DJ Kaufman & Broad SA: RESULTS FOR THE FIRST NINE MONTHS OF FISCAL YEAR 2020
Kaufman & Broad SA
Kaufman & Broad SA: RESULTS FOR THE FIRST NINE MONTHS OF FISCAL YEAR 2020
01-Oct-2020 / 18:22 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, October 1,?2020
Results for the first nine months of fiscal year 2020
· *Overall backlog: &euro3.7 billion (+67.0%) *
· *Still a very solid balance sheet: *
·
· *net financial debt reduced to &euro27.5 million*[1]
· *financing capacity of &euro374.0 million*
· *Confirmation of outlook announced on July 9 2020*
_Kaufman & Broad SA today announced its results for
the first nine months of its fiscal year 2020 (from
· Key December 1, 2019 to August 31, 2020). Nordine
componen Hachemi, Chairman and Chief Executive Officer of
ts of Kaufman & Broad, made the following comments: _
sales
activity _"Overall economic activity may have contracted
sharply in the first half of fiscal year 2020, but
(9M 2020 Kaufman & Broad saw activity at its construction
vs. 9M sites pick up in the third quarter, as expected._
2019)
However, beyond the public health crisis, the Housing
market has been penalized to date by a very steep
· Total drop in the number of building permits granted along
orders: with their associated administrative authorizations.
The property supply decreased as a direct result of
· this, as did the number of orders, even though we can
&euroM2, still see that investors, institutional and
175.7 individuals have a great deal of appetite for all our
(+72.0%) programs.
incl.
VAT _We continue to roll out our land planning strategy
by redeveloping brownfield sites and derelict
business districts. Our redevelopment plans include
the A7A8 project in the Austerlitz district of Paris,
· for which the public consultation was completed in
Housing: late July. _
&euroM1,
077.4 _We can see that institutional investors are
(-6.0%) increasingly interested in housing assets, including
incl. managed housing, which shows that they are placing
VAT more value on the sector's investment quality; the
solid performances delivered by residential property
i.e. 4,700 companies are testament to this, as their revenues
units have been affected very little by the public health
(-16.5%) crisis. _
· _As per our strategy, therefore, we continue to
Commerci develop serviced housing programs in our capacity as
al a developer-investor-operator thanks to Kaufman__ &
Property Broad's solid balance sheet, which includes net
: financial debt reduced to &euro27.5__(1)__ million
&euroM1, and financing capacity of &euro374 million._
098.3
_As such, we are able to reiterate all our guidance
targets on the back of Kaufman & Broad's solid
financial structure as well as its historically large
· backlogs in both the Business Property and Housing
Take-up segments._
period*[
2]* for _For fiscal year 2020, we see revenue reaching around
Housing: &euro1 billion, with an EBIT margin of close to 6%
and virtually no net debt._
3.0 months _Going further forward, the backlog at end-August
vs. 5.7 2020 points to revenue growth of around 30% in 2021.
months This increase will be higher if the A7A8 Austerlitz
(-2.7 project gets the full green light from the
months) authorities in 2021._
_This outlook assumes that our construction sites are
· Key able to make progress in the current economic and
financia social circumstances, and that the pace at which
l data building permits are granted rapidly returns to
normal. "_
(9M 2020)
·
Overall
revenue:
&euroM65
7.4
Of which
Housing:
&euroM585.
7
· Gross
margin:
&euroM12
1.6
· EBIT:
&euroM30
.3
·
Attribut
able net
income:
&euroM10
.6
· Net
financia
l debt1:
&euroM27
.5
·
Financin
g
capacity
:
&euroM37
4.0
· Key
growth
indicato
rs
(9M 2020
vs. 9M
2019)
·
Overall
backlog:
&euroM3,
697.0
(+67.0%)
Of which
Housing:
&euroM2,38
9.5
(+19.3%)
·
Housing
property
portfoli
o:
35,594
units
(+6.4%)
· Sales activity
· Housing
Orders for housing in the first nine months of 2020 amounted to &euro1,077.4
million (including VAT) in value terms, down 6.0% on the first nine months
of 2019. In volume terms, this corresponded to 4,700 units, a 16.5% decrease
compared with the same period in 2019.
The take-up period for programs was 3.0 months over the 9-month period, an
improvement of 2.7 months compared with the same period in 2019 (5.7
months).
