DECEUNINCK NV Regulated information - 1H 2014 results
Under embargo until Wednesday 23 July 2014 at 7:00 a.m. CET
Deceuninck 1H 2014: Exchange rates offset sales volume growth and impact EBITDA. Stable net profit. Sales breakdown 1H 2014
Consolidated 1H 2014 sales increased 0.4% to € 264.2 million (1H 2013: € 263.1 million). Volume: +5.5%. Stable volumes in Belgium, Germany and Poland. Double digit growth in UK, Spain, Italy and Czech Republic. Decline in France.
Russia: stable sales in a declining market
Continued growth in US and Turkey & Emerging Markets
Exchange rates: -7.6%. Unfavourable impact of TRY, RUB, USD and CZK
Mix effects: +2.5%, delayed pass through of increased raw material cost in Turkey
Gross margin decreased to 27.4% in 1H 2014 from 29.7% in 1H 2013.
o Impact of exchange rates (mainly TRY, RUB, USD and CZK) and the delay in passing through increased raw material cost in Turkey.
EBITDA decreased to € 15.2 million or 5.7% of sales (1H 2013: € 19.0 million or 7.2%). EBIT: € 4.0 million or 1.5% of sales (1H 2013: €.76 million or 2.5% of sales)
Net profit: stable at € 0.4 million (1H 2013: € 30.million)
Net debt increased to € 91.4 million against € 860.million at 31 December 2013.
Tom Debusschere, Deceuninck CEO:
"Our sales developed in line with our expectations. In Europe, the flat 2Q volumes confirmed that the growth during 1Q was driven by the mild winter, rather than by an underlying improvement of the construction activity. Volumes were stable in Belgium, Germany and Poland. In Russia sales were stable in a declining market. UK, Spain, Italy and Czech Republic performed well with double digit growth. The main concern remains France, where we observe a contraction of both new build and renovation market.
Our US sales improved, supported by a sustainable housing recovery and continued consumer confidence.
Growth also continues in Turkey & Emerging Markets driven by competitive wins and the success in Latin America and India.
Gross profit and EBITDA were substantially impacted by the strong EUR on exchange rates and the usual delay in passing through increased raw material cost to the market in Turkey. Raw materials pricing is driven by the USD, against which the TRY depreciated 19%. The price increases that have been implemented in Turkey have restored the gross margin in this region
at the start of 2H.
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Outlook full year 2014
We expect the sales trends to continue into 2H. Volumes in continental Europe will be flat to slight growth. The construction market in France remains a concern. The UK is showing an economic upturn with increased activity in residential construction. The performance in the US, Turkey & Emerging Markets, will continue to be solid.
Within this environment, Deceuninck commits to protect margins and maintain profitability through innovation, continuous productivity improvement and rigorous cost control.
1. Comments on the consolidated results
1.1. Sales
Sales breakdown per quarter and 1st halfyear% of s ale s 1Q 2014 2Q 2014 1H 2014
Exchange rate -8.4% -7.0% -7.6% Volum e 11.4% 1.2% 5.5% Mix (country, price, product) 0.9% 3.7% 2.5%
TOTAL 3.8% -2.0% 0.4%
Sales breakdown 1H 2014 per regionVar. 1Q Var. 2Q 1H Var. 1H Var . 1H (in € million) 2013/2014 2013/2014 2014 2013/2014 Loc. Curr . | |||
Wes tern Europe 6.7% -1.6% Central & Eas tern Europe 8.5% -6.8% Turkey & Em erging Markets -3.8% -3.3% North Am erica 0.5% 9.3% | 96.3 70.5 60.4 37.0 | 2.2% -1.0% -3.5% 5.7% | 5.0% 18.4% 10.1% |
Total 3.8% -2.0% | 264.2 | 0.4% |
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Western Europe
1H 2014 sales in Western Europe increased 2.2% to €96.3 million (1H 2013: € 94.2 million). Sales in Belgium were stable in a weak environment. Growth was solid in the UK, Italy and Spain.
