REXEL :SECOND-QUARTER & HALF-YEAR 2016 RESULTS (unaudited)
(Thomson Reuters ONE) -
SECOND-QUARTER & HALF-YEAR 2016 RESULTS (unaudited)
ORGANIC SALES SLIGHTLY UP IN Q2, SUPPORTED BY STRONG CALENDAR EFFECT
IMPROVED GROSS MARGIN AND ADJUSTED EBITA MARGIN IN Q2
FULL-YEAR FINANCIAL TARGETS CONFIRMED
SALES OF ?3.350bn IN Q2
* Up 0.1% on an organic basis
* Down 2.2% on a reported basis, mainly due to a 2.8% negative currency effect
IMPROVED GROSS MARGIN IN Q2, UP 26bps YEAR-ON-YEAR
* Improvement in Europe and Asia-Pacific
* Broadly stable in North America
ADJUSTED EBITA MARGIN OF 4.5% IN Q2, UP 5bps YEAR-ON-YEAR
* First quarter of year-on-year improvement since Q4 2012
* Continued opex reduction in North America
FULL-YEAR FINANCIAL TARGETS CONFIRMED
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Key figures(1) Q2 2016 YoY change H1 2016 YoY change
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Sales ?3,349.9m ?6,510.5m
On a reported basis -2.2% -2.0%
On a constant and actual-day basis +0.1% -0.9%
On a constant and same-day basis -2.3% -1.9%
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Adjusted EBITA ?150.4m +1.1% ?272.3m -2.7%
As a percentage of sales 4.5% 4.2%
Change in bps as a % of sales +5bps -8bps
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Reported EBITA ?147.1m -1.3% ?260.9m -5.3%
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Operating income ?126.8m +23.5% ?219.7m +5.8%
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Net income from continuing op. ?57.0m +184.4% ?95.8m +121.8%
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Recurring net income ?77.3m -7.2% ?134.0m +0.5%
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FCF before interest and tax from ?188.1m vs. ?144.2m ?(6.9)m vs. ?2.4m
continuing op.
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Net debt at end of period ?2,380.2m -6.9% ?2,380.2m -6.9%
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(1 )See definition in the Glossary section of this document
Patrick BERARD, Chief Executive Officer, said:
"Rexel's second quarter performance showed a positive signal with a slight
increase in profitability compared to last year, despite an environment that
remained quite difficult. This improvement was mainly due to an increase in
gross margin and the continuing effects of our cost reductions in North America.
The second half should benefit from positive elements, such as the construction
recovery in France and a gradual reduction in the negative impact from oil and
gas activity, mainly in North America. Nevertheless, uncertainty surrounding
Brexit and industrial activity levels in North America and China lead us to
remain cautious.
In this context and given the first-half performance, we confirm our financial
targets for the full-year 2016, as announced in February.
In my new role as CEO of Rexel, I will focus in the second part of the year,
with my team, on delivering our 2016 targets, along with reviewing our action
plans and updating our 2020 ambitions. I will present the outcome of this review
next February, along with our 2016 annual results."
FINANCIAL REVIEW FOR THE PERIOD ENDED JUNE 30, 2016
* Financial statements as of June 30, 2016 were authorized for issue by the
Board of Directors on July 28, 2016. They have been subjected to a limited
review by statutory auditors.
* The following terms: EBITA, Adjusted EBITA, EBITDA, Recurring net income,
Free Cash Flow and Net Debt are defined in the Glossary section of this
document.
* Unless otherwise stated, all comments are on a constant and adjusted basis
and, for sales, at same number of working days.
SALES
In Q2, sales were slightly up on an organic basis (+0.1%), boosted by a strong
calendar effect of 2.4% offsetting the 2.3% decline on a constant and same-day
basis (including a 1.3% negative copper effect)
In H1, sales were down 0.9% on an organic basis, favored by a calendar effect of
1.0%, and down 1.9% on a constant and same-day basis (including a 1.2% negative
copper effect)
In Q2, Rexel posted sales of ?3,349.9 million, down 2.2% on a reported basis and
slightly up (+0.1%) on an organic basis. On a constant and same-day basis, sales
were down 2.3%, including a 1.3% negative impact due to the change in copper-
based cable prices.
