Kaufman & Broad SA
Kaufman & Broad SA: H1 2020 RESULTS
09-Jul-2020 / 18:37 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 9, 2020
H1 2020 Results
· *Robust sales activity* *with institutional investors: *
·
· *Overall orders in value terms: EUR 1.95bn (+110.7%)*
· *Housing orders: EUR 872m incl. VAT (+7.9%)*
· *Work resumed on all sites on May 31, 2020*
· *Continued strong business performance: *
·
· *Overall backlog: EUR 3.8bn (+68.2%) *
· *Housing property portfolio: +8.6% to 34,864 units*
· *Financing capacity: EUR 326.4m*
· *2020-2021 outlook*
Today, Kaufman & Broad SA announced its results
for the first half of the 2020 fiscal year (from
· Key sales December 1, 2019 to May 31, 2020). Nordine
data Hachemi, Chairman and Chief Executive Officer of
Kaufman & Broad, made the following comments:
(H1 2020 vs. H1
2019) _"At the end of a first half of 2020 marked by
the strikes of December 2019 and the sharp
contraction in the broader economy for two
· Total months, from mid-March to mid-May, Kaufman &
orders: Broad's results attest to the soundness of its
business model. This means financial balances
· will be preserved in the short term while
EUR 1,951.9m keeping our momentum in preparing for the
incl. VAT future._
(+110.7%)
_The sales activity in the first half enjoyed
order growth in value terms, both overall
(doubling to nearly EUR 2 billion) and for the
· Housing: Housing business (+7.9%). _
EUR 872m _This was boosted by keen interest from
incl. VAT institutional buyers, both private and public,
(+7.9%) and in particular from CDC Habitat. Their orders
rose 69% from one half-year to the next,
· Commercial accounting for two-thirds of total Housing
property: orders in value terms._
EUR 1,079.9m
incl. VAT _In addition, 4,144 units totaling EUR 842.6
(x9.1) million (including VAT) have been ordered for
projects that could obtain a building permit in
2021. These orders will be recognized according
to the time frame for obtaining building permits
· Take-up and therefore do not appear in the backlog._
period *[1]*
for Housing: _This strong momentum, which is in line with our
strategy, significantly increases the visibility
3.1 months (-2 of our business over 2021. It also confirms that
months) our commercial offering is in tune with current
societal issues._
· Key _The overall backlog was up 68.2% year-on-year
financial at the end of May to EUR 3.8 billion. The
data Housing property portfolio recorded continued
growth (+8.6% at end-May)._
(H1 2020 vs. H1
2019) _Finally, in Business Property, a
sale-before-completion (VEFA) was signed
post-closing with GCI/Crédit Suisse on June 19
· Overall for the c.10,000 sq.m "Blue Bird" office
revenue: building in Montrouge. Meanwhile, the public
EUR 385.0m consultation on the A7-A8 Austerlitz project
vs. (around 92,000 sq.m in offices, retail space and
EUR 703.8m a hotel) began on June 29._
Of which _The stoppage of activity during the lockdown
Housing: period has resulted in an increase in net debt,
EUR 352.3m vs which will be gradually reduced as work resumes
EUR 610.9m at all sites._
_The financial structure remains extremely
· Gross solid, with a financing capacity of EUR 326.4
margin: million at the end of May. _
EUR 73.5 vs.
EUR 140.7m
· EBIT:
EUR 12.3m vs
EUR 69.8m
·
Attributable
net income:
EUR 2.1m vs
EUR 39.3m
· Net
financial
debt*[2]*:
EUR 78.6m vs.
EUR 56.0m at
end 2019
· Financing
capacity:
EUR 326.4m vs.
EUR 458.1m at
end 2019
· Key growth
indicators
(H1 2020 vs. H1
2019)
· Overall
backlog:
EUR 3,788.8m
(+68.2%)
Of which
Housing:
EUR 2,464.2m
(+21.6%)
· Housing
property
portfolio:
34,864 units
(+8.6%)
_As regards the market, there was a sharp drop in supply due to delays in
processing building permits on account of the municipal elections in France,
further compounded by the postponement of the second round. We can therefore
expect a drop in orders in 2020, with a corresponding impact on new
construction projects in 2021._
_For fiscal 2020 as a whole, we are looking for revenue of around EUR 1
billion, EBIT close to 6% and virtually no net debt._
_For 2021, the backlog at end-May 2020 allows us to forecast revenue growth
of around 30%. This increase would be significantly higher should the A7-A8
Austerlitz project get full green light in 2021._
_This outlook is based on a stabilization of the health situation. "_
· Sales activities
· Housing
In H1 2020, in value terms housing orders totaled EUR 872.0m (incl. VAT), a
7.9% increase compared with H1 2019. In volume terms, 3,635 units were
ordered, a 13% decrease compared with the same period in 2019.
