Kaufman & Borad SA
Kaufman & Borad SA: H1 2019 Results
10-Jul-2019 / 18:47 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Press release
Paris, July 10, 2019
H1 2019 Results
- Significant increase in Backlog (+7.9%), to more than EUR2.2bn, and in
the housing property portfolio (+14.5%)
- A solid financial structure with a financing capacity of EUR454.4m
- Projected 2019 dividend of at least EUR2.50 per share
Today, Kaufman & Broad SA
announced its results for the
? Key sales data first half of the 2019 fiscal
year (from December 1, 2018 to
May 31, 2019).
(H1 2019 vs. H1 2018)
Nordine Hachemi, Chairman and
Chief Executive Officer of
Kaufman & Broad, made the
following comments:
? Orders:
? Housing: 4,177 units
(+0.7%) "Kaufman & Broad's H1 2019
EUR807.8m incl. tax (- 6.5%) results are in line with our
expectations. The new housing
? Commercial property: market should be in decline
EUR118.6m overall for the year, at around
115,000 housing units. This
decline is primarily due to the
decrease in the number of
? Take-up period for buliding permits issued.
Housing:
5.1 months (stable vs. H1
2018)
"Conversely, demand for housing
is still high, which is visible
through a stable take-up period
for Kaufman & Broad's programs,
at less than six months.
? Key financial data
(H1 2019 vs. H1 2018)
"Sales performance in H1 was
stable, as anticipated.
Nevertheless, the generally
slower pace in building permit
issuance could lead to a
decrease in new programs opening
? Revenue: in the second half.
Housing: EUR610.9M (+0.3%)
Overall: EUR703.8m (- 9.4%)
"On top of this, the increases
? Gross margin: in the land reserve (+14.5%) and
in overall Backlog (+7.9%)
confirm our strong long-term
growth capacity. The 13.5%
EUR135.6m, 19.3% of revenue increase in Housing Backlog, now
more than EUR2bn, allow a good
visibility for our business.
? Adjusted EBIT:
EUR67.7m, 9.6% of revenue
? Attributable net income:
EUR38.5m (+1.9%)
? Net cash:
"In Business Property, the
EUR54.6m vs. EUR50.0m at end building permit for block A7A8
2018 in the Austerlitz district was
filed in May. This 92,000 sq.m
project is made up of offices,
retail space, housing, and a
? Financing capacity: hotel. It seems reasonable to
expect that the building permit
will come through in late 2020 /
early 2021.
EUR454.4m (EUR353.4m at end
2018)
"In this context, Kaufman &
Broad sets the following
? Key growth indicators projections for the current
year: revenue should stand at
around EUR1.5bn, with an around
5% increase in Housing and a
(H1 2019 vs. H1 2018) decline in Commercial business,
in line with expectations.
"The gross margin ratio is
expected to hold at around 19%
and the adjusted EBIT ratio
? Overall backlog: should remain above 9%.
EUR2,253.1m (+7.9%) Attributable net income should
be at least equal to 2018
levels. Given the expected
financial structure and results,
Of which Housing: EUR2,026.4m a dividend of at least EUR2.50
(+13.5%) per share should be proposed to
the Board of Directors for the
2019 fiscal year."
? Housing property
portfolio:
32,109 units (+14.5 %)
Sales activities
? Housing
In H1 2019, in value terms, housing orders totaled EUR807.8m including tax,
a 6.5% decrease compared with H1 2018. In volume, 4,177 units were ordered,
a 0.7% increase compared with the same period in 2018.
The take-up period for projects was 5.1 months in the first half of 2019,
stable compared with H1 2018 (5.1 months).
The commercial offer, 97% of which is located in high-demand, low-supply
areas (A, Abis and B1), amounted to 3,575 housing units at the end of May
2019 (3,527 housing units at the end of May 2018).
Breakdown of the customer base
For the first half of 2019, orders in value (excl. tax) from first-time
buyers were down by 23% and represented 15% of sales. Orders from
second-time buyers decrease by 16%, making up 9% of sales. Orders from
investors accounted for 32% of sales (26% just for the Pinel Scheme). Block
sales made up 43% of housing orders, up by 10% compared with H1 2018, when
they represented 37% of orders. Moreover, around 52% of block orders were
for managed housing (for tourists, students, business travelers, and
seniors).
? Commercial Property
In H1 2019, the Commercial Property segment recorded net orders of EUR118.6m
including tax.
The building permit for block A7A8 in the Austerlitz district was filed in
May. This 92,000 sq.m project is made up of offices, retail space, housing,
and a hotel. Given the upcoming elections, it seems reasonable to expect
that the building permit will come through in late 2020 / early 2021.
Kaufman & Broad is currently marketing or studying around 293,000 sq.m of
office space and around 126,000 sq.m of logistics and industrial space.
It is also currently building around 63,000 sq.m in office space.
Two XXL logistics platforms with a total surface area of 150,000 sq.m were
also delivered in the first half, to a subsidiary of the Casino group and to
Lapeyre (Saint Gobain group).
At the end of May 2019, the commercial backlog amounted to EUR226.7m.
? Forward-looking sales and development indicators
At May 31, 2019, the housing backlog amounted to EUR2,026.4m (excl. tax),
i.e. 18.8 months of business. At the same date, Kaufman and Broad had 200
housing programs on the market, representing 3,575 housing units (compared
with 217 programs representing 3,527 housing units at the end of May 2018).
The housing property portfolio represents 32,109 units, up 14.5% compared
with the end of May 2018, corresponding to potential revenue of around four
years of business.
? Financial results
? Business volumes
Total revenues amounted to EUR703.8m (excl. tax), down 9.4% compared to H1
2018.
Revenue from Housing amounted to EUR610.9m (excl. tax), versus EUR608.8m
(excl. tax) in H1 2018. This represents 86.8 % of group revenue. Revenue
from Apartments was down by 1.2% compared to H1 2018 and stood at EUR566.6m
(excl. tax). Revenue from Single-family homes in communities amounted to
EUR44.3m (excl. tax), versus EUR35.2m (excl. tax) in H1 2018.
Revenue from Commercial Property amounted to EUR89.8m (excl. tax), compared
with EUR163.9m (excl. tax) in H1 2018.
? Profitability highlights
Gross margin for H1 2019 amounted to EUR135.6m, compared with EUR150.0m in
H1 2018. The gross margin ratio was 19.3%, stable compared with H1 2018
(19.3%).
Current operating expenses amounted to EUR72.9m (10.4 % of revenue), versus
EUR78.5m in H1 2018 (10.1% of revenue).
Current operating income stood at EUR62.7m, versus EUR71.5m in H1 2018. The
current operating margin ratio was 8.9%, compared with 9.2% in H1 2018.
The group's adjusted EBIT amounted to EUR67.7m in H1 2019 (compared with
EUR77.6m in H1 2018). The adjusted EBIT margin was 9.6% (compared with 10.0%
in H1 2018).
Attributable net income for H1 2019 was EUR38.5m (compared with EUR37.8m in
H1 2018). At May 31, 2019, in accordance with IFRS IAS12, this attributable
net income includes a reduction in tax liability worth EUR3.8m, due to the
provisions voted on under the 2018 finance law that gradually reduces the
normal tax rate on companies from 33.3% to 26.5% in 2021, and to 25.0%
starting in 2022. If these tax provisions change in the future, the company
will have to increase its tax liability accordingly.
? Financial structure and liquidity
The net cash position was EUR54.6m at May 31, 2019, compared with net cash
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