The 2.2% drop in sales on a reported basis included:
* A negative currency effect of ?94.9 million (mainly due to the depreciation
of the US and Canadian dollars as well as the British pound against the
euro),
* A positive net scope effect of ?19.4 million from recent acquisitions
(Sofinther in France, Electro-Industrie en Acoustiek in Belgium, Zhonghao
Technology in China and Brohl & Appell in the USA) and recent divestments
(Poland, Slovakia and Baltics),
* A strong positive calendar effect of 2.4 percentage points.
In H1, Rexel posted sales of ?6,510.5 million, down 2.0% on a reported basis and
down 0.9% on an organic basis. On a constant and same-day basis, sales were down
1.9%, including a 1.2% negative impact due to the change in copper-based cable
prices.
The 2.0% drop in sales on a reported basis included:
* A negative currency effect of ?130.0 million (mainly due to the depreciation
of the Canadian dollar and the British pound against the euro),
* A positive net effect of ?57.5 million from recent acquisitions (Sofinther
in France, Electro-Industrie en Acoustiek in Belgium, Zhonghao Technology in
China and Brohl & Appell in the USA) and recent divestments (Poland,
Slovakia and Baltics),
* A positive calendar effect of 1.0 percentage point.
Europe (56% of Group sales): -0.9% in Q2 and -0.3% in H1 on a constant and same-
day basis
In the second quarter, sales in Europe increased by 1.5% on a reported basis
including a positive net scope effect of ?5.0m and a negative currency effect of
?34.7m (mainly due to the depreciation of the British pound against the Euro).
On a constant and same-day basis, sales were down by 0.9% and grew by 0.7%
excluding the negative impact of copper.
* In France (36% of the region's sales), sales were stable, demonstrating good
resilience. The basis of comparison was more challenging in Q2 (-0.3% in Q2
2015) than it was in Q1 (-3.6% in Q1 2015). Moreover, floods impacted
business in some regions in May.
* In the UK (14% of the region's sales), sales were down 6.4% on a constant
and same-day basis due to lower PV sales and project delays linked to
uncertainty preceding the Brexit vote. Excluding the 80% drop in sales of
photovoltaic equipment, sales were down 3.2%.
* In Germany (11% of the region's sales), sales dropped by 2.0% including
copper, but were up 2.1% excluding this effect. They continued to improve
sequentially over Q1 2016 (-3.0% including copper and -0.3% excluding
copper).
* In Scandinavia (13% of the region's sales), sales were up year-on-year
(+3.5%). Sweden posted solid growth of +10.2% despite a challenging
comparison base (+8.3% in Q2 2015) while sales in Norway were slightly down
(-0.3%) on a challenging basis of comparison (+10.2% in Q2 2015) and sales
in Finland dropped by 5.7% due to tough market conditions.
* In other European countries, performance was as follows:
* The Netherlands confirmed its return to growth, with sales up 3.3% and
in Belgium, sales were up 2.9%,
* In Switzerland, sales were down 4.0%, impacted by lower residential
activity, while in Austria, sales increased by 4.1%,
* In Spain, sales dropped by 7.7% (as export activity dropped by 44% while
domestic activity remained broadly stable) and in Italy sales were down
4.7%.
North America (34% of Group sales): -4.2% in Q2 and -4.3% in H1 on a constant
and same-day basis
In the second quarter, sales in North America were down 6.3% on a reported basis
including a negative currency effect of ?37.9m (mainly due to the depreciation
of the US and Canadian dollars against the Euro). On a constant and same-day
basis, sales were down 4.2%. The year-on-year drop in sales to the Oil & Gas
industry continued to impact sales since the beginning of the year, but it is
gradually improving (minus 21% year-on-year).
