DECEUNINCK NV Regulated information - 1H 2015 results
Under embargo until Wednesday 22 July 2015 at 7:00 a.m. CET
Deceuninck 1H 2015: solid growth in sales (+18%) and EBITDA (€ 27.2m)Recovery of building activity in Europe remains brittle.
Sales increase 18.1% to € 312.1 million.
o Comparable scope: +7.2%
· Volume: +4.0%; exchange rates: +4.2%; mix: -0.9%
o Pimapen Turkey & Enwin Russia acquisition: +10.9% or € 28.7 million
Gross margin increases to 29.1% (1H2014: 27.4%).
EBITDA at € 27.2 million or 8.7% of sales (1H2014:€ 15.2 million or 5.7%) Net profit increases to € 4.7 million (1H2014: €.40 million)
European PVC costs have reached a record level, after 4 consecutive raw material cost increases since March.
Outlook 2015: cautious optimism on market development, and acceleration of investments in growth and efficiency
Tom Debusschere, Deceuninck CEO:
"The clear improvement of our 1H2015 results confirms that Deceuninck is on track with its projects and its margins. Increasing positive signals from the market in Western Europe, continued good performance in the US and the normalising availability of PVC make us more optimistic than at the start of the year.
At comparable scope, volumes increased by 4.0% for the first half year. We were pleased by the volume growth in Belgium during the 2nd quarter and we expect sales in France to bottom out. Various incentives from the French government to revitalize building activity should have a positive impact in the second half of the year.
Our strategy of launching ground-breaking innovations to the market such as the slimline glass fibre reinforced iSlide#neo sliding door helps us win new customers and new projects in a highly competitive market. We are truly perceived as the innovators in our sector.
Growth continued at double digit rate in the US. Volumes in Turkey remained stable, while gaining market share.
Sales in Russia are substantially lower due to the ruble devaluation and the impact of the sanctions on consumer confidence and construction activity.
Meanwhile we accelerate the integration of Pimapen in Turkey. Production of the Pimapen window profiles will be consolidated in Kocaeli from early 2016. Preparation for the construction of the new Menemen site near Izmir is progressing well.
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Outlook 2015
We remain cautious for the full year 2015. Building and renovation activity in Europe remains brittle, driven by a subdued economic environment The PVC supply in Europe has returned to normal, after the force majeures were lifted. However, at historic high price levels.
We are convinced that our continued actions to launch innovations, to improve productivity, to reduce structure costs, and our discipline to pass on increased material cost to the market will sustain our margins and will allow further growth of net profits."
1. Key figures
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Regulated information - 1H 2015 results
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2. Comments on the consolidated results
2.1. Sales
Sales breakdown per quarter and 1st halfyear% of sales 1Q 2015 2Q 2015 1H 2015
Exchange rate 4.6% 3.9% 4.2% Volume 3.1% 4.6% 4.0% Mix (country, price, product) 0.9% -2.3% -0.9%
Scope change (*) 9.4% 12.0% 10.9%
TOTAL 18.0% 18.2% 18.1%
* Scope change : Pimapen Turkey, Enwin Russia
Sales breakdown 1H 2015 per region(in € million) | Var. 1Q Var. 2Q 1H Var. 1H Var. 1H | ||
(in € million) | 2014/2015 2014/2015 2015 2014/2015 Loc. Curr. | ||
Western Europe 1.0% 9.7% Central & Eastern Europe -4.6% -9.1% Turkey & Emerging Markets 58.6% 48.8% North America 47.1% 39.5% | 101.6 65.4 92.4 52.7 | 5.5% -7.2% 53.0% 42.4% | -1.7% 47.9% 15.3% |
Total 18.0% 18.2% | 312.1 | 18.1% |
1H 2015 sales in Western Europe increased 5.5% to €101.6 million (1H 2014: € 96.3 million). Sales increase in the 2Q was strong with a 9.7% increase to € 54.7 million. Double digit sales growth in UK, The Netherlands, Spain and Italy continued and even accelerated in most countries.
