PRESS RELE ASE
H1 2023 FINANCIAL RESULTS
Regulated Information
Thursday 24 August 2023 at 7:00h CET
Record EBITDA - Margin improvement - Solid cash generation
Sales | Adj. EBITDA | Adj. EBITDA % | Net Result | Net Debt |
€ 427.2m | € 59.6m | 13.9% | € 17.8m | € 100.8m |
(€ 506.8m LY) | (€ 57.8m LY) | (11.4% LY) | (€ 7.5m LY) | (€ 121.2m LY) |
Executive Summary
-
Adj. EBITDA increased to € 59.6m (+3.1% vs H1 2022) driven by strong business performance in Turkey and improved profitability in North
America. - Adj. EBITDA-margin amounted to 13.9%, compared to 11.4% in H1 2022 and to 9.5% in H2 2022.
- The record Adj. EBITDA has been realized in a challenging market environment, causing 6.9% volume decrease due to a slowdown of the construction activity in Europe and North America, while Turkey & Emerging markets performed strongly with 12.6 % higher volumes.
- Sales in H1 2023 decreased by 15.7% of which 8.3% related to exchange rate movements and 6.9% due to lower volumes.
- Net income increased from € 7.5m in H1 2022 to € 17.8m in H1 2023.
- Net debt decreased with €20.4m versus same period last year reflecting solid cash generation while continuing the planned investment program.
- Deceuninck continues to invest in sustainability initiatives with a focus on recycling capacity, use of recycled materials and solar energy.
- Half year report available atwww.deceuninck.com/investors
Quote of the CEO, Bruno Humblet
"During challenging market environments with high inflation and increasing interest rates, we were able to achieve a record half year Adj. EBITDA and increasing profit margins, while further improving our cash generation. The business performance in Turkey was very strong. In North America we were able to improve our profitability reflecting improved plant efficiencies and a stronger product mix. Business results in Europe were weaker reflecting difficult market conditions.
We continued to invest in our recycling capacity and sustainability initiatives. The investment in our aluminium coating facility in Turkey will help us to further grow our aluminium business. Our Elegant transition remains well on track which will help to increase the usage of recycled PVC. After a solid start in the first half of the year, we reconfirm our outlook of increasing our full year Adj. EBITDA."
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Summary of consolidated figures
(in € million) | H1 2022 | H1 2023 | % y-o-y |
Volumes (PVC, in kTon) | 115.9 | 107.9 | (6.9%) |
Sales | 506.8 | 427.2 | (15.7%) |
Gross profit | 139.9 | 139.0 | (0.7%) |
Gross-margin (%) | 27.6% | 32.5% | +4.9 pps |
EBITDA | 54.8 | 57.1 | 4.3% |
Adj. EBITDA | 57.8 | 59.6 | 3.1% |
Adj. EBITDA-margin (%) | 11.4% | 13.9% | +2.5 pps |
EBIT | 26.1 | 35.4 | 35.7% |
Financial result | (12.1) | (9.0) | (25.5%) |
Profit / (loss) before taxes (EBT) | 14.0 | 26.4 | 88.3% |
Income taxes | (6.5) | (8.7) | 33.1% |
Net profit / (loss) | 7.5 | 17.8 | 136.1% |
Net Debt | 121.2 | 100.8 | (16.9) |
Sales evolution by region
(in € million) | H1 2022 | Volume | FX | Price / Mix / Other | H1 2023 | % y-o-y |
Europe | 241.9 | -12.1% | -0.3% | 1.6% | 216.0 | -10.7% |
North America | 119.7 | -23.3% | 0.7% | -7.4% | 83.8 | -30.0% |
Turkey & EM | 145.1 | 12.6% | -32.2% | 7.4% | 127.4 | -12.2% |
Total | 506.8 | -6.9% | -8.3% | -0.5% | 427.2 | -15.7% |
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Management comments
Business environment
In Europe, the overall market demand and consumer confidence remained low due to higher interest rates and increased costs for building materials. Slowdown of the market was mainly present in Central and Eastern Europe, while Southern Europe demonstrated more resilience.
In North America, higher mortgage rates continued to impact sales volumes. Improvements in operational efficiency and lower staff rotation resulted into higher profitability compensating lower volumes.
In Turkey, there was high market activity with solid volumes while sales are impacted by weakening of the Turkish Lira. Our strong brand position resulted into market share growth during times of high inflation & devaluation.
Within Emerging Markets, overall market and customer confidence is low while the trend towards higher quality products continues.
Income Statement
Consolidated sales in H1 2023 decreased to € 427.2m, down 15.7% from € 506.8m in H1 2022, driven by significant devaluation of the Turkish Lire in June and lower volumes in Europe and North America, partially compensated by strong volumes & favorable product mix in Turkey & EM.