* In the US (78% of the region's sales), sales were down 3.4%, of which:
* 1.7 percentage points attributable to the 24% drop in sales to the Oil &
Gas industry,
* 2.0 percentage points attributable to lower cable sales,
* 1.1 percentage points attributable to branch network optimization (part
of a program of cost efficiency measures implemented in the USA and
presented on July 29, 2015).
Excluding these unfavorable effects, sales were up 1.4% in the quarter, mainly
reflecting growth in the non-residential end-market.
* In Canada (22% of the region's sales), sales were down 7.1%, of which:
* 0.8 percentage points attributable to the 9% drop in sales to the Oil &
Gas industry,
* 0.9 percentage points attributable to lower cable sales,
* 1.4 percentage points attributable to the 89% drop in sales to the wind
industry.
Excluding these unfavorable effects, sales were down 4.0% in the quarter,
reflecting a weak macro-economic environment.
Asia-Pacific (10% of Group sales): -3.2% in Q2 and -1.6% in H1 on a constant and
same-day basis
In the second quarter, sales in Asia-Pacific were down 6.1% on a reported basis,
including a negative effect of ?22.3m from currencies due to the depreciation of
the Chinese Yuan against the Euro. On a constant and same-day basis, sales were
down 3.2%, reflecting contrasting performance between Pacific and Asia.
* In the Pacific (48% of the region's sales), sales were up 1.4%:
* In Australia (c. 80% of Pacific), sales were stable and confirmed
gradual improvement in sales trends,
* In New Zealand (c. 20% of Pacific), sales posted solid growth of 7.2%.
* In Asia (52% of the region's sales), sales were down 7.2%:
* In China (c. 65% of Asia), sales dropped by 18.1%, reflecting tougher
macro-economic conditions,
* In South-East Asia (c. 25% of Asia), sales grew by 19.9%,
* In the Rest of Asia (c. 10% of Asia), sales increased by 35.7%, driven
by double-digit growth in India (+12.0%) and in the Middle East
(+69.7%).
PROFITABILITY
Improved adjusted EBITA margin in Q2 (up 5bps at 4.5% of sales) thanks to
increased gross margin (up 26bps at 24.2% of sales) and reduced opex in North
America (down 15bps at 17.7% of sales)
In Q2, gross margin stood at 24.2% of sales, up 26bps year-on-year. It improved
in Europe (up 17bps at 26.5% of sales) and Asia-Pacific (up 92bps at 18.5% of
sales), while it was stable in North America (at 22.2% of sales).
Opex (incl. depreciation) stood at 19.7% of sales, up 21bps year-on-year. This
reflected contrasting situations between Europe (up 22bps at 21.1% of sales) and
Asia-Pacific (up 137bps at 17.1% of sales), on the one hand, and North America
(down 15bps at 17.7% of sales), on the other hand. In Europe, opex mainly
increased as a result of increased investment and depreciation, while in Asia-
Pacific, opex increased due to Asia. In North America, opex were reduced by
?10.2m, mainly reflecting the continued benefits from actions taken in recent
quarters.
As a result, adjusted EBITA in the quarter stood at ?150.4m (vs. ?148.7m in Q2
2015), up 1.1% and 5bps year-on-year, at 4.5% of sales.
In H1, gross margin stood at 24.5% of sales, up 10bps year-on-year. It improved
in Europe (up 7bps at 26.9% of sales) and Asia-Pacific (up 15bps at 18.3% of
sales), while it was slightly down in North America (down 6bps at 22.2% of
sales).
Opex (incl. depreciation) stood at 20.3% of sales, up 17bps year-on-year. This
reflected contrasting situations between Europe (up 22bps at 21.4% of sales) and
Asia-Pacific (up 92bps at 17.1% of sales), on the one hand, and North America
(down 8bps at 18.6% of sales), on the other hand.
As a result, adjusted EBITA in the half-year stood at ?272.3m (vs. ?280.0m in H1
2015), down 2.7% and 8bps year on-year, at 4.2% of sales (reminder: adjusted
EBITA margin in Q1 was down 20bps year-on-year at 3.9% of sales).
