DGAP-News: Braas Monier Building Group S.A. / Key word(s): 9-month
figures
Braas Monier Building Group achieves sustainable profitability
increase in first nine months of 2014
04.11.2014 / 07:01
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BRAAS MONIER achieves sustainable profitability increase in first nine
months of 2014
Highlights of the first nine months and outlook for 2014
- 9M revenues of EUR 908 million are up slightly by 0.3% compared to the
previous year, despite a generally weaker market
- Significant 28% increase in Operating EBITDA to EUR 148 million in the
first nine months leads to higher Operating EBITDA margin of 16.3% (9M
2013: 12.9%)
- Operating EBITDA margin improved to 19.7% in the third quarter (Q3
2013: 19.3%), despite revenue decline of 5% in the third quarter of
2014
- Positive net profit in first nine months of EUR 28 million (Q3: EUR 23
million)
- Net debt to Operating EBITDA*) ratio continues to decline to 2.0
(previous year: 3.2)
- Operating EBITDA expected to see a strong improvement of at least 20%
for the full year 2014, with total revenues for the year around the
previous year's level
High profitability thanks to strengthened market position, profitable
acquisition-based and organic growth besides strict cost management
The strategic decisions taken in the past few months and the Group-wide
measures relating to the "Top Line Growth" (TLG) programme are already
showing initial signs of success. The Group's operating profitability has
continued to improve despite the adverse overall conditions and led to an
Operating EBITDA margin of just below 20% in the third quarter of 2014. The
growth programme goes along with strict cost management as well as a clear
focus on profitability and cash generation. In addition, the Group is in
the process of launching a multi-year programme to systematically enhance
the Group's internal processes going forward, including administrative,
sales support, in-house logistics and production processes. "It is
essential to look forward and systematically exploit Braas Monier's
opportunities in this ever-changing environment," Pepyn Dinandt, CEO of
Braas Monier Building Group, emphasised the Group's on-going efforts to
achieve above-average market growth complemented by strict cost management
and profitability improvement.
Braas Monier won additional mid-term revenues and earnings potential at the
end of October with the agreed takeover of Spanish and Portuguese market
leaders - Tejas Cobert (Spain) and CT Telhas Cobert (Portugal). In a
normalised environment and including synergies, particularly related to the
components business, the Group expects this acquisitions to generate
additional potential of at least some EUR 50 million in revenues and around
EUR 10 million in EBITDA. The opening of a second plant in India will also
continue to drive organic growth.
The exceptional cash flows generated by the operating business allow the
Group to achieve consistent and ambitious growth, both organically and
through acquisitions, without losing sight of the Group's debt reduction
targets.
Nine-month revenues slightly higher year on year despite weaker market
environment
From January to September, Braas Monier achieved above-market growth in
several countries - both in growing and contracting markets - such as
Germany, the Netherlands, Poland, Malaysia and China. At EUR 907.7 million,
revenues in the first nine months of 2014 increased slightly by 0.3%
(adjusted for currency effects: +1.7%) compared to the previous year (EUR
905.1 million). In the third quarter, revenues were 5.1% (adjusted for
currency effects: -4.8%) lower compared to the previous year (EUR 360.7
million) at EUR 342.4 million.
Sustainable improvement in profitability
Braas Monier has improved its profitability thanks to strict cost
management. The slight improvement in revenues of EUR 2.6 million in the
first nine months of 2014 resulted in a EUR 32.0 million, or 27.5%,
increase in Operating EBITDA to EUR 148.4 million (9M 2013: EUR 116.4
million). As a result, Braas Monier achieved an Operating EBITDA margin
increase of 340 basis points to 16.3% (9M 2013: 12.9%) on the back of
efficiency gains and consistent cost management. In the third quarter, when
the margin is usually at its highest due to seasonal effects, it also
exceeded the level of previous year's quarter (19.3%) at 19.7%. Braas
Monier therefore largely compensated for the revenues decline in the third
quarter, with Operating EBITDA at EUR 67.4 million falling only narrowly
short of the previous year (EUR 69.5 million) by EUR 2.1 million, or 2.9%.
In the first nine months of 2013, substantial restructuring costs of EUR
45.0 million were incurred. No expenses of this nature occurred in 2014.