The Adj. EBITDA increased to € 59.6m (+3.1% vs H1 2022). The Adj. EBITDA-margin in H1 2023 was 13.9%, which is 2.5 percentage point higher than in H1 2022 (11.4%). Improvement in Adj. EBITDA is driven by higher volumes combined with margin improvement in Turkey and higher operational efficiency in the North America. In Europe, decreased volumes led to lower efficiency levels while indexation of salaries resulted into higher personnel costs.
Adj. EBITDA-items (difference between EBITDA and Adj. EBITDA) amount to € 2.5m (vs € 3.0m in H1 2022) and include costs related to the transition to Elegant in Europe.
The high negative financial result mainly reflects the inflation impact on monetary assets in Turkey. In H1 2023 this amounted to € (9.0)m compared to € (12.1)m in H1 2022. This improvement is partly due to increased dividend repatriation.
Depreciations and amortizations decreased from € 28.7m in H1 2022 to € 21.7m in H1 2023, as 2022 was negatively impacted by the impairment of property, plant and equipment in Russia for an amount of € 7.5m.
Income taxes have risen from € (6.5)m in H1 2022 to € (8.7)m in H1 2023 driven by increased Earnings before taxes. As a result of the above, net profit increased from € 7.5m in H1 2022 to € 17.8m in H1 2023.
Cash Flow and Balance sheet
Capex amounted to € 23.3m in H1 2023 compared to € 16.9m in H1 2022. Capex included investments with a focus on recycling, solar panels, Elegant transition and aluminium coating activities in Turkey.
The Net Debt decreased from € 121.2m per June 2022 to € 100.8m, causing leverage to decrease from 1.2x to 1x. Decrease in Net Debt is driven by increased Gross operating cashflow with solid Working capital improvements in the last twelve months.
Working capital has decreased from € 160.9m as per June 2022 to € 119.0m per June 2023, mainly driven by significantly lower inventories in Europe and North America and the impact of FX movements.
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Sustainability
Deceuninck is committed to reducing direct and indirect carbon emissions in alignment with the Science Based Targets.
In line with this commitment, we have invested in a range of energy efficiency measures during the first six months of this year. Our global action plan to increase own production of renewable electricity kicked off with the installation of 5.400 KWp of Solar PV at our plants in Belgium and Turkey.
We have also further invested in our high-techrecycling facility in Diksmuide and in the increased use of recycled material in our products through the expansion of co-extrusion lines.
Through best-in-classinsulation values, our products directly contribute to energy savings in houses and buildings. Therefore, we are part of the solution to address climate change via renovations of the building portfolio.
Outlook
We reconfirm our ambition to deliver another growth year in Adj. EBITDA while improving Free Cash Flow generation.
In Europe, market activity is expected to stay at low levels keeping margins under pressure. The Elegant transition remains on track and we continue our investments to increase our recycling capacity and use of recycled materials.
In North America, both renovation and new build market remain low as a result of macroeconomic headwind. On the mid-term, structural shortage of qualitative housing keeps providing strong growth perspectives.
In Turkey, a strong market momentum remains after a solid first half year. We continue to focus on leveraging our strong market position with the investment in aluminium activities.
Emerging Markets will continue to move towards higher quality windows and doors, while we keep assessing our global positioning and structure cost.
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Annex 1: Consolidated Income Statement
(in € million) | 2022 | 2023 |
Sales | 506.8 | 427.2 |
Cost of goods sold | (366.9) | (288.3) |
Gross profit | 139.9 | 139.0 |
Marketing, sales and distribution expenses | (76.9) | (72.2) |
Research and development expenses | (3.3) | (3.6) |
Administrative and general expenses | (26.3) | (28.2) |
Other net operating result | (7.3) | 0.4 |
Share of the result of a joint venture | 0.0 | 0.0 |
Operating profit (EBIT) | 26.1 | 35.4 |
Costs related to the derecognition of accounts receivable | (1.1) | (0.3) |
Interest income / (expense) | (2.3) | (2.2) |
Foreign exchange gains / (losses) | (0.0) | 0.3 |
Other financial income / (expense) | (1.0) | (1.5) |
Monetary gains / (losses) | (7.7) | (5.4) |
Profit / (loss) before taxes (EBT) | 14.0 | 26.4 |
Income taxes | (6.5) | (8.7) |
Net profit / (loss) | 7.5 | 17.8 |
Adj. EBITDA | 57.8 | 59.6 |
Earnings per share distributable to the shareholders of the parent | 2022 | 2023 |
company (in €): | ||
Basic earnings per share | 0.05 | 0.11 |
Diluted earnings per share | 0.04 | 0.11 |
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Deceuninck NV published this content on 24 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 August 2023 05:02:01 UTC.