Reported EBITA stood at ?147.1m in Q2 (including a ?3.3m negative one-off copper
effect) and at ?260.9m in H1 (including a ?11.4m negative one-off copper
effect).
NET INCOME
Strong increase in net income from continuing operations, mainly driven by lower
net financial expenses
Recurring net income up 0.5%, at ?134.0m in H1
Operating income in H1 stood at ?219.7 million, up 5.8% year-on-year.
* Amortization of intangibles resulting from purchase price allocation
amounted to ?9.2 million (vs. ?8.6 million in H1 2015).
* Other income and expenses amounted to a net charge of ?32.0 million (vs. a
net charge of ?59.2 million in H1 2015). They included ?23.0 million of
restructuring costs (vs. ?36.8 million in H1 2015, which also included a
?18.8 million charge from goodwill impairment).
Net financial expenses in H1 amounted to ?76.9 million (vs. ?139.4 million in H1
2015). Both periods included charges related to refinancing operations. H1 2016
included a net charge of ?10 million related to the early repayment of a ?650m
bond issued in 2013 and maturing in June 2020 at a coupon of 5.125%, which was
replaced by a new issuance, in May, of a ?650m maturing in June 2023 at a coupon
of 3.500%. H1 2015 included a net charge of ?52.5 million, related to early
redemption of two bond lines at coupons of 7.000% and 6.125%. Restated for those
net charges, net financial expenses fell from ?86.9 million in H1 2015 to ?66.9
million in H1 2016. This largely reflected lower average debt year-on-year and
lower average effective interest rate, thanks to the various refinancing
operations. The average effective interest rate decreased again by 50 basis
points year-on-year in H1 2016 to 3.7% on gross debt (vs. 4.2% in H1 2015).
Income tax in H1 represented a charge of ?47.0 million. The effective tax rate
stood at 32.9% (vs. 36.7% in H1 2015).
Net income from continuing operations in H1 rose by 121.8% to ?95.8 million (vs.
?43.2 million in H1 2015).
As the disposal of our Latin American operations represented a loss of ?41.7
million in H1 2015, net income was strongly up in the half-year at ?95.8 million
(vs. ?1.5 million in H1 2015).
Recurring net income in H1 amounted to ?134.0 million, up 0.5% year-on-year (see
appendix 2).
FINANCIAL STRUCTURE
Solid free cash flow generation of ?188.1m before interest and tax and net debt
reduced by ?115.4m in Q2
Sound financial structure and reduced net financial expenses through continued
optimization of financings
In Q2, free cash flow from continuing operations before interest and taxwas an
inflow of ?188.1 million (vs. an inflow of ?144.2 million in Q2 2015). This net
inflow included:
* Gross capital expenditure of ?26.9 million (vs. ?25.2 million in Q2 2015),
* An inflow of ?62.7 million from change in working capital on a reported
basis (vs. an inflow of ?27.0 million in Q2 2015). On a constant and
adjusted basis, working capital decreased by 70bps as a percentage of the
last 12 month sales, from 11.4% at June 30, 2015 to 10.7% at June 30, 2016.
At June 30, 2016, net debt stood at ?2,380.2 million, reduced by ?115.4 million
compared to the net debt of ?2,495.6 million at the end of March.
It took into account:
* ?31.9 million of net interest paid in the quarter (?63.5 million paid in the
half-year),
* ?14.0 million of income tax paid in the quarter (?34.3 million paid in the
half-year),
* ?19.7 million of negative currency effect in the quarter (?21.3 million
positive in the half-year).
At June 30, 2016, the indebtedness ratio (Net financial debt / EBITDA), as
calculated under the Senior Credit Agreement terms, stood at 3.2x (stable vs.
June 30, 2015), in line with our covenant and reflecting the traditional
seasonality effect. Rexel confirms its strong commitment to maintaining a sound
financial structure with an indebtedness ratio at or below 3x at the end of the
year.
