PLASTIC OMNIUM (EPA:POM) - 1st half-year results:21% growth in revenue, Automotive production outperformance of 7.1 points, Results show good resilience
Transparency directive : regulatory news
19/07/2019 06:30
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Levallois, July 19, 2019,1st half-year results: 21% growth in revenue
Automotive production outperformance of 7.1 points
Results show good resilience
In the second-half of 2018, worldwide automotive production declined for the
first time in 10 years (-4.4%); this decline steepened in the first-half of
2019 (-6.9%). In this context, in the first-half of 2019, Compagnie Plastic
Omnium saw its revenue(1) grow 20.7% and its results show good resilience
thanks to cost savings plans carried out from the 4th quarter of 2018.
* Group revenue(1) stood at EUR4,611 million, growing 20.7% at the new Group
scope. Like-for-like, it was stable (+0.2%) and outperformed worldwide
automotive production by 7.1 points, particularly in China and North America.
* The operating margin reached EUR281 million (6.6% of revenue), versus EUR324
million in the first-half of 2018 and EUR286 million in the second-half of
2018. It held up to the sharp decline and volatility of the market in China,
Germany and the United Kingdom.
* After EUR64 million in additional depreciation on assets supporting future
growth (excluding IFRS 16 impact(8)), EBITDA increased by EUR54 million to
reach EUR511 million.
* Net income, Group share, came in at EUR155 million and includes EUR25 million
of restructuring costs.
* After EUR308 million in investments (7.2% of revenue), free cash-flow stood
at EUR30 million. The second-half of 2019 will see lower investments which
will represent, as announced, around 6% of revenue for full-year 2019;
* The financial structure is sound, with net debt of EUR1,021 million
representing 46% of shareholders' equity and 1.1x EBITDA, taking into account
the application of IFRS 16 (+EUR234 million)(8).
In expectation of an estimated 4.5% drop in worldwide automotive production for
full-year 2019 (an estimated production of around 87 million vehicles in 2019
versus 91.3 million in 2018), Plastic Omnium strengthened its cost reduction
plan.
In these market conditions, the Group is confirming outperformance from its
businesses of at least 5 points in 2019 as well as free cash-flow generation of
around EUR200 million. It now expects its operating income to decrease slightly
compared to the EUR610 million achieved in 2018. 2019 EBITDA will show an
increase compared to 2018 EBITDA.
Furthermore, on the basis of an independent valuation, Plastic Omnium expects
to sell its commercial real estate assets to the real estate company Sofiparc,
wholly-owned by Burelle SA which is also the holding company controlling
Plastic Omnium. This transaction would enable the non-industrial real estate
assets of Plastic Omnium to be rationalized and strengthen its financial
structure.
"With a solid order book, Plastic Omnium confirms its objective of
strengthening its financial structure through strict control of investments and
costs in order to consolidate its leadership as an innovative automotive
supplier.
The recent increase in direct and indirect family control of Compagnie Plastic
Omnium demonstrates the majority shareholder's confidence in the Group's
fundamentals and its long-term growth strategy, based on technological
developments and market opportunities." Laurent Burelle, Chairman and CEO
Financial information Tel: +33 (0)1 40 87 64 49 Fax: +33 (0)1 40 87 96 62
investor.relations@plasticomnium.com
Plastic Omnium is the world leader in intelligent exterior systems, clean
energy systems and automotive modules.
The Group and its joint ventures have 32,000 employees in 128 plants, 24 R&D
centers and 26 countries worldwide, serving 92 automotive brands.
Plastic Omnium is listed on Euronext Paris, compartment A. It is eligible for
the Deferred Settlement Service (SRD) and is part of the SBF 120 and CAC Mid
60 indices (ISIN code: FR0000124570).
First-half 2019 consolidated results
The Board of Directors of Compagnie Plastic Omnium met on July 18, 2019, under
the Chairmanship of Laurent Burelle, and approved the consolidated financial
statements at June 30, 2019.
First-half First-half
In EUR millions Group 2018 2019 Change
Economic revenue(1) 3,821 4,611 +21%
Consolidated revenue(2) 3,190 4,268 +34%
Operating margin(3) 324 281 -13%
as a % of consolidated revenue 10.2% 6.6% -3.6 points
Net profit - Group share 230 155 -33%
EBITDA(4.8) 457 511 +12%
as a % of consolidated revenue 14.3% 12.0% -2.3 points
Investments 271 308 +14%
Free cash-flow(5) 109 30
Net debt(6) at June 30(8) 992 1,021 +EUR29
million
Net debt/shareholders' equity 54% 46%
Net debt/EBITDA 1.1 1.1
20.7% growth in revenue(1)
In EUR millions First-half First-half Change like-
by business line 2018 2019 Change for-like(7)
Plastic Omnium Industries 3,446 3,458 +0.4% -1.2%
Plastic Omnium Modules 375 1,153 +207% +4.7%
Economic revenue(1) 3,821 4,611 +20.7% +0.2%
Joint ventures 631 343 -45.7% +4.5%
Consolidated revenue(2) 3,190 4,268 +33.8% -0.1%
In the first-half of 2019, Compagnie Plastic Omnium's economic revenue(1)
amounted to EUR4,611 million, an increase of 20.7% compared to the first half
of 2018.
