Lanson BCC : 2019 full-year earnings

Press release date:

18/03/2020 - 5:45pm

Reims, Wednesday March 18, 2020 - 5:45 pm

LANSON-BCC's results for 2019 were affected by the significant contraction in volumes sold in France, particularly in the mass retail sector, which was not able to be offset by the positive effects of the improvement in the price-product mix and the reduction in financial expenses. Nevertheless, net income totaled €10.1m, enabling the Group to consolidate its sound financial structure.

As a family-owned pure player for Champagne, LANSON-BCC is moving forward with its long-term value development strategy with determination.

Highlights

Global Champagne shipments came to 297.6 million bottles (-1.6%). The French market, once again affected by the social protest movements, continued to contract, down -4.0% (-4.2% in 2018). It represents 47.6% of the volumes shipped by the Champagne industry. The other European Union countries achieved +0.9% growth to represent 25.7% of the volumes sold, while non-EU countries are up +0.7% to 26.7% of the volumes sold. The total value of Champagne shipments reached €5.1bn, up +3.4% (source: CIVC).

In this contrasting environment, the LANSON-BCC Group's Houses, faced with the need to pass on the continued increases in grape prices, focused their sales policy on value rather than volumes. In France, the Houses with most exposure to the mass retail sector - particularly Maison Burtin and to a lesser extent Maison Chanoine Frères - despite the market share gains observed in point-of-sale reports, recorded a drop in their sales. However, the Group's Houses with the strongest focus on exports and serving traditional customer segments improved their performances.

Consolidated income statement

IFRS (€m)	2019	2018	Change
Revenues	250.29	277.50	-9.8%
Gross margin	92.92	98.38
EBIT	17.63	21.88	-19.5%
% of revenues	7.0%	7.9%
Financial income and expenses	-3.53	-3.70	+4.6%
Corporate income tax	-4.17	-5.60
Net income	10.11	12.69	-20.3%
% of revenues	4.0%	4.6%

2019 consolidated revenuestotaled €250.29m (-9.8%). Excluding the brokerage subsidiary, whose activity is traditionally subject to fluctuations, consolidated revenues represent €246.16m (-9.5%).

EBIT came to €17.63m, compared with €21.88m (-19.5%). This change primarily reflects the significant contraction in volumes for the mass retail sector, as well as the continued increase in grape prices (+22.6% over 10 years). It masks the progress made by several Houses, both in France - excluding mass retail - and on Export markets, and the globally positive price-mix effects.

Financial expenses primarily concern financing for the aging of Champagne stocks. They show a further improvement to represent -€3.53m, compared with -€3.70m, thanks to the moderation of the average cost of financial debt at significantly less than 1%.

Pre-tax earnings came to €14.10m, down -22.5%.

Corporate income tax represents -€4.17m(-25.5%), with an effective corporate income tax rate of 29.6% for the Group.

Net income totaled €10.11m (-20.3%), with a net margin rate of 4.0%.

Consolidated balance sheet

Shareholders' equity represents €287.9m, compared with €283.9m at end-2018, notably reflecting the impact of provisions resulting from the revaluation of employee-related commitments for €3.2m (health insurance and retirement benefits).

Consolidated net financial debt came to €544.4m - including €6m for the application of IFRS 16 (Leases) - compared with €521.7m at end-2018. 86% of this total or €470m, versus €447.3m at end-2018, concerns financing for the aging of a stock of wine for nearly four years on average, which is an essential part of the Champagne wine production process; its book value is €540.3m, versus €526.8m at end-2018.

Other financial debt represents €74.4m(equivalent to end-2018) and concerns the investments in our Houses and vineyards.

The Group's financial structure remains sound:gearing, at 1.87, is at a normal level for Champagne due to the significant levels of stock for aging. It has continued to fall from a high of 5.68 at end-2006 following the acquisition of Maison Burtin and Champagne Lanson.

Proposed dividend

Taking into account the contraction in earnings in 2019, LANSON-BCC's Board of Directors will be submitting a dividend of €0.25 per share (18% of net income) for approval at the general meeting on April 30, 2020, scheduled for payment on May 11, 2020. As has been the case since 2006, the Group has capitalized the bulk of its earnings in order to give it the resources needed to drive its development.

Outlook

LANSON-BCC is reaffirming its long-term value development strategy, with its ambition to further strengthen its positioning in the world of high-end wines. In a disrupted economic environment, the Group is focusing on the increasingly renowned quality of its Houses and their capacity for innovation to drive its progress, primarily on export markets. Alongside this, the Group will continue to strengthen its financial structure. The new governance structures put in place during the year, for Lanson, Chanoine Frères and Boizel, will deliver benefits in the short and medium term.

With regard to Covid-19, the Group's priority is the health of its teams and it has therefore rolled out a business continuity plan since March 16, with the Houses shutting down all or part of their cellar-based work, while activities in the vines are virtually normal. While it is impossible at this stage to estimate this epidemic's material impact on the Group's activities, LANSON-BCC would like to remind readers that nearly 50% of billing traditionally takes place in the last quarter of the calendar year.

Additional information

The consolidated financial statements for 2019 were approved by the Board of Directors on March 18, 2020. The audit procedures on the consolidated accounts have been completed. The certification report will be issued once the necessary procedures have been finalized for filing the 2019 Universal Registration Document with the AMF (previously Registration Document).