In France the contraction of activity in both newbuild and renovation market continues. To curb the weak volumes in France, Deceuninck has started the gradual build-up of
a flagship store concept, in addition to the franchise shops "Les Menuisiers Pévécistes Deceuninck". This will allow a deeper understanding of consumer dynamics and a faster roll out of innovations. The additional building of the Deceuninck brand will further support our window fabricators, who will manufacture all products sold in the shops.
1H 2014 sales in Central & Eastern Europe decreased 1.0% to € 70.5 million from € 71.2 million in 1H 2013 (at constant exchange rates: +5.0%).
All markets recorded volume growth with the exception of some of the countries in the Balkan region, supported by mild winter conditions during the first quarter.
Performance in Russia was solid with stable sales in a declining market. A major part of the sales was negatively impacted by the weakness of RUB, CZK and to a lesser extent PLN.
At this year's Fensterbau/Frontale in Nürnberg, Inoutic/Deceuninck won the architectural
innovation award for a door frame with Deceuninck's USA patented Rovex™ material. Rovex™ is an advanced fiberglass reinforced resin technology. Rovex™ profiles are an alternative to badly insulating metal reinforcements.
1H 2014 sales in Turkey & Emerging Markets decreased by 3.5% to € 60.4 million (at constant exchange rates: + 18.4 %). Volumes continued to increase in the domestic market as well as in Latin America and India. The year on year 25% weaker TRY completely offset the volume growth.
Turkey has become Deceuninck's export hub for developing Emerging Markets thanks to its competitive cost basis, the availability of skilled labour and a product offering, fitting the needs of the local market. The current target regions are Latin America and India. Sales in India are supported through the Turkish subsidiary, Ege Profil from a warehouse in Chennai. For Latin America, Ege Profil and Deceuninck North America have the products in place to meet all the needs of the region. In 2013 Ege Profil founded Deceuninck Importadora Ltda. in Santiago de Chile with a 3600m² warehouse.
1H 2014 sales increased 5.7% to € 37.0 million. Atconstant exchange rates sales increased
10.1%. Sales quickly picked up after an extraordinary harsh winter in the Northeast. Deceuninck North America saw its sales increase by 14.6% in USD during the second quarter. The rise reflects increased consumer and builder confidence. Remodelling activity remains
strong, but market growth is constrained by labour shortage and credit availability.
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Deceuninck North America's strategy of introducing innovative products and materials, creating brand awareness, gaining new Customers, and reinforcing current Customer relations paid off. This resulted in higher than market sales growth.
1.2. Results
(in € million) 1H 2013 1H 2014 Var (%) | ||
Sales 263.1 Gros s profit 78.1 Gross-margin (%) 29.7% EBITDA 19.0 EBITDA-margin (%) 7.2% EBIT 6.7 EBIT-margin (%) 2.5% Financial res ult -4.0 EBT 2.7 Incom e taxes -2.4 Net profit 0.3 Net profit-margin (%) 0.1% | 264.2 72.3 27.4% 15.2 5.7% 4.0 1.5% -3.5 0.5 -0.1 0.4 0.1% | 0.4% -7.4% -20.0% -39.3% |
Gross-margin decreased to 27.4% (1H 2013: 29.7%). Gross profit was substantially impacted by the strong EUR on exchange rates (mainly TRY, RUB, USD and CZK) and the delay in passing through increased raw material cost to the market in Turkey.
Increased labour and energy cost were offset by continued productivity improvements and mix effects.
EBITDA decreased to € 15.2 million or 5.7% of sales(1H 2013: € 19.0 million or 7.2% of sales)
as a result of lower gross-margin. Operating expenses (OPEX) improved slightly.
Operating result (EBIT) was € 4.0 million (1H 2013:€ 6.7 million) resulting in an EBIT-margin of
1.5% compared to 2.5% in 1H 2013.
