REXEL : FULL-YEAR 2015 RESULTS
FULL-YEAR 2015 RESULTS
PARIS, Feb. 11, 2016 (GLOBE NEWSWIRE) --
2015 PERFORMANCE IN LINE WITH TARGETS
NET INCOME IMPACTED BY ONE-OFF EFFECTS; RECURRING NET INCOME OF €269.4m, DOWN 7.1%
PROPOSED DIVIDEND OF €0.40 PER SHARE PAYABLE IN CASH
1 See definition in the Glossary section of this document; Latin American operations, recently divested, are presented as "Discontinued operations"
Rudy PROVOOST, Chairman of the Board of Directors and CEO, said:
"Despite a persistently challenging business environment, Rexel posted a solid full-year performance, in line with its most recent outlook. The 2015 results clearly confirm the resilience of Rexel's business as well as its ability to generate strong cash flow throughout the cycle. With regards to Rexel's strategic imperatives, 2015 was a year of operational progress. We improved our organizational effectiveness by implementing a streamlined regional structure, centered on Europe, North America and Asia-Pacific, and completed the business transformation program in the US. Furthermore, we actively managed our balance sheet to optimize our financial structure and to further reduce our financing costs. We also made significant progress in the execution of our disposal program aimed at reallocating our resources to our most valuable assets, while announcing a few targeted accretive acquisitions in line with our strategic priorities.
We will propose to our shareholders on May 25 to approve a dividend of €0.40 per share, to be paid fully in cash. This is in line with our minimum 40% of net recurring income pay-out policy and consistent with our cash allocation strategy.
Taking into account low copper and oil prices, the slowdown of the Chinese economy and the uncertainty around the North American industrial market, the start of 2016 leads us to be cautious in our guidance for the year, even if Europe could experience a slight gradual recovery throughout the year. More than ever, we will continue to relentlessly focus on margin discipline and cost control while implementing a genuinely customer-centric strategy for long-term value creation. In this respect, we will present the details of our 2020 ambition and roadmap at today's Capital Markets Day in Paris."
FINANCIAL REVIEW FOR THE PERIOD ENDED DECEMBER 31, 2015
Sales of €13,537.6m in the full year, up 5.6% year-on-year on a reported basis; down 2.1% year-on-year on a constant and same-day basis
In the fourth quarter, Rexel posted sales of €3,509.8 million, up 3.2% on a reported basis and down 2.9% on a constant and same-day basis. Excluding the 0.9% negative impact due to the change in copper-based cable prices, sales were down 2.0% on a constant and same-day basis.
The 3.2% increase in reported sales included:
In the full year, Rexel posted sales of €13,537.6 million, up 5.6% on a reported basis and down 2.1% on a constant and same-day basis. Excluding the 0.5% negative impact due to the change in copper-based cable prices, sales were down 1.6% on a constant and same-day basis.
The 5.6% increase in reported sales included:
Europe (54% of Group sales): -0.8% in Q4 and -0.1% in FY on a constant and same-day basis
In the fourth quarter, sales in Europe increased by 1.1% on a reported basis but they were down 0.8% on a constant and same-day basis. This 0.8% decrease in Q4 represented a slight improvement over Q3 (-0.9%). Excluding the negative impact from the change in copper-based cable prices, which was higher in Q4 (-1.0%) than in Q3 (-0.3%), sales were up 0.2% in Q4 while they were down 0.7% in Q3.
North America (36% of Group sales): -6.5% in Q4 and -5.2% in FY on a constant and same-day basis
In the fourth quarter, sales in North America were up 4.4% on a reported basis including a positive currency effect of €127.6m (mainly due to the appreciation of the USD against the euro). On a constant and same-day basis, sales were down 6.5%, mainly reflecting both the strong deterioration in sales to the Oil & Gas industry, which represent about 10% of the region's sales and dropped by 36% on average in the quarter, as well as lower cable sales (USD copper prices dropped by 26% in the quarter).
The above-mentioned branch network optimization in the US is part of a program of cost efficiency measures implemented in North America that was presented on July 29, during the presentation of the half-year 2015 results.
Asia-Pacific (10% of Group sales): -0.1% in Q4 and -1.1% in FY on a constant and same-day basis
In the fourth quarter, sales in Asia-Pacific were up 10.8% on a reported basis, including a positive effect of €8.4m from currencies (primarily the Chinese Yuan against the euro) and a positive effect of €26.1m from recent acquisitions in the region. On a constant and same-day basis, sales were down 0.1%.
In Q4, gross margin stood at 23.9% of sales, up 4 basis points year-on-year. This performance mainly reflected the good performance in Europe, where gross margin improved both year-on-year and sequentially. This improvement was partly offset by a drop in gross margin in Asia-Pacific while gross margin in North America was broadly stable year-on-year.
In Q4, distribution and administrative expenses (including depreciation) stood at 19.2% of sales, up 60 basis points year-on-year as a percentage of sales. There was an increase as a percentage of sales across the three geographies. Nevertheless, it should be highlighted that distribution and administrative expenses (including depreciation) improved sequentially as a percentage of sales in Europe (from 20.4% of sales in Q3 2015 to 20.1% of sales in Q4 2015) and that they decreased by €2.5 million year-on-year in North America. Operating expenses in Asia-Pacific were impacted by a €4.5m charge from bad debt in the quarter.
As a result, adjusted EBITA margin in Q4 stood at 4.7% of sales, a 31 basis-point sequential improvement over the 4.4% margin posted in Q3. It was down 57 basis points year-on-year, mainly impacted by Asia-Pacific.