Positive net profit achieved
Braas Monier reported positive net profit, both in the third quarter and
the first nine months of 2014. After a loss of EUR 25.9 million in the
previous year, net profit from January to September 2014 increased by EUR
54.1 million to EUR 28.2 million. The contribution of the third quarter of
EUR 23.0 million more than doubled compared to the previous year (Q3 2013:
EUR 11.3 million).
Equity position strengthened, financial flexibility increased
As a result of the capital increase of approximately EUR 100 million in
connection with the IPO in June this year, total equity rose from EUR 16.2
million at 31 December 2013 to EUR 111.0 million at 30 September 2014.
The leverage ratio, defined as net debt to Operating EBITDA, was reduced
significantly to 2.0 times at the end of the nine-month period (previous
year: 3.2 times). Today, the financial liabilities of the Group mainly
consist of a Senior Secured Floating Rate Note of EUR 315 million and the
remaining Term Loan B amounting to EUR 200 million. Both instruments mature
in 2020. Further financial flexibility is provided by the currently
completely undrawn Revolving Credit Facility of EUR 100 million.
Mixed segment development
Due to the weakening of the German market, revenues in the Central,
Northern & Eastern Europe segment fell far below from July to September
compared to the same period in the previous year. In absolute numbers, the
operating result (Operating EBITDA) was only slightly lower thanks to the
stable margin. Yet in the first nine months, also this segment recorded a
slight increase in revenues and a strong improvement in Operating EBITDA.
On the back of dynamic growth in the UK and positive impetus from the
Netherlands, Western Europe achieved the strongest revenues increase, both
in the first nine months and in the third quarter, which is reflected in
the above-average earnings increase for both periods.
While Southern Europe suffered the sharpest drop in revenues within the
Group, it was still in line with expectations for the third quarter given
the economic situation in Italy and the impact of the Ukraine crisis on the
countries in South-Eastern Europe. The considerable margin and earnings
improvement, both in the third quarter and for the first nine months, also
demonstrates the efficiency improvements and strict cost control.
Asia & Africa saw a strong increase in revenues and earnings in the first
nine months, adjusted for currency effects. The operating result in the
third quarter was slightly lower year on year due to positive one-time
effects in 2013, at slightly higher revenues.
At Chimneys & Energy Systems, with its geographical focus on Central and
Eastern Europe, the negative revenues development from the second quarter
continued into the third quarter and subsequently fell short of the
previous year's nine-month figure. Earnings in the third quarter fell below
the previous year in absolute terms, but the margin increased. On a
nine-month basis, earnings were up, both in absolute terms and in terms of
the margin.
Revenues in the components business in the Central Products & Services
segment improved in the first nine months, but were clearly lower from July
to September compared to previous year. This was attributable to
distributors running down their stocks in anticipation of lower sales as
well as weaker demand in individual markets. This resulted in a marginal
loss for the third quarter and the first nine months.
Dynamic growth continues in the UK; the situation in France and Italy
remains difficult; Germany is stagnant; the Ukraine crisis dampens overall
sentiment for full-year 2014
In view of the weaker market expectations for Europe, Braas Monier is
focusing on implementing additional TLG initiatives in order to outperform
the markets. Excluding acquisition-based growth in the fourth quarter,
management forecasts for 2014 revenues around the previous year's level.
Like in the first nine months, a positive price effect is expected for the
full-year as well. Management also anticipates a considerable EBTIDA
improvement of more than 20% for 2014. At year-end 2014, a sharp reduction
in the net debt to Operating EBITDA ratio to below 2.0 times compared to
2.9 times at the end of 2013 is expected, including acquisition-based
growth in the fourth quarter on a pro-forma basis.
From a cost perspective management expects moderate increases in input
costs (raw materials and wage inflation). The fixed cost structure will be
positively impacted by the roll-over effects from headcount reductions that
took place in 2013 under the framework of the restructuring program
(Step 200+). The majority of this effect has already taken place in the
first nine months of 2014. Management does not expect operational
restructuring costs in 2014, however, some provisions made in 2013 will be
paid in cash in 2014. Non-recurring financial expenses in 2014 will consist
primarily of refinancing cost and transaction costs for the Initial Public
Offering.
Growth stems primarily from the UK. In Germany, the general market
development in the third quarter of 2014 did not match previous estimates.
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November 04, 2014 01:01 ET (06:01 GMT)
