CFAO : 2015 Annual Results - 2015 Fourth-Quarter Revenue

2009 Results

PRESS RELEASE

Sèvres, February 26, 2016

2015 Fourth-Quarter Revenue

2015 Annual Results

Improved profitability despite a drop in sales in a more challenging economic environment

• Improvement of the recurring operating margin to 7.8% of sales
• Net income attributable to owners of the parent rising by +6.1% versus 2014 to €106.6m
• Group revenue down -3.5% over the year : decrease of CFAO Automotive Equipment & Services sales in a context of repositioning of the division
• Proposed dividend : 0.81 euro per share

In a statement, Richard Bielle, Chairman of CFAO's Management Board said:

"CFAO's financial performance once again demonstrates the Group's strength and the pertinence of its business model. 2015 was a year of transition marked by a significant economic slowdown in oil- producing countries, and which saw, in our automotive segment, the last significant effects of the end of certain distribution agreements.

Aside from the improvement in operating margin attributable to outstanding team commitment, the Group continued to focus on preparing its future growth drivers. Initiatives were launched across all of our activities in the aim of meeting new expectations on the continent, with the emergence of an African middle class seeking high-quality new products and services.

The opening of PlaYce, Abidjan's first shopping mall including a Carrefour hypermarket, is the tangible sign of how our model has adapted to this profound and lasting change in our environment. I remain very confident in our ability to seize other opportunities in the future as our business lines evolve as they must."

Throughout the press release, "like-for-like" changes correspond to changes observed on a constant Group structure and exchange rate basis.

1. Fourth-quarter 2015 revenue

   
   

   Fourth quarter				Full year
   (in €m)	Q4 2014	Q4 2015	Change	Change	2014	2015	Change	Change
   			(reported)	(like-for- like)			(reported)	(like-for- like)
   Consumer Goods	95.3	93.6	-1.8%	-6.0%	366.8	350.0	-4.6%	-5.3%
   Healthcare	327.8	314.3	-4.1%	+1.8%	1,216.1	1,251.5	+2.9%	+2.3%
   Equipment & Services	524.2	492.0	-6.1%	-5.8%	1,977.4	1,834.1	-7.2%	-8.9%
   Total CFAO	947.4	900.0	-5.0%	-3.3%	3,560.4	3,435.7	-3.5%	-4.7%

   
   

   CFAO posted fourth-quarter revenue of €900.0 million, down -5.0% on the same prior-year period. Group structure changes had a negative -€3.6 million impact in the quarter.

   The impact of exchange rates (translating subsidiaries' revenue into euros) was also negative at -€13.3 million for the quarter, mainly driven by the weakening of currencies in English speaking Africa and Maghreb.

   Like-for-like, fourth-quarter revenue fell by -3.3% compared to the same period in 2014.

   
   

   Revenue from the Consumer Goods business line was €93.6 million in the final quarter 2015, down - 1.8% on the same prior-year period. The like-for-like decline was -6.0%. The general downturn in the Nigerian market, which particularly affected the Food, Hygiene & Convenience activity in CFAO FMCG Industries & Distribution business unit, carried on. The Beverages activity maintained its sales level, while CFAO Retail business unit started contributing to the business line revenue.

   
   

   Healthcare business line reported revenue of €314.3 million in the quarter down -4.1% and up +1.8% like-for-like. The French-speaking sub-Saharan activity showed strong growth, +8.7% on a like-for-like basis, but the shrinking Algerian activity dropping by -20.8% undercut the business line overall performance. The Healthcare institutional clients activity boosted by the delivery of significant tenders over the same period last year, is back to a more normative trading level.

   
   

   Revenue from Equipment & Services business line was €492.0 million in the fourth-quarter 2015, down -6.1% reported and -5.8% like-for-like on the prior-year period. Despite a good performance in West and Central Africa, CFAO Automotive Equipment & Services business unit activity remained overall poorly oriented. It was particularly sluggish in Maghreb region where volumes were down due to the loss of distribution agreements and a difficult market environment in Algeria, leading to a significant drop of revenue .