On a like-for-like basis, growth was +0.2%. The Group's economic revenue
includes EUR70 million of positive currency effects and EUR700 million of
positive net scope effects, mainly due to the full consolidation of HBPO from
July 1st, 2018 for Plastic Omnium Modules.
Compagnie Plastic Omnium's consolidated revenue(2) stood at EUR4,268 million at
June 30, 2019, a rise of +33.8% and stable like-for-like.
Automotive production outperformance of 7.1 points
In the first-half of 2019, worldwide automotive production declined -6.9%
(source: IHS July 2019), compared to growth in economic revenue of +0.2% on a
like-for-like basis, i.e. an outperformance of 7.1 points, including 5.7 points
for Plastic Omnium Industries and 11.6 points for Plastic Omnium Modules.
All regions outperformed automotive production, with a strong outperformance,
as forecast, in China (+13.5 points) and in North America (+10.2 points).
Outperformance/
In EUR millions and % First-half First-half Change like- automotive
of revenue by region 2018 2019 for-like(7) production
Europe/Africa 2,120 2,490 -3.1% +4.9 points
55% 54%
North America 944 1,311 +7.3% +10.2 points
25% 28%
Asia, excl. China 293 343 +3.4% +3.8 points
8% 8%
China 363 385 -0.9% +13.5 points
9% 8%
South America 101 82 -0.2% +2.7 points
3% 2%
Economic revenue(1) 3,821 4,611 +0.2% +7.1 points
Business in Europe, down 3.1% in the first half of 2019, has been impacted by
the sharp drop in automotive production in Germany (-11.4%) and the United
Kingdom (-19.8%), which represented 16% and 5% respectively of the Group's
revenue. This drop is partially offset by the growth in SCR revenue (diesel
vehicle emissions reduction systems, +31%) and by strong business in France
(+13%) and Eastern Europe (+15%), particularly in Slovakia (+22%).
North American revenues grew strongly (+7.3% like-for like) and benefited from
the ramp up of new American and Mexican plants recently commissioned as well as
the high exposure to SUV/Light Truck models which represented 80% of its
business.
In China, business was virtually stable (-0.9% like-for like) while automotive
production fell by -14.4%. The Group's strong market share gains in the leading
worldwide automotive market are the result of many new model launches: China
today represents nearly half of the Group's launches.
In Asia excluding China, Plastic Omnium performed well in South Korea and
Turkey.
Drop in operating margin, growth in EBITDA
To respond to the deterioration in worldwide automotive production, Plastic
Omnium launched a cost reduction plan in the 4th quarter of 2018, which was
strengthened in the 1st quarter of 2019, for a full- year amount of EUR100
million, including EUR50 million of savings in indirect production and
structural costs.
These cost saving plans enabled the Group's operating margin to withstand the
drop in worldwide automotive production and to offset the extra depreciation
related to new plant launches and numerous program launches to support the
Group's growth. Thus, depreciation (excluding IFRS 16(8)) increased by EUR64
million between the first-half of 2018 and the first-half of 2019.
The operating margin thus came in at EUR281 million, i.e. 6.6% of consolidated
revenue, in the first-half of 2019. It declined 13% compared to the EUR324
million in the first-half of 2018 (10.2% of consolidated revenue) and is
comparable to the EUR286 million achieved in the second-half of 2018 (7.1% of
consolidated revenue), in tougher market conditions. EBITDA increased from
EUR457 million to EUR511 million between the first-half of 2018 and the
first-half of 2019.
The full consolidation of HBPO from July 1st, 2018 into PO Modules, a less
capital-intensive assembly business, had, as expected, a dilutive impact on the
operating margin percentage and on EBITDA.
By business, the change in Operating Margin and EBITDA is as follows:
First-half Second-half First-half
In EUR millions 2018 2019 2019
Consolidated revenue 3,190 4,055 4,268
PO Industries 3,190 3,098 3,207
PO Modules 0 957 1,062
Operating margin 324 286 281
as a % of revenue 10.2% 7.1% 6.6%
PO Industries 315 263 254
as a % of revenue 9.9% 8.5% 7.9%
PO Modules 9 24 27
as a % of revenue N/A 2.5% 2.5%
EBITDA 457 461 511
as a % of revenue 14.3% 11.4% 12.0%
PO Industries 448 417 457
as a % of revenue 14.1% 13.4% 14.2%
PO Modules 9 44 54
as a % of revenue N/A 4.7% 5.1%
Net profit, Group share: EUR155 million
In the first-half of 2019, Plastic Omnium recognized EUR25 million of net
non-current expenses (EUR9.9 million in net expenses in the first-half of
2018), mainly comprising restructuring charges to respond to the drop in
worldwide automotive production.
Net financial income was stable at -EUR36.9 million.
Income tax stood at -EUR55.6 million, i.e. an effective tax rate of 28%, versus
-EUR50.9 million at June 30, 2018 (effective tax rate of 21%).
