Recticel : Trading update 3rd quarter 2020

PRESS RELEASE

Regulated information - Inside information

Brussels, 30 October 2020 - 07:00 CET

Trading update 3rd quarter 2020

Solid recovery following the COVID-19 crisis in first half-year 2020

• Net sales 3Q2020: from EUR 212.0 million1 in 3Q2019 to EUR 217.4 million (+2.5%), including a - 0.5% currency effect
• Year-to-dateSeptember 2020 net sales: from EUR 665.8 million1 in 9M2019 to EUR 591.6 million (-11.1%), including a -0.2% currency effect
• Net financial debt: EUR 9.3 million (including EUR 52.9 million IFRS 16 lease obligations)

Olivier Chapelle (CEO): "After a sales decline of 32.3% in the 2nd quarter of 2020 due to COVID-19, our top-line confirms its recovery with a 2.5% growth in the 3rd quarter versus 2019. The positive sales momentum developed month after month within the quarter, with July, August and September at respectively -4.0%, +3.2% and +8.1% versus 2019. Moreover, a strong net cash flow of more than EUR 30.0 million led to a further improved net cash position on our balance sheet.

The strength of the recovery, coupled with severe production issues at our raw material suppliers - including several force majeure situations -, has created critical supply issues as from September, which our suppliers have used to increase raw material prices at an historically high speed. As in past instances, our commercial teams are committed to fully neutralize these raw material price increases with selling price increases.

After the divestments of the 50% participation in the Eurofoam joint venture and of 51% of the Automotive Interiors division, the Group is adapting its organizational set-up and is actively work ing at the re- deployment of its resources to further develop its highest value added segments."

OUTLOOK

Subject to there being no further severe COVID-19 impacts, the dynamics of the recovery observed during the second and third quarter lead the Group to confirm the 2H2020 consolidated net sales and Adjusted EBITDA of its retained business to be at the level of 2H2019.

1 Following the partial divestment from Automotive Interiors on 30 June 2020 (see press release of 01 July 2020), Automotive Interiors is integrated in the consolidated accounts according to the 'equity method'. Due the loss of control as a result of the partial divestment of Automotive Interiors and the sale of Eurofoam, the 2019 consolidated income statement was restated to present their operations as discontinued operations.

To facilitate comparisons and understanding of the Group's underlying performance, all comments in this document on developments in revenue or results are made on a like -for-like basis unless otherwise indicated.

Following the divestment of 50% participation in Eurofoam, the publication of combined accounts has been discontinued.

Press release - Third quarter 2020 trading update - 30 October 2020 - 07:00 CET

Changes in the scope of consolidation :

• First step of the Automotive Interiors divestment on 30 June 2020, now operated through the 51/49% Admetos/Recticel joint venture, which is integrated in accordance with the equity method from 1 July 2020 onwards
• Disposal of the 50% participation in the Eurofoam group (Flexible Foams) on 30 June 2020.

Sales of chemical raw materials at cost to the Proseat and Automotive Interiors companies, which previously were reported under the segment Automotive, are integrated under "Corporate/Eliminations".

1. SALES DEVELOPMENT

On a like-for-like basis1 3Q sales increased by 2.5% from EUR 212.0 million1 to EUR 217.4 million, including a currency impact of -0.5%.

3Q2020 marked a strong recovery after a 2Q2020 (-32.3%) which has been heavily impacted by the COVID-19 pandemic and the subsequent governmental lockdown measures in most countries. Sales have progressively improved through the 3rd quarter with July by -4.0%, August by +3.2% and September by +8.1%.

Breakdown of the sales by segment

in million EUR	3Q2019	3Q2020	3Q	9M2019		9M2020	9M
restated 1	restated	1
Flexible Foams	84,3	81,5	-3,3%	273,7		228,6	-16,5%
Bedding	57,8	68,3	18,1%	177,6		177,5	-0,1%
Insulation	62,9	65,0	3,3%	192,8		177,7	-7,8%
Corporate / Eliminations	7,0	2,6	-62,6%	21,7		7,8	-64,2%
TOTAL CONSOLIDATED SALES	212,0	217,4	2,5%	665,8		591,6	-11,1%

1. Flexible Foams Third quarter 2020:

Sales decreased slightly from EUR 84.3 million1 in 3Q2019 to EUR 81.5 million in 3Q2020 (- 3.3%), including exchange rate differences (-1.2%). Versus 2Q2020 sales increased by 41.2%. External sales decreased by 3.5% to EUR 74.6 million.

