Regulated information - 2013 results
Under embargo until Tuesday 18 February 2014 at 7:00 a.m. CET
Deceuninck doubles 2013 net profit to € 8.4mSales volumes stable, but offset by currencies and mix
Sales decrease 3.7% to € 536.5 million. Volume: +0.4%;
exchange rates: -3.0%; mix: -1.0% Gross margin: 29.0% (2012: 28.7%).
EBITDA at € 47.4 million or 8.8% of sales (2012: €50.0 million or 9.0%) Net profit doubles to € 8.4 million (2012: € 4.2 imllion)
Net debt decreases to € 80.6 million (31 December2012: € 92.6 million) Board proposes € 0.02 gross dividend per share
Tom Debusschere, CEO:"In 2013, Deceuninck improved net profit and reduced net debt in spite of a challenging economic environment and continued high raw material costs. We strengthened our market position in all four regions with innovative products and competitive wins.
We are happy to show a doubling of our net profit to € 8.4 million as a result of stable volumes, strict working capital management and cost control. We continued to reduce net debt while increasing capital expenditures for future growth. Given the solid performance, the Board of Directors advises a dividend of 2c per share.
Our group volume remained stable, driven by growth in the USA, UK, Turkey & Emerging Markets, Germany and Italy. Demand in these regions remained solid all year. Moreover, the low cost basis and the availability of highly skilled people allows our Turkish division to become the export hub of Deceuninck. Markets in Asia, Africa and Latin America are now being served with high quality, competitive products from Turkey. Following the start of a new warehouse in India in 2012, Deceuninck started a warehouse in Santiago de Chile to serve the Latin American market.
Sales performance in the United States was strong in a growing market supported by new product launches. In Europe, building markets were more depressed after a harsh winter. There was a slight improvement towards the end of the year. All markets, except for the UK, Germany and Italy, suffered from the sovereign debt crisis and its impact on local economies and consumer confidence.
Gross margin was 29.0%. Deceuninck continued to offset increased labour and energy cost with further productivity improvements.
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EBITDA amounted to € 47.4 million or 8.8% of salesthrough continued control of operating expenses.
Net profit doubled to € 8.4 million.
In 2013, we increased investments to € 26.7 millionin the 3 axis of our long term strategy. "Building a sustainable home. Innovation - Ecology - Design".
Innovation - PVC remains the most economical solution for best insulation. Deceuninck introduced the Zendow#neo window system. Deceuninck now offers a window system that substitutes traditional steel reinforcements with glass fibre and steel wire reinforcement, already built into the profile. This high technology linktrusion® concept offers the best insulation at the lowest material consumption. Deceuninck North America increased production capacity for the glass fibre Innergy® reinforcements, which substitute aluminium for better insulation values.
Ecology - PVC continues to improve its ecological footprint. In 2012 Deceuninck opened a new post-consumer rigid PVC recycling factory, adjacent to the existing compounding site in Diksmuide (Belgium).
Design - PVC windows now also become a true architectural solution for beautiful aesthetics in the home, school or office building. Ever more intricate wood surface decors and coated colours become available to the market. In 2012 Deceuninck invested in a new automated coating factory in Gits, Belgium. The new proprietary coating process produces profiles with a powder coated look on all four sides, which results in a window without any plastic visible. The new Omniral® coating brings the end consumer the look and feel of an aluminium window, but with the insulation values of a high quality PVC product. Omniral® was launched in 2013.
Outlook 2014:
The macro-economic picture for 2014 remains uncertain. As a result of the mild winter, order intake at the beginning of the year is strong for Europe. In the US we expect continued solid performance. The year started good for Turkey, but the weak Turkish lira is expected to impact
consolidated sales and EBITDA for the region. The macro-economic environment in Europe is
mixed.
In the meanwhile, the concern of rising PVC costs within the trend of consolidation of European PVC producers remains. In 2014, Deceuninck will step up its investments in growth, among others in a new 65,000 ton/year factory in Turkey.
This mixed picture does not allow Deceuninck to give a quantified guidance for 2014."
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Regulated information - 2013 annual results
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1. Key figures
In € million 2012 2013 Var (%) | 1H 2013 2H 2013 | ||
Sales 556.9 Gros s profit 159.9 Gross-margin (%) 28.7% EBITDA 50.0 EBITDA-margin (%) 9.0% EBIT 20.7 EBIT-margin (%) 3.7% Financial res ult -12.7 EBT 8.0 Incom e taxes -3.7 Net profit 4.2 Net profit-margin (%) 0.8% | 536.5 155.7 29.0% 47.4 8.8% 23.6 4.4% -8.4 15.2 -6.8 8.4 1.6% | -3.7% -2.6% -5.2% 14.2% | 263.1 273.5 78.1 77.6 29.7% 28.4% 19.0 28.4 7.2% 10.4% 6.7 17.0 2.5% 6.2% -4.0 -4.4 2.7 12.6 -2.4 -4.5 0.3 8.1 0.1% 3.0% |
2. Comments on the consolidated results
2.1. Sales
Sales breakdown 2013· Consolidated 2013 sales decreased 3.7% to € 536.5 million (2012: € 556.9 million).
· Volume: +0.4%. Volume developed favourably mainly in US, UK, Germany, Turkey & Emerging Markets and Italy.
· Exchange rates: -3.0%. Unfavourable impact mainly from Turkish lira, US dollar and Russian ruble.
· Mix effect: -1.0%, as a result of a changed product and geographical mix.
