Good operating results in H1 2017
Organic growth at 3.0%
Adjusted EBITDA margin stable at 11.8%
- Net sales up 5.1% year-on-year at €1,364m, including organic growth of 3.0%(1)
- Good organic growth in the CIS, APAC & Latin America (+7.2%), Sports (+5.3%) and EMEA (+4.2%) segments
- Adjusted EBITDA(2) up 5.9% at €160m and EBITDA margin at 11.8% (versus 11.7% in H1 2016)
- Net profit(3) of -€98m, penalized by a €150m provision in relation to the proceedings in progress with the French Competition Authority
- Significant improvement in the net debt/adjusted EBITDA ratio: 1.3x versus 1.8x at end-June 2016
Net sales at constant scope of consolidation and exchange rates moved up 3.0% in H1 2017. The CIS, APAC & Latin America segment delivered robust growth (+7.2%), led mainly by an increase in volumes and an improved mix in CIS countries. The Sports segment also put in a good H1 performance (+5.3%), while the EMEA segment posted a 4.2% rise in sales. Only North America segment (-1.6%) continued to suffer from a high year-on-year comparison basis. All segments helped drive the acceleration in organic growth in Q2 (up 3.2%) versus Q1 (+2.8%) with the exception of EMEA, hit by a negative calendar effect of around -4.0% in Q2.
Reported sales were up 5.1% on H1 2016. Exchange rates accounted for a positive 2.0% impact, thanks to gains in the US dollar and Russian ruble against the euro that offset the fall in pound sterling. The acquisition of the assets of AlternaScapes, a Florida-based landscape turf distributor and installer, had a minor scope impact (+0.1%).
Adjusted EBITDA was €160m versus €151m in H1 2016, while the adjusted EBITDA margin came in at 11.8% compared to 11.7% in the six months to June 30, 2016. The CIS, APAC & Latin America segment posted strong adjusted EBITDA growth, driven by a good performance in the CIS segment in terms of selling prices, volumes and productivity. Adjusted EBITDA for the Sports segment benefited from a US$ 12m one-off settlement payment in connection with a favorable ruling enforced against AstroTurf. In contrast, adjusted EBITDA for EMEA and for North America was down, owing mainly to the rise in raw material costs and the negative impact of certain currencies in the EMEA region. The rise in raw material prices had an adverse impact of €13m for the Group as a whole. Productivity gains represented €18m.
Net profit attributable to owners of the Company was -€98m, reflecting a €150m provision in relation to the proceedings in progress with the French Competition Authority. On July 25, 2017, the Group signed minutes of a settlement agreement with the investigation services. This settlement, along with the final amount of the fine, will be subject to a final decision by the “Collège” of the French Competition Authority.
Commenting on these results, Michel Giannuzzi, CEO, stated:
“After a solid start to the year, the increase in sales picked up pace in Q2. We were able to capitalize on the economic recovery in CIS countries, where growth gained traction and profitability improved sharply. High raw material prices weighed on our H1 results. We are confident that our markets will hold firm over the rest of the year.”
(1) Organic growth: at constant scope of consolidation and exchange rates (note that in the CIS segment, price increases implemented to offset currency fluctuations are not included in organic growth, which only reflects changes in volumes and the product mix). See the definition of alternative performance indicators at the end of this press release.
(2) Adjusted EBITDA: adjustments include expenses relating to restructuring, acquisitions and certain other non-recurring items. See the definition of alternative performance indicators at the end of this press release.
(3) Net profit attributable to owners of the Company.
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