---|---|---|---|---|---|
| EUR million | Share capital | Foreign currency translation | Proposed dividend | Retained earnings | Hedging | Non-controlling interests | Total |
| Equity 1/1 2016 | 29.5 | -138.7 | 33.9 | 1,442.1 | -2.4 | 2.6 | 1,367.0 |
| Profit for the period | 28.3 | 28.3 | |||||
| Other comprehensive income | 1.6 | 1.1 | 2.7 | ||||
| Comprehensive income for the period | 1.6 | 0.0 | 28.3 | 1.1 | 0.0 | 31.0 | |
| Sale and purchase of own shares | 1.4 | 1.4 | |||||
| Expensed value of options issued | 0.4 | 0.4 | |||||
| Equity 1st qtr. 2016 | 29.5 | -137.1 | 33.9 | 1,472.2 | -1.3 | 2.6 | 1,399.8 |
| Equity 1/1 2015 | 29.5 | -149.2 | 33.4 | 1,388.7 | -3.0 | 3.7 | 1,303.1 |
| Profit for the period | 17.6 | 17.6 | |||||
| Other comprehensive income | 69.1 | -2.7 | 0.1 | 66.5 | |||
| Comprehensive income for the period | 0.0 | 69.1 | 0.0 | 17.6 | -2.7 | 0.1 | 84.1 |
| Sale and purchase of own shares | -9.8 | -9.8 | |||||
| Expensed value of options issued | 0.3 | 0.3 | |||||
| Equity 1st qtr. 2015 | 29.5 | -80.1 | 33.4 | 1,396.8 | -5.7 | 3.8 | 1,377.7 |
ROCKWOOL FIRESAFE INSULATION
Release no. 6 – 2016
Report on the first quarter of 2016
To Nasdaq Copenhagen
ROCKWOOL International A/S
Hovedgaden 584, Entrance C
DK-2640 Hedehusene
Phone: +45 4656 0300
www.rockwool.com
Danish CVR no: 54879415
Page 11/11
| Main figures in DKK million: | 1st qtr. 2016 | 1st qtr. 2015 | Full year 2015 |
|---|---|---|---|
| Unaudited | Audited | ||
| Net sales | 3,687 | 3,720 | 16,468 |
| Depreciation, amortisation and write-downs | 311 | 299 | 1,393 |
| EBIT | 308 | 194 | *1,281 |
| Profit before tax | 295 | 183 | 995 |
| Profit for the period | 211 | 131 | 677 |
| Total assets | 14,819 | 16,019 | 14,961 |
| Equity | 10,447 | 10,291 | 10,201 |
| Cash flow (from operating activities) | 43 | -33 | 2,217 |
| Investments and acquisitions | 312 | 449 | 1,497 |
| Exchange rate | 7.46 | 7.47 | 7.46 |
*) Excluding redundancy costs from the Business Transformation Programme and write-downs in Asia.