2. 2015 financial and operating performance

   
   

   
   

   (in €m)	2014	2015	Change
   Revenue	3,560.4	3,435.7	-3.5%
   Cost of sales	(2,717.5)	(2,581.2)	-5.0%
   Gross profit	842.9	854.5	+1.4%
   as a % of revenue	23.7%	24.9%	+1.20 pt
   Payroll expenses	(282.8)	(299.7)	+6.0%
   Other recurring operating income and expenses	(289.4)	(285.6)	-1.3%
   Recurring operating income	270.7	269.2	-0.5%
   as a % of revenue	7.6%	7.8%	+0.23 pt
   Other non-recurring operating income and expenses	(4.2)	9.8
   Operating income	266.4	279.0	+4.7%
   EBITDA(*)	332.2	335.2	+0.9%
   as a % of revenue	9.3%	9.8%	+0.43 pp
   Finance costs, net	(41.5)	(47.5)	+14.3%
   Income before tax	224.9	231.5	+2.9%
   Income tax	(76.8)	(86.6)	+12.8%
   Overall effective tax rate	34.1%	37.4%	+3.3 pt
   Share in earnings of associates	1.5	0.7
   Net income of consolidated companies	149.6	145.6	-2.7%
   Net income attributable to non-controlling interests	49.1	39.0	-20.5%
   Net income attributable to owners of the parent	100.5	106.6	+6.1%
   Earnings per share	1.63	1.70	+4.0%

   
   

   (*) EBITDA is defined as recurring operating income plus depreciation, amortization and provisions for non-recurring operating assets recognized in recurring operating income.

3. Activity




Over the year the Group's reported revenue fell by -3.5%. On like-for-like basis the fall was -4.7%.




The main changes in Group structure during 2015 related to the first-time consolidation of Compagnie Mauritanienne de Distribution Auto (+€14.8m) into the scope of CFAO Automotive Equipment & Services business unit, and Fazzini (+€9.7m) which joined the Eurapharma business unit. Changes in Group structure had a positive +€37.8 million impact on revenue for the year.




Fluctuations in the exchange rates used to translate annual revenue into euros resulted in a positive

+€7.9 million impact in 2015.

The Consumer Goods business line showed a decline in activity to €350.0 million in 2015, down -4.6% on a reported basis and -5.3% like-for-like.




The revenue breakdown for the Consumer Goods business line is as follows:




(In €m)	2014	2015	change
Beverages	226.3	226.3	-0.0%
Food, Hygiene & Convenience	140.5	118.7	-15.5%
Retail	-	5.0	N/A
Consumer Goods	366.8	350.0	-4.6%




The Beverages activity revenue remained stable, despite the increased competition.

Difficult market conditions in Nigeria led to a decline of the Food, Hygiene & Convenience sales.

With the opening of PlaYce Marcory, its first shopping mall in December in Abidjan, Côte d'Ivoire,

CFAO Retail division started contributing to the business line revenues (+€5.0 million).




The Healthcare business line (Eurapharma business unit) posted sales of €1,251.5 million, up +2.9% reported and +2.3% like-for-like.




The revenue breakdown for the Healthcare business line is as follows:




(In €m)	2014	2015	change
Import-Wholesale-Resale	827.5	861.2	+4.1%
Pre-wholesale	193.6	181.5	-6.2%
Distribution agents	85.9	90.9	+5.8%
Healthcare institutional clients	106.2	115.1	+8.4%
Other	2.9	2.8	-5.3%
Healthcare	1,216.1	1,251.5	+2.9%




The good performance of the Import-Wholesale-Resale, Distribution agents, and Healthcare institutional clients activities, was partly offset by the decrease of the Pre-Wholesale activity mainly impacted by a difficult business environment in Algeria.