In the full year, adjusted EBITA margin stood at 4.4% of sales, in line with the target announced on October 7. It was down 65 basis points year-on-year, of which 20 basis points attributable to a drop in gross margin and 45 basis points attributable to higher distribution and administrative expenses (including depreciation) as a percentage of sales, largely reflecting lower volumes.
In the full year, reported EBITA stood at €573.0 million, down 11.4% year-on-year.
Operating income in the full year stood at €379.4 million, down 27.9% year-on-year.
Net financial expenses in the full year amounted to €210.0 million (vs. €184.4 million in 2014) and included one-off costs of €52.5 million, due to financing optimization operations that took place in H1 2015. Those operations contributed to the continuous improvement in Rexel's financial structure. In the full year, the average effective interest rate decreased by 100 basis points year-on-year: it stood at 3.9% on gross debt (vs. 4.9% in 2014).
Income tax in the full year represented a charge of €84.4 million (vs. €100.9 million in 2014). The decrease is mainly due to the lower profit before tax. The effective tax rate stood at 49.8% (vs. 29.5% in 2014). The rise in tax rate mainly reflected the rise in non-deductible charges for goodwill impairment.
Net income from continuing operations in the full year was down 64.7%, at €85.0 million (vs. €240.8 million in 2014).
Net income from discontinued operations (disposal of Latin America, announced on April 30 and now finalized) was a loss of €69.3 million (vs. a loss of €40.8 million in 2014).
Reported net income in the full year amounted to €15.7 million (vs. €200.0 million in 2014).
Recurring net income in the full year amounted to €269.4 million (vs. €289.9 million in 2014) (see appendix 2).
In the full year, free cash flow before interest and tax from continuing operationswas an inflow of €562.6 million (vs. an inflow of €559.7 million in 2014). This net inflow included:
At December 31, 2015, net debt stood at €2,198.7 million (vs. €2,213.1 million at December 31, 2014). Net debt was reduced by €145.1 million before the unfavorable impact of currency and by €14.4 million after this impact. It took into account:
At December 31, 2015, the indebtedness ratio (Net financial debt / EBITDA), as calculated under the Senior Credit Agreement terms, stood at 2.99x, in line with the target to be at or below 3 times EBITDA at every year-end.
By acquiring Cordia, Rexel complements its security specialist business under the Francofa and Eurodis companies. It will also allow Rexel to build a number one position as a security specialist in France.
With about 40 employees, Cordia has built a strong partnership with its suppliers. It posted sales of €12 million in 2015, of which 15% through the web, and double-digit profitability.
Rexel strengthens its position in the Automation and MRO segments in the US through the acquisition of Brohl & Appell
Rexel announced last week the acquisition of Brohl & Appell, a US specialist in industrial automation and MRO services, founded in 1889 and based in Ohio.
This acquisition strengthens Rexel's position in the US in industrial automation, which represented around 15% of total sales in the US in 2015.
With about 60 employees, Brohl & Appell has built a strong partnership with Rockwell Automation. In 2015, it posted sales of €24 million through 7 branches, with profitability above Group average.
PROPOSED DIVIDEND OF €0.40 PER SHARE PAYABLE IN CASH
Rexel will propose to shareholders a dividend of €0.40 per share, representing 45% of the Group's recurring net income (vs. 75% last year). This is in line with Rexel's policy of paying out at least 40% of recurring net income.
It will be paid in cash and will be subject to approval at the Annual Shareholders' Meeting to be held in Paris on May 25, 2016.
In an environment that is expected to remain difficult throughout most of the year and taking into account challenging comparables in Q1, Rexel aims at delivering in 2016:
In addition, Rexel confirms its cash allocation policy of:
.thanks to solid free cash-flow generation of:
April 29, 2016 First-quarter results
The financial report for the period ended December 31, 2015 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 fourth-quarter & full-year 2015 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.
FINANCIAL ANALYSTS / INVESTORS
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.
Appendix 1: Segment reporting - Constant and adjusted basis*
* Constant and adjusted = at comparable scope of consolidation and exchange rates, excluding the non-recurring effect related to changes in copper-based cables price and before amortization of purchase price allocation; the non-recurring effect related to changes in copper-based cables price was, at the EBITA level:
Appendix 2: Extract of Financial Statements
Consolidated Income Statement
Bridge Between Operating Income Before Other Income And Other Expenses And Adjusted EBITA
Recurring Net Income
Sales And Profitability By Segment
Consolidated Balance Sheet1
1 Net debt includes Debt hedge derivatives for €6.5m at December 31, 2014 and €(6.4)m at December 31, 2015. It also includes accrued interest receivables for €(0.7)m at December 31, 2014 and for €(0.7)m at December 31, 2015.
Change in Net Debt
1 Includes restructuring outflows of :
2 Excluding settlement of fair value hedge derivatives
Appendix 3: Working Capital Analysis
Appendix 4: Headcount and branches by geography
Appendix 5: Calendar, scope and change effects on sales
2014 sales should take into account the following estimated impacts to be comparable to 2015:
Based on the assumption of the following average exchange rates:
and based on acquisitions to date, 2015 sales should take into account the following estimated impacts to be comparable to 2016:
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 March 25, 2015 under number D.15-0201. 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 March 25, 2015 under number D.15-0201, 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).
Full-Year 2015 Results http://hugin.info/143564/R/1985400/728119.pdf