Rexel boasts a sound financial structure with strong financial flexibility,
comfortable headroom vis-à-vis its bank covenant and an average debt maturity of
4 years, with no repayment before June 2020.
In Q2, Rexel continued to optimize its financings in order to further reduce its
cost of financing.
In the past quarter, Rexel refinanced its 5.125% EUR Senior notes due June 2020
through the issuance of ?650m 3.500% EUR Senior notes due June 2023. As
previously commented, a one-off net charge was recognized in the net financial
expenses for ?10.0 million and the Net Present Value (NPV) of cash flows related
to this refinancing transaction is c. ?22 million. This operation will allow
Rexel to further reduce its cost of financing in the coming quarters.
OUTLOOK
As regards the second half of the year, we expect contrasting effects:
* Some factors will favor the second half of the year in comparison to the
first half:
* Activity in France (c. 1/3 of Group sales) should gradually benefit from
the first positive effects of the construction recovery,
* The negative impact from the drop in sales to the Oil & Gas segment (c.
8% of sales in North America) should continue to decrease,
* The copper effect should start being less negative, notably in Q4.
* Other factors lead to caution in the second half of the year:
* The consequences of Brexit on activity in the UK (c. 8% of Group sales)
are still difficult to estimate,
* Uncertainty about industrial activity levels in North America and China.
As a result, 2016 full-year financial targets remain unchanged:
* Organic sales growth on a constant and same-day basis of between -3% and
+1%,
* Adjusted EBITA margin of between 4.1% and 4.5%,
* Solid free cash flow generation of:
* Between 70% and 80% of EBITDA, before interest and tax,
* Between 35% and 45% of EBITDA, after interest and tax.
As announced on June 24, Ian Meakins, who joined the Board of Directors on July
1, will become Non-Executive Chairman of the Board on October 1.
Rexel will present both its 2017 full-year financial targets and its updated
2020 ambitions, along with the 2016 full-year results, at a financial meeting to
be held in Paris on February 13, 2017.
CALENDAR
October 28, 2016 Third-quarter and 9-month results
February 13, 2017 Fourth-quarter and full-year results
FINANCIAL INFORMATION
The financial report for the period ended June 30, 2016 is available on the
Group's website (www.rexel.com), in the "Regulated information" section, and has
been filed with the French Autorité des Marchés Financiers.
A slideshow of the second-quarter 2016 results is also available on the Group's
website.
ABOUT REXEL GROUP
Rexel, a global leader in the professional distribution of products and services
for the energy world, addresses three main markets - residential, commercial and
industrial. The Group supports its customers to be at their best in running
their business, by providing a broad range of sustainable and innovative
products, services and solutions in the field of technical supply, automation
and energy management. Rexel operates through a network of some 2,100 branches
in 35 countries, with c. 28,000 employees. The Group's sales were ?13.5 billion
in 2015.
Rexel is listed on the Eurolist market of Euronext Paris (compartment A, ticker
RXL, ISIN code FR0010451203). It is included in the following indices: SBF 120,
CAC Mid 100, CAC AllTrade, CAC AllShares, FTSE EuroMid, STOXX600. Rexel is also
part of the following SRI indices: DJSI Europe, FTSE4Good Europe & Global, EURO
STOXX Sustainability, Euronext Vigeo Europe 120 and ESI Excellence Europe.
Finally, Rexel is included on the Ethibel EXCELLENCE Investment Register in
recognition of its performance in corporate social responsibility (CSR). For
more information, visit Rexel's web site at www.rexel.com
CONTACTS
FINANCIAL ANALYSTS / INVESTORS
Marc MAILLET +33 1 42 85 76 12 marc.maillet(at)rexel.com
Florence MEILHAC +33 1 42 85 57 61 florence.meilhac(at)rexel.com
PRESS
Pénélope LINAGE +33 1 42 85 76 28 penelope.linage(at)rexel.com
Brunswick: Thomas KAMM +33 1 53 96 83 92 tkamm(at)brunswickgroup.com
GLOSSARY
REPORTED EBITA (Earnings Before Interest, Taxes and Amortization) is defined as
operating income before amortization of intangible assets recognized upon
purchase price allocation and before other income and other expenses.