Belgium and France recorded again sales growth in 2Q, a reversal of the trend observed in the previous quarters. In France various residential building market indicators do not yet show any improvement, in spite of the numerous government incentives to revitalize the market.
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The strategy in Western Europe of launching true innovations such as the glass fibre reinforced Zendow#neo premium window and the slimline iSlide#neo patio door result in gaining new customers and increasing market share in a highly competitive market.
The launching of a unique "slide and swing" patio door and a fully reversible window boosted sales in the UK.
Central & Eastern Europe (incl. Germany)
1H 2015 sales in Central & Eastern Europe decreased year-on-year by 7.2% to € 65.4 million
(1H 2014: € 70.5 million - at constant exchange raet s 1.7%).
The same trends from 1Q more or less continued. Double digit growth in Poland and in the cluster of Czech Republic, Slovak Republic and Hungary as a result of competitive wins and increased demand from key accounts.
Inoutic window sales on the domestic market in Germany were stable from the 2nd quarter onwards. The German window market continues to be impacted by increasing imports from Eastern European cheap labour countries. Further weakening consumer confidence fed by the economic sanctions and strong devaluation of the Russian ruble (-35% Y-o-Y) severely hit newbuild and renovation activity in Russia
Sales in Turkey & Emerging Markets increased by 53.0% to € 92.4 million (at constant exchange rates +47.9%). Sales include Pimapen sales in Turkey.
Deceuninck owns 3 brands in the top segment of the worldwide second largest PVC window market: Egepen Deceuninck, Winsa and Pimapen.
Organic domestic sales and exports to Northern Africa remained more or less stable. The outcome of the June parliamentary elections did not substantially change the trend.
A new corporate identity for the Pimapen brand, the most recognised brand for PVC windows in
Turkey and a new Pimapen advertising campaign supported sales.
Turkey as Deceuninck's export hub for developing Emerging Markets continued to build up new markets in South America and India.
Sales increased 42.4% to € 52.7 million. (At constant exchange rates +15.3%)
Market indicators reflect a stable and growing U.S. economy with unemployment at the lowest point since 2008 (5.3%) while GDP for 1Q has been revised upward. NAHB/Wells Fargo Housing Market Index in July has risen to the highest level since November 2005 and remodelling activity has been consistent, but market growth has continued to be constrained by a shortage of experienced labour and credit availability. Deceuninck North America (DNA) has been accelerating its efforts to convert new and existing customers to its latest innovative
products and materials while maintaining "Zero Back-orders" and expanding brand
awareness. This resulted in higher than market sales growth.
2.2. Results
Gross profitGross-margin increased to 29.1% (1H 2014: 27.4%). Raw material costs increased in Europe from March onwards. Force majeure declarations by raw material producers in Europe resulted
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in sharp price increases. Raw material prices increased in Turkey due to a weakening of the Turkish lira against the US dollar. Gross margin was favourably impacted by a changed regional mix and by the elimination of operational inefficiencies.
EBITDA
EBITDA increased to € 27.2 million or 8.7% of sales(1H 2014: € 15.2 million or 5.7% of sales)
as a result of higher gross margin combined with stable OPEX margins.
REBITDA was € 28.7 million or 9.2% of sales (1H 2014: € 15.2 million). Restructuring costs in
Western Europe and Turkey amounted to € 1.5 million.
REBITDA was favourably impacted by a € 2.4 milliongain on the sale of the Izmir site. Productivity improvement projects are implemented worldwide and already resulted in the first half year in a positive contribution to EBITDA.
Operating result (EBIT) was € 12.0 million (1H 2014: € 4.0 million) resulting in an EBIT-margin of 3.9% compared to 1.5% in 1H 2014.
Non cash costs amount to € 15.1 million against €11.2 million in 1H 2014.
Financial result was € -4.6 million (1H 2014: € -53.million). This is € 1.1 million higher mainly as a result of higher interest charges in Turkey due to the changed scope with Pimapen and due to increased cost for hedging the Russian ruble as a result of higher interest rates in Russian
ruble.
In May 2015 Deceuninck extended its credit facilities with 3 years (until 2020) at improved conditions.