With 96% of programs located in high-demand, low-supply areas (zones A,
A-bis, and B1), property supply totaled 1,558 housing units at end-August
2020 (vs. 3,569 units at end-August 2019).
Breakdown of the customer base
In the first nine months of 2020, orders from first-time buyers were down in
value terms (including VAT) compared with the same period in 2019 and
corresponded to 7% of sales. Second-time buyers accounted for 5% of sales,
compared with 9% for the same period in 2019. Orders from investors
accounted for 23% of sales (of which 19% under the Pinel incentive scheme
alone). The proportion of block sales increased by 52% and corresponded to
65% of sales in the first nine months of 2020, i.e. &euro610.7 million.
· Commercial Property
The Commercial Property segment recorded net orders of &euro1,098.3 million
(including VAT) in the first nine months of 2020.
Kaufman & Broad is currently in the process of marketing or studying around
150,000 sq.m of office space and around 75,000 sq.m of logistics space. It
is also currently building nearly 30,000 sq.m of office space and more than
32,500 sq.m of logistics space. Lastly, it has around 120,000 sq.m of office
space transactions yet to sign.
At the end of August 2020, the Commercial Property backlog totaled
&euro1,307.5 million.
· Forward-looking sales and development indicators
The Housing backlog at August 31, 2020 amounted to &euro2,389.5 million
(excluding VAT), i.e. 28.7 months of activity. At the same date, Kaufman &
Broad had 150 housing programs on the market, representing 1,558 housing
units (compared with 208 programs representing 3,569 housing units at the
end of August 2019).
The Housing property portfolio represents 35,594 units. It has increased by
6.4% since the end of August 2019 and corresponds to more than 4 years of
sales activity.
· Financial results
· Business volumes
Total revenue amounted to &euro657.4 million (excluding VAT), down 36.2%
compared with the same period in 2019.
Housing revenue totaled &euro585.7 million (excluding VAT), versus
&euro920.1 million (excluding VAT) in the first nine months of 2019. This
represents 89.1% of group revenue. Revenue from the Apartments business was
down 37.7%, compared with the first nine months of 2019, and amounted to
&euro529.7 million (excluding VAT). Revenue from the Single-family Homes in
Communities business totaled &euro56.1 million (excluding VAT), versus
&euro69.4 million (excluding VAT) for the same period in 2019.
Revenue from the Commercial Property segment totaled &euro67.4 million
(excluding VAT), compared with &euro104.7 million for the same period in
2019.
· Profitability highlights
The gross margin for the first nine months of 2020 totaled &euro121.6
million, compared with &euro206.3 million in 2019. The gross margin ratio
was 18.5%, which is 41.1% lower than in the same period of 2019.
Current operating expenses amounted to &euro91.3 million (13.9% of revenue),
compared with &euro106.8 million for the same period in 2019 (10.4% of
revenue).
Current operating income totaled &euro30.3 million, compared with &euro99.6
million in the first nine months of 2019. The current operating margin ratio
was 4.6%, compared with 9.7% in the same period in 2019.
Consolidated net income amounted to &euro19.6 million in the first nine
months of 2020 (versus &euro67.2 million in the same period in 2019).
Non-controlling equity interests (minority interests) totaled &euro9.0
million, compared with &euro11.8 million for the same period in 2019.
Attributable net income amounted to &euro10.7 million (versus &euro55.3
million for the first nine months of 2019).
In accordance with IAS 12, attributable net income at August 31, 2020
included a reduction in the tax liability due to the provisions stipulated
in the 2018 Finance Law that gradually reduces the normal corporate tax rate
from 33.3% to 26.5% in 2021, and to 25.0% starting from 2022. If these tax
provisions were to change in the future, the Company would have to increase
its tax liability accordingly.
· Financial structure and liquidity
During the Covid-19 pandemic, work on most of the group's construction sites
was halted or scaled back, and sales activity was extremely sluggish. This
situation had a material adverse impact on the group's financial position as
cash inflows were virtually zero during this period (since no new calls for
funds were issued) while payments for work performed in the first quarter
became due.
Kaufman & Broad did not request deferral or suspension of payment of its tax
and social security charges, nor did it apply for the government-backed bank
loans introduced as one of the measures to support the economy. In March
2020, as a precaution, the group drew down &euro150 million from its
revolving credit facility in order to further strengthen its already sound
cash position and secure funding for its general needs given the
circumstances.
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