Non cash costs amount to € 11.2 million against €21.3 million in 1H 2013.
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Financial result & Income taxes
Financial result was € -3.5 million (1H 2013: € -04.million), mainly as a result of a favourable evolution of interest rates.
Income tax expense was € -0.1 million against € -42.million in 1H 2013 as a result of lower EBT (Earnings Before Taxes) and a changed country mix.
The net profit 1H 2014 was € 0.4 million versus €.30 million in 1H 2013.
Working capital
Working capital increased from € 102.5 million on 31 December 2013 to € 113.3 million on 30
June 2014 (30 June 2013: € 112.2 million).
Inventories were € 10.7 million higher as comparedto 30 June 2013 to support growth in US, Turkey and development in Latin America and India.
Trade receivables decreased € 2.0 million as compaer d to 30 June 2013. Days outstanding (DSO) was more or less stable year-on-year. DSO is favourably impacted by expanding factoring to our US Customer base.
Trade payables increased year-on-year by € 7.6 mililon in line with increased inventories.
The operational working capital on 30 June 2014 was 17.5% of the Last Twelve Month (LTM)
sales as compared to 16.5% on 30 June 2013.
Capital expenditures in 1H 2014 were € 13.6 millionagainst € 10.4 million at 30 June 2013.
Net financial debt
The net financial debt at 30 June 2014 amounted to € 91.4 million against € 80.6 million at 31
December 2013 as a result of higher working capital needs combined with € 3.2 million increased capital expenditures and € 2.2 million dviidend payment.
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Equity
Equity decreased by € 1.7 million to € 202.6 millniofrom € 204.3 million at 31 December 2013. The decrease was the result of € 2.2 million dividend payment partly offset by a € 0.4 million net profit.
The gearing was 45.1% at 30 June 2014 against 39.4 % at 31 December 2013.
On 30 June 2014 Deceuninck employed worldwide 2,959 full time equivalents (FTEs) (including temporary workers and external staff) (30 June 2013: 2,815).
Financial calendar 2014
23 October 2014 3Q 2014 trading update
End of press release
Building a sustainable home
At Deceuninck, our commitment towards innovation, ecology and design provides us with a clear focus: building a sustainable home. A home that is more energy-efficient to live in and more attractive to look at. Deceuninck works worldwide with state-of-the-art materials, resulting in low maintenance, top insulating and long lasting products that can be fully recycled at end of life. Moreover, our values of Candor, Top performance and Entrepreneurship help us build a better world for our Partners and end users. Deceuninck has strong ambitions. We want to build a work environment in which people are proud to contribute, and strengthen our position within the top three market players. Alongside our ecological sustainability, Deceuninck also pursues financial sustainability.
Deceuninck employs 2700 people in 25 countries. Deceuninck has production facilities in Belgium, Czech Republic, France, Germany, Poland, Russia, Thailand, Turkey, UK and US.
Deceuninck sales in 2013 were € 536.5 million witha net positive result of € 8.4 million.