Breakdown of the customer base
Over H1 2020 as a whole, buyers' orders in value terms (incl. VAT) fell by
47% (first-time buyers) and 53% (second-time buyers) and accounted for 11%
of sales compared with 24% in the first half of 2019.
Orders from investors accounted for 22% of sales (19% for the Pinel Scheme
alone), down 29% from one half-year to the next.
Block sales made up 67% of housing orders, i.e. EUR 581.1m. They rose by
69% compared with H1 2019, when they represented 43% of orders.
Take-up period and sales offer
The take-up period for programs was 3.1 months in the first half of 2020,
down from 5.1 months in H1 2019.
The commercial supply, 98% of which is located in high-demand, low-supply
areas (A, Abis and B1), amounted to 1,850 housing units at the end of May
2020 (3,484 housing units at the end of May 2019, i.e. 97% in high-demand,
low-supply areas).
· Commercial Property
In H1 2020, the Commercial Property segment recorded net orders of
EUR 1,079.9m (incl. VAT).
A sale before completion (VEFA) was signed on 19 June on the c.10,000 sq.m
Blue Bird office building in Montrouge with GCI/Crédit Suisse. Meanwhile,
the public consultation on the A7-A8 Austerlitz project (about 92,000 sq.m
in offices, retail and hotel) began on June 29.
Kaufman et Broad currently has around 150,000 sq.m in office space and
around 75,000 sq.m in logistics space under marketing or under study. It is
currently building nearly 73,000 sq.m in office space and more than 36,000
sq.m in logistics space. Lastly, it has around 120,000 sq.m of office space
to be finalized.
At the end of May 2020, the commercial backlog amounted to EUR 1,324.5m.
· Forward-looking sales and development indicators
On May 31, 2020, the housing backlog amounted to EUR 2,464.2m (excl. VAT),
i.e. 27.1 months of business. At the same date, Kaufman and Broad had 156
housing programs on the market, representing 1,881 housing units (compared
with 200 programs representing 3,575 housing units at the end of May 2019).
The Group's total backlog amounts to nearly EUR 3.8bn, of which 36.5% of
the revenue still to be recognized is based on land already acquired. Of the
remainder to be acquired, 56.3% is related to projects for which a building
permit has either been filed, obtained or under review and so being cleared.
Finally, within the share of projects for which the permit has only been
filed, the Commercial operations of Austerlitz A7/A8 and Galion Puteaux
alone represent nearly 30% of the Group's total backlog as of May 31, 2020.
The Housing property portfolio represents 34,864 units. It is up 8.6%
compared with the end of May 2019, corresponding to potential revenue of
around four years of business.
· Financial results
· Business volumes
Overall revenues totaled EUR 385.0m (excl. VAT), down 45.3% compared to H1
2019, mainly due to the sharp contraction in general business for two
months, from mid-March to mid-May.
Revenue from Housing amounted to EUR 352.3m (excl. VAT), versus EUR 610.9m
(excl. VAT) in H1 2019. This represents 91.5% of group revenue. Revenue from
Apartments was down by 43.7% compared to H1 2019 and stood at EUR 319.1m
(excl. VAT). Revenue from Single-family homes in communities amounted to
EUR 33.2m (excl. VAT), versus EUR 44.3m (excl. VAT) in H1 2019.
Revenue from Commercial Property amounted to EUR 30.0m (excl. VAT),
compared with EUR 89.8m (excl. VAT) in H1 2019.
· Profitability highlights
Gross margin for H1 2020 amounted to EUR 73.5m, compared with EUR 140.7m
in H1 2019.
Current operating expenses amounted to EUR 61.2m (15.9% of revenue), versus
EUR 70.9m in H1 2019 (10.1% of revenue).
Current operating income stood at EUR 12.3m, versus EUR 69.8m in H1 2019.
The current operating margin ratio was 3.2%, compared with 9.9% in H1 2019.
Attributable net income for H1 2020 was EUR 2.1m (compared with EUR 39.3m
in H1 2019).
· Financial structure and liquidity
During the Covid-19 pandemic, most of the Group's construction sites were
totally or partially shut down, and sales activity slowed dramatically. This
had a significant negative impact on the Group's financial position, with
virtually no cash inflows during this period, even though settlement of work
carried out in Q1 became due.
Kaufman & Broad did not request deferral or suspension of payment of its tax
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