Both sub-segments experienced a strong recovery, with Comfort Foams ahead of 2019, and Technical Foams slightly behind. The strong recovery in Comfort Foams is due to a refocus of the consumers on their home comfort and refurbishing at the expense of other types of spending such as travels. In Technical Foams, the volumes benefitted from a demand recovery in the automotive and industrial end-use markets which come close to the 2019 levels.

Selling price increases have been implemented in September 2020 and October 2020 to compensate for the historically steep surge in chemical raw material prices following several 'force majeure' events declared by our suppliers.

Press release - Third quarter 2020 trading update - 30 October 2020 - 07:00 CET

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Year-to-dateSeptember 2020:

Over 9M2020, sales decreased from EUR 273.7 million1 in 9M2019 to EUR 228.6 million (- 16.5%), including exchange rate differences (-0.7%). External sales decreased by 17.7% to EUR 207.5 million.

Both sub-segments Comfort and Technical Foams remain behind last year sales levels. due to the volume shortfalls linked to COVID-19.

B. Bedding

Third quarter 2020:

Sales increased from EUR 57.8 million in 3Q2019 to EUR 68.3 million in 3Q2020 (+18.1%), including exchange rate differences (+0.2%). External sales increased by 18.8% to EUR 67.4 million in 3Q2020, which was supported by the reopening of the shops after the end of the lockdown measures in Europe, a positive shift in consumer spending towards home refurbishing, and a favourable product-mix.

Year-to-dateSeptember 2020:

Over 9M2020 sales reached the 9M2019 level of EUR 177.5 million - including exchange rate differences (+0.3%). External sales increased by 0.6% to EUR 175.0 million. 3Q2020 was very strong (+18.1%) compensating for the volume shortfall in 2Q2020 (-20.7%) following the COVID- 19 retail shopping restrictions imposed in most European countries .

The sub-segment "Branded Products" (+4.7%) continued to over-perform thanks to the strength of our brands in Germany, Belgium, Austria and Switzerland. The sub-segment "Non- Branded/Private Label" receded by 7.3%.

1. Insulation Third quarter 2020:

Sales increased from EUR 62.9 million in 3Q2019 to EUR 65.0 million in 3Q2020 (+3.3%), including exchange rate differences (-0.2%).

Accelerating activity levels in the construction markets during the summer led to monthly volumes exceeding the levels of 2019 from June 2020 onwards. Selling price increases have been implemented in September and October 2020 to compensate for the steep surge in chemical raw material prices following tighter supply from our suppliers.

The new plant in Finland continues to increase its output, now that all products have been certified for the Nordics.

Year-to-dateSeptember 2020:

Sales decreased from EUR 192.8 million in 9M2019 to EUR 177.7 million (-7.8%) in 9M2020, including a currency impact of -0.1%. The decrease is mainly due to lower average prices, reflecting the lower raw material input prices and the competitive environment in certain markets, while volumes have marginally increased, despite the COVID-19 impact.

Press release - Third quarter 2020 trading update - 30 October 2020 - 07:00 CET

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2.	FINANCIAL POSITION
		in million EUR	30 SEP 2019	31 DEC 2019	31 MAR 2020	30 JUN 2020	30 SEP 2020
		TOTAL EQUITY	-	276,6	-	331,5	-
		Net financial debt excluding factoring	105,5	88,6	121,4	( 11,4)	( 43,7)
	+ Drawn amounts under factoring programs	32,9	47,1	32,1	0,0	0,0
	+ Impact of application IFRS 16	84,0	80,0	77,6	55,2	52,9
		TOTAL CONSOLIDATED	222,4	215,6	231,1	43,8	9,3
		NET FINANCIAL DEBT

Excluding the EUR 52.9 million lease debt recognised under IFRS 16, and considering the strong cash flow generation, the Group's net cash position increased by EUR 32.3 million over 3Q2020 to reach EUR 43.7 million on 30 September 2020.

In order to secure its financing needs going forward, the Group entered into an agreement to replace the existing EUR 175 million 'club deal' facility, maturing in February 2021, by a new EUR 100 million syndicated revolving credit facility with a tenor of 3 years followed by two 1 year extension options.

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Press release - Third quarter 2020 trading update - 30 October 2020 - 07:00 CET

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