Income tax expense was € 2.7 million against € 0.m1 illion in 1H 2014 as a result of higher EBT (Earnings Before Taxes).
The net profit 1H 2015 was € 4.7 million versus €.40 million in 1H 2014.
Working capital
Working capital increased from € 124.6 million on 31 December 2014 to € 151.7 million on 30
June 2015 (30 June 2014: € 113.3 million).
Inventories were € 15.1 million higher as comparedto 30 June 2014 due to the Pimapen acquisition and to support growth in US and Turkey & Emerging Markets.
Trade receivables increased € 18.9 million as compared to 30 June 2014 due to higher sales volume. Days outstanding (DSO) decreased slightly year-on-year. The impact of the Pimapen customer base on trade receivables and DSO was offset by strict receivables management and expanding factoring to the UK customer base. Total factoring amounted to € 30.5 million at 30
June 2015.
Trade payables decreased year-on-year by € 4.5 mililon.
The operating working capital on 30 June 2015 was 22.0% of the Last Twelve Month (LTM)
sales as compared to 17.5% on 30 June 2014.
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Capital Expenditures
Capital expenditures (capex) in 1H 2015 were € 12.5million against € 13.6 million at 30 June
2014.
Expansion capex (€ 4.1 million) was mainly spent onthe new extrusion site Menemen in Turkey and investments in the US warehouse to meet growth and Zero Back orders target.
Deceuninck further started foiling activity and distribution in Croatia to better meet the customer requirements in Italy.
€ 5.4 million was spent on new tools and products. Maintenance capex was € 3.0 million.
The net financial debt at 30 June 2015 amounted to € 92.1 million against € 71.0 million at 31
December 2014. The acquisition of Pimapen results in higher working capital needs. Net financial debt is traditionally higher at the end of June as compared to the end of December due to the seasonality of the business.
Equity slightly decreased by € 0.2 million to € 26.34 million from € 264.5 million at 31 December
2014. The net profit, unfavourable currency translation adjustments and the € 2.7million
dividend payment combined had a minor impact on equity as compared to 31 December 2014.
The gearing was 34.8% at 30 June 2015 against 26.8 % at 31 December 2014.
On 30 June 2015 Deceuninck employed worldwide 3,600 full time equivalents (FTEs) (including temporary workers and external staff) (30 June 2014: 2,959).
Financial calendar 2015
21 October 2015 3Q 2015 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 3400 people in 25 countries. Deceuninck has production facilities in Belgium, Chili, Czech
Republic, France, Germany, Poland, Russia, Thailand, Turkey, UK and US.
Deceuninck sales in 2014 were € 552.8 million witha net positive result of € 10.5 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 2014 2015 Note s (in € thousand) Unaudite d Unaudite d | ||
Sales 2 | 264,221 | 312,114 |
Cost of goods sold | -191,955 | -221,426 |
Gross profit | 72,266 | 90,688 |
Marketing, sales and distribution expenses | -46,664 | -54,732 |
Research and development expenses | -3,292 | -4,131 |
Administrative and general expenses | -18,750 | -21,358 |
Other net operating result | 482 | 1,582 |
Operating profit (EBIT) | 4,041 | 12,048 |
Financial charges | -7,353 | -16,200 |
Financial income | 3,820 | 11,629 |
Profit before taxes (EBT) | 508 | 7,478 |
Income taxes 4 | -150 | -2,745 |
Net profit | 358 | 4,732 |
The ne t profit is attributable to: | ||
Shareholders of the parent company | 295 | 4,748 |
Non-controlling interests | 62 | -16 |
Earnings pe r s hare dis tributable to the s hare holde r s of the pare nt com pany (in €): | ||
Normal earnings per share | 0.00 | 0.04 |
Diluted earnings per share | 0.00 | 0.03 |
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Annexe 2: consolidated statement of financial position