Net income was EUR163.5 million (i.e. 3.8% of consolidated revenue), versus
EUR232.7 million in the first-half of 2018.
Net profit, Group share, dropped 33% to EUR155 million (i.e. 3.6% of
consolidated revenue) compared to the first-half 2018 record level (EUR230
million).
Free cash-flow of EUR30 million after a final quarter of heavy investment
In the first-half of 2019, the Group invested at a high level of EUR308
million, i.e. 7.2% of consolidated revenue. These investments included:
- four plants for the Intelligent Exterior Systems business in the United
States, Slovakia, India and Morocco;
- three R&D centers, including two for the Clean Energy Systems business
(Belgium and China) and the extension and digitization of (Sigma)-Sigmatech
for Intelligent Exterior Systems, opened in June 2019.
With this high level of investment, the Group generated EUR30 million in free
cash flow at June 30, 2019.
In the second-half of 2019, the Group will not commission any significant
plants or finance any additional R&D centers; investments will thus be sharply
reduced. They will represent approximately 6% of consolidated revenue for the
whole of 2019.
Sound financial structure
Net debt at June 30, 2019 stood at EUR1,021 million, i.e. approximately the
same level as at June 30, 2018 (EUR992 million), after a +EUR234 million impact
from the changeover to IFRS 168 in 2019. In the meantime, Plastic Omnium paid
EUR123 million in dividends, purchased EUR50 million of Treasury shares and
sold its Environment business for EUR220 million (December 2018).
The Group's net debt represents 46% of shareholders' equity and 1.1x EBITDA.
Outlook
In expectation of an estimated 4.5% drop in worldwide automotive production for
full-year 2019 (an estimated production of around 87 million vehicles in 2019
versus 91.3 million in 2018), Plastic Omnium strengthened its cost reduction
plan.
In these market conditions, the Group is confirming outperformance of its
businesses of at least 5 points compared to worldwide automotive production in
full-year 2019, as well as free cash-flow generation of around EUR200 million.
It now expects its operating income to decrease slightly compared to the EUR610
million achieved in 2018. 2019 EBITDA will show an increase compared to 2018
EBITDA.
The Group does not expect a rebound in worldwide automotive production in 2020
or 2021. On this basis and over this period, it is confirming outperformance of
its businesses of around 5 points and generation of annual free cash-flow
greater than EUR200 million.
With a sound financial structure and strengthened fundamentals, Plastic Omnium
will consolidate its leadership as an innovative automotive supplier in clean
and connected cars.
More detailed financial information can be found on the website:
www.plasticomnium.com.
As at the date of this release, the financial statements have been subject to a
limited review and the Statutory Auditors' have issued their limited review
report.
Webcast presentation of the annual results
The presentation of half-year results, with simultaneous translation, will take
place on Friday, July 19, 2019 at 8:30 a.m. Paris time.
It will also be accessible by webcast on the website of Groupe Plastic Omnium
and by telephone to:
Main language - French:
- France Tel: +33170710159 PIN: 45080523#
Secondary language - English:
- France Tel: +33 172727403 PIN: 23337858#
- Germany Tel: +49 69222225429 PIN: 23337858#
- Spain Tel: +34 911140101 PIN: 23337858#
- United Kingdom Tel: +44 2071943759 PIN: 23337858#
- United States Tel: +1 6467224916 PIN: 23337858#
Glossary
(1) The economic revenue reflects the Group's operational and managerial
reality. It corresponds to the consolidated sales plus the sales of the
Group's joint ventures at the Group's percentage stake: BPO (50%) and YFPO
(50%) and HBPO for 33.33% until its full consolidation on July 1st, 2018.
(2) Consolidated revenue, pursuant to IFRS 10-11-12, does not include the share
of joint ventures, which are consolidated using the equity method.
(3) The operating margin includes the share of the results of companies which
have been consolidated using the equity method, and the amortization of the
intangible assets acquired, before other operating income and expenses.
(4) EBITDA corresponds to the operating margin plus the share of profit of
associates and joint ventures before depreciation and operating provisions.
(5) Free cash flow corresponds to the operating cash-flow, less tangible and
intangible investments net of disposals, taxes and net interest paid +/-
variation of the working capital requirements (cash surplus from
operations).
(6) Net debt includes all long-term borrowings, short-term loans and bank
overdrafts less loans, marketable debt instruments and other non-current
financial assets, and cash and cash equivalents.
(7) Like-for-like (scope and exchange):
a. the currency effect is calculated by applying the exchange rate of the
previous period to the revenue of the current period. In the first-half of
2019, it is a positive EUR69.5 million on economic revenue and EUR72.7
million on consolidated revenue;
b. the scope effect is calculated by applying the consolidation method of
the current period to the previous period. The full consolidation of HBPO
into Plastic Omnium Modules thus impacted economic revenue by +EUR704.8
million and consolidated revenue by +EUR1,010 million in the first-half of
2019.
(8) The Group has applied IFRS 16 "Leases" since January 1st, 2019. At June 30,
2019, it impacted property, plant and equipment and financial liabilities
by +EUR234 million and depreciation and EBITDA by +EUR26 million.
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