Contact Deceuninck: Ludo Debever • T +32 51 239 248 • M +32 473 552 335 • ludo.debever@deceuninck.com
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Annexe 1: consolidated income statement
For the s ix m onth pe riod e nde d 30 June
(in € thousand)
2013 2014
Unaudite d Unaudite d
Sales 263,052 264,221
Cost of goods sold -184,990 -191,955
Gross profit 78,062 72,266
Marketing, sales and distribution expenses -48,633 -46,664
Research and development expenses -2,844 -3,292
Administrative and general expenses -19,817 -18,750
Other net operating result -107 482
Operating profit (EBIT) 6,661 4,041
Financial charges -8,932 -7,353
Financial income 4,941 3,820
Profit before taxes (EBT) 2,670 508
Income taxes -2,391 -150
Net profit 278 358
The ne t profit is attributable to: | ||
Shareholders of the parent company | 212 | 295 |
Non-controlling interests | 66 | 62 |
Earnings pe r s hare dis tributable to the | ||
s hare holde rs of the pare nt com pany (in €): | ||
Normal earnings per share | 0 | 0 |
Diluted earnings per share | 0 | 0 |
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Annexe 2: consolidated statement of financial position
Equity and liabilities | ||
Is s ued capital | 42,495 | 42,522 |
Share prem ium s | 46,355 | 46,427 |
Cons olidated res erves | 160,407 | 158,762 |
Cas h flow hedge res erve | 63 | -128 |
Actuarial gains / los s es | -1,885 | -1,863 |
Treas ury s hares | -261 | -261 |
Currency trans lation adjus tm ents | -44,264 | -44,332 |
Equity excluding non-controlling interest | 202,911 | 201,128 |
Non-controlling interes t | 1,413 | 1,500 |
Equity including non-controlling interest | 204,324 | 202,628 |
Interes t-bearing loans | 35,390 | 16,477 |
Long-term provis ions | 21,087 | 21,695 |
Deferred tax liabilities | 5,013 | 4,204 |
Non-current liabilities | 61,490 | 42,376 |
Interes t-bearing loans | 66,892 | 96,466 |
Trade payables | 63,651 | 86,931 |
Tax liabilities | 4,899 | 6,675 |
Em ployee related liabilities | 10,246 | 12,321 |
Short-term provis ions | 2,005 | 1,213 |
Other liabilities | 4,962 | 6,474 |
Current liabilities | 152,654 | 210,080 |
Total equity and liabilities | 418,468 | 455,084 |
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Regulated information - 1H 2014 results
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Annexe 3: consolidated statement of cash flows
For the s ix m onth pe r iod e nde d in 30 June (in € thousand)
2013 2014
Unaudite d Unaudite d
Operating activities
Net profit 278 358
Depreciations of (in)tangible fixed as s ets 11,385 10,749
Im pairm ents on (in)tangible fixed as s ets 321 370
Provis ions for pens ions and other ris ks & charges -566 -539
Im pairm ents on current as s ets 1,181 570
Net financial charges 3,991 3,533
Profit on s ale of tangible fixed as s ets -37 -34
Los s on s ale of tangible fixed as s ets 23 88
Incom e taxes 2,392 150
Share-bas ed paym ent trans actions s ettled in equity 150 210
Cash flow from operating activities before movements in working
capital and provisions 19,118 15,455
Decreas e / (increas e) in trade and other receivables -10,773 -15,228
Decreas e / (increas e) in inventories -14,524 -17,497
Increas e / (decreas e) in trade payables 25,030 22,712
Decreas e / (increas e) in other non-current as s ets -77 -79
Decreas e / (increas e) in other current as s ets 137 -771
Increas e / (decreas e) in other non-current liabilities -322 0
Increas e / (decreas e) in other current liabilities 3,482 3,047
Cash flow generated from operating activities 22,072 7,638
Interes t received 569 644
Incom e taxes paid (-) / received (+) -1,252 -114
Cash flow from operating activities 21,389 8,168
Investing activities
Cas h receipts on s ale of tangible fixed as s ets 275 208
Purchas es of tangible fixed as s ets -10,448 -13,636
Purchas es of intangible fixed as s ets -2 -13
Other trans actions -7 301
Cash flow from investing activities -10,182 -13,140
Financing activities
Capital increas e 0 99
New (+) / repaym ents (-) of long-term debts 1,717 -5,030
New (+) / repaym ents (-) of s hort-term debts -7,032 15,147
Interes ts paid -3,549 -2,175
Dividends paid -61 -2,150
Other financial item s -276 -1,104
Cash flow from financing activities -9,201 4,787
Net increase (+) / decrease (-) in cash and cash equivalents 2,006 -185
Cash and cash equivalents as per beginning of period 23,211 21,715
PImrepascst orfeelxechaasnege rate fluctations -896 -26
Cash and cash equivalents as per end of period 24,321 21,503
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