31 De ce m be r 2014 30 June 2015 (in € thousand) Audite d Unaudite d |
Assets |
Intangible fixed as s ets 5,922 5,924 Goodwill 10,871 10,755 Tangible fixed as s ets 215,649 213,670 Financial fixed as s ets 66 65 Deferred tax as s ets 21,080 21,887 Long-term receivables 1,068 1,188 |
Non-current assets 254,657 253,490 |
Inventories 93,417 109,576 Trade receivables 115,826 124,571 Other receivables 8,677 13,979 Cas h and cas h equivalents 29,046 28,735 Fixed as s ets held for s ale 2,060 1,961 |
Current assets 249,026 278,823 |
Total assets 503,684 532,313 |
Equity and liabilities | ||
Is s ued capital | 52,912 | 52,978 |
Share prem ium s | 85,927 | 86,073 |
Cons olidated res erves | 169,423 | 171,762 |
Cas h flow hedge res erve | -91 | -55 |
Actuarial gains / los s es Treas ury s hares | -3,864 -261 | -3,594 -261 |
Currency trans lation adjus tm ents | -44,316 | -47,113 |
Equity excluding non-controlling interest | 259,731 | 259,792 |
Non-controlling interes t | 4,758 | 4,471 |
Equity including non-controlling interest | 264,489 | 264,261 |
Interes t-bearing loans | 14,635 | 51,709 |
Long-term provis ions | 24,962 | 25,391 |
Deferred tax liabilities | 5,771 | 6,060 |
Non-current liabilities | 45,368 | 83,161 |
Interes t-bearing loans | 85,396 | 69,097 |
Trade payables | 84,670 | 82,425 |
Tax liabilities | 6,224 | 10,936 |
Em ployee related liabilities | 9,702 | 14,066 |
Short-term provis ions | 777 | 777 |
Other liabilities | 7,058 | 7,591 |
Current liabilities | 193,826 | 184,891 |
Total equity and liabilities 503,684 532,313 inck.com
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Annexe 3: consolidated statement of cash flows
For the s ix m onth pe riod e nde d in 30 June (in € thousand)
2014 2015
Unaudite d Unaudite d
Operating activities
Net profit 358 4,732
Depreciations of (in)tangible fixed as s ets 10,749 12,756
Im pairm ents on (in)tangible fixed as s ets 370 590
Provis ions for pens ions and other ris ks & charges -539 687
Im pairm ents on current as s ets 570 1,093
Net financial charges 3,533 4,571
Profit on s ale of tangible fixed as s ets -34 -1,610
Los s on s ale of tangible fixed as s ets 88 147
Incom e taxes 150 2,745
Share-bas ed paym ent trans actions s ettled in equity 210 270
Cash flow from operating activities before movements in working
capital and provisions 15,455 25,982
Decreas e / (increas e) in trade and other receivables -15,228 -17,026
Decreas e / (increas e) in inventories -17,497 -15,270
Increas e / (decreas e) in trade payables 22,712 -140
Decreas e / (increas e) in other non-current as s ets -79 -89
Decreas e / (increas e) in other current as s ets -771 -8,269
Increas e / (decreas e) in other non-current liabilities 0 7
Increas e / (decreas e) in other current liabilities 3,047 8,355
Cash flow generated from operating activities 7,638 -6,450
Interes t received 629 584
Incom e taxes paid (-) / received (+) -114 -447
Cash flow from operating activities 8,153 -6,313
Investing activities
Cas h receipts on s ale of tangible fixed as s ets 208 5,510
Purchas es of tangible fixed as s ets -13,636 -11,874
Purchas es of intangible fixed as s ets -13 -647
Other trans actions -7 1
Cash flow from investing activities -13,125 -7,011
Financing activities
Capital increas e 99 213
New (+) / repaym ents (-) of long-term debts -5,030 11,272
New (+) / repaym ents (-) of s hort-term debts 14,907 11,363
Interes ts paid -2,175 -4,471
Dividends paid -61 -2,679
Other financial item s -276 -2,735
Cash flow from financing activities 4,787 12,963
Net increase (+) / decrease (-) in cash and cash equivalents -185 -360
Cash and cash equivalents as per beginning of period 21,715 29,046
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Cash and cash equivalents as per end of period 21,503 28,735
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