ADJUSTED EBITA is defined as EBITA excluding the estimated non-recurring net
impact from changes in copper-based cable prices.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is
defined as operating income before depreciation and amortization and before
other income and other expenses.
RECURRING NET INCOME is defined as net income adjusted for non-recurring copper
effect, other expenses and income, non-recurring financial expenses, net of tax
effect associated with the above items.
FREE CASH FLOW is defined as cash from operating activities minus net capital
expenditure.
NET DEBT is defined as financial debt less cash and cash equivalents. Net debt
includes debt hedge derivatives.
APPENDICES
For appendices, please open the PDF file.
DISCLAIMER
The Group is exposed to fluctuations in copper prices in connection with its
distribution of cable products. Cables accounted for approximately 14% of the
Group's sales and copper accounts for approximately 60% of the composition of
cables. This exposure is indirect since cable prices also reflect copper
suppliers' commercial policies and the competitive environment in the Group's
markets. Changes in copper prices have an estimated so-called "recurring" effect
and an estimated so called "non-recurring" effect on the Group's performance
assessed as part of the monthly internal reporting process of the Rexel Group:
i) the recurring effect related to the change in copper-based cable prices
corresponds to the change in value of the copper part included in the sales
price of cables from one period to another. This effect mainly relates to the
Group's sales; ii) the non-recurring effect related to the change in copper-
based cables prices corresponds to the effect of copper price variations on the
sales price of cables between the time they are purchased and the time they are
sold, until all such inventory has been sold (direct effect on gross profit).
Practically, the non-recurring effect on gross profit is determined by comparing
the historical purchase price for copper-based cable and the supplier price
effective at the date of the sale of the cables by the Rexel Group.
Additionally, the non-recurring effect on EBITA corresponds to the non-recurring
effect on gross profit, which may be offset, when appropriate, by the non-
recurring portion of changes in the distribution and administrative expenses.
The impact of these two effects is assessed for as much of the Group's total
cable sales as possible, over each period. Group procedures require that
entities that do not have the information systems capable of such exhaustive
calculations to estimate these effects based on a sample representing at least
70% of the sales in the period. The results are then extrapolated to all cables
sold during the period for that entity. Considering the sales covered. the Rexel
Group considers such estimates of the impact of the two effects to be
reasonable.
This document may contain statements of future expectations and other forward-
looking statements. By their nature, they are subject to numerous risks and
uncertainties, including those described in the Document de Référence registered
with the French Autorité des Marchés Financiers (AMF) on April 7, 2016 under
number D16-0299. These forward-looking statements are not guarantees of Rexel's
future performance, Rexel's actual results of operations, financial condition
and liquidity as well as development of the industry in which Rexel operates may
differ materially from those made in or suggested by the forward-looking
statements contained in this release. The forward-looking statements contained
in this communication speak only as of the date of this communication and Rexel
does not undertake, unless required by law or regulation, to update any of the
forward-looking statements after this date to conform such statements to actual
results to reflect the occurrence of anticipated results or otherwise.
The market and industry data and forecasts included in this document were
obtained from internal surveys, estimates, experts and studies, where
appropriate, as well as external market research, publicly available information
and industry publications. Rexel, its affiliates, directors, officers, advisors
and employees have not independently verified the accuracy of any such market
and industry data and forecasts and make no representations or warranties in
relation thereto. Such data and forecasts are included herein for information
purposes only.
This document includes only summary information and must be read in conjunction
with Rexel's Document de Référence registered with the AMF on April 7, 2016
under number D16-0299, as well as the consolidated financial statements and
activity report for the 2015 fiscal year which may be obtained from Rexel's
website (www.rexel.com).
Second-Quarter & Half-Year 2016 results:
http://hugin.info/143564/R/2031821/756205.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: REXEL via GlobeNewswire
[HUG#2031821]
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Datum: 29.07.2016 - 07:30 Uhr
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