Sales breakdown 2013 per quarterIn € million 1Q
2013
2Q
2013
3Q
2013
4Q
2013
FY
2013
Sales 111.2 151.9 146.4 127.1 536.5
Exchange rates -0.3% -1.2% -4.6% -5.8% -3.0%
Volume -2.0% -1.2% +5.1% -0.9% +0.4%
Mix effect -3.5% -0.4% -1.1% +0.6% -1.0%
Total -5.8% -2.8% -0.5% -6.2% -3.7%
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Regulated information - 2013 annual results
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Sales breakdown 2013 per region
In € million 1Q 2Q 3Q 4Q FY FY Var.2013 2013 2013 2013 2013 2013 2013 loc.curr. | ||||
Western Europe -15.0% -8.9% -0.4% -4.1% Central & Eastern Europe -9.2% -5.3% -2.8% -10.1% Turkey & Emerging Markets +14.2% +4.8% -6.4% -13.3% North America +1.9% +6.9% +15.3% +13.2% | 179.1 160.7 121.4 75.3 | -7.5% -6.4% -1.2% +9.7% | +4.7% + 13.0% | |
Total -5.8% -2.8% -0.5% | -6.2% | 536.5 | -3.7% | +4.7% + 13.0% |
Full year 2013 sales in Western Europe were € 179.1million, a year-on-year decrease of 7.5%. Sales declined in Benelux and France, due to a weak building activity in a climate of reducing public spending, increasing taxes, low consumer confidence and continuing high unemployment rate. Sales in Spain bottomed out in the second half of 2013.
A management change in the UK at the start of 2013 created a new impetus supported by a fresh and innovative marketing approach. Meanwhile both renovation and newbuild market saw a clear improvement of demand. Italy sales grew on the back of a number of competitive wins. In all countries Deceuninck outperformed the market, using innovation (linktrusion®), ecology (recycling and energy efficiency) and design (colours) as a market differentiator.
Full year 2013 sales in the region decreased 6.4% to € 160.7 million.
Sales were impacted by a weak economic environment, government austerity programmes, high unemployment rates and low consumer confidence in the entire region, with the exception of Germany. Deceuninck's growth in the German market was mainly driven by building products and a growing market share in an otherwise stable window market.
Sales in Poland, Czech and Slovak republic decreased as a result of weak residential construction activity both in newbuild and in renovation. Volume developed favourably in most other markets.
In Russia, lower than expected consumer confidence, is at the basis of a sales decline. The large residential renovation potential remains.
Full year 2013 sales decreased 1.2% to € 121.4 miillon (at constant exchange rate: + 4.7%). Deceuninck grew sales on the Turkish market in spite of political turmoil and weakening economic indicators. The gain in market share was largely due to a strong nationwide
franchised network of branded window shops (brands "Egepen Deceuninck" and "Winsa").
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Regulated information - 2013 annual results
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Turkey has become Deceuninck's export hub for developing Emerging Markets thanks to its competitive cost basis, the availability of skilled labour and a product offering, fitting the needs of the local market. The current target regions are Latin America and India.
Sales in India are supported through the India branch of our Turkish subsidiary, Ege Profil,
which operates from a warehouse in Chennai.
For Latin America, Ege Profil and Deceuninck North America have the products in place to meet all the needs of the region. In 2013 Ege Profil founded Deceuninck Importadora Ltda. in Santiago, Chile with a 3600m² warehouse. North America
Full year 2013 sales increased 9.7% to € 75.3 milloi n (at constant exchange rate: +13.0%), representing 14% of 2013 consolidated sales.
Deceuninck North America (DNA) finished 2013 with solid sales increases on top of the modest growth in the housing industry and improved remodelling spending. While the US housing recovery remained mixed, DNA was able to realize sales increases by expanding into new markets, building distribution in existing markets, and leveraging its innovative technologies.
2.2. Results
Gross profitGross margin was 29.0% (2012: 28.7%) as a result of stable volumes in spite of a challenging economic environment in Europe and Turkey. Increased labour and energy cost were offset by continued productivity improvements and mix effects. Raw material cost remained stable, but at a high level.
EBITDAEBITDA amounted to € 47.4 million or 8.8% of sales.(2012: € 50.0 million or 9.0% of sales). EBITDA margin in 2H 2013 increased to 10.4% from 7.2% in 1H 2013 as a result of continued control of operating expenses.
EBIT
Operating result (EBIT) was € 23.6 million (2012: €20.7 million) resulting in an EBIT margin of
4.4% compared to 3.7% in 2012.
Lower provision resulted in a decrease of the non cash costs from € 29.3 million in 2012 to €
23.8 million in 2013.
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Financial result & Income taxes
Financial result was € -8.4 million (2012: € -12.m7 illion). Improved financing terms from the 5- year financing agreement concluded in July 2012, impacted the financial result substantially. On top, working capital needs were lower as a result of strict working capital management. Evolution of market interest rates, capital expenditure plans for future growth and continued
strict working capital management will be the drivers for the financial result in the coming years. Income tax expense was € - 6.8 million against € -.73 million in 2012, as a result of higher EBT.
The net profit 2013 doubles to € 8.4 million or 1.6% on sales versus 0.8% on sales in 2012.
Working capital
Working capital decreased from € 116.4 million on 31 December 2012 to €102.5 million on 31
December 2013. (30 June 2013: € 112.2 million)
Inventories were € 5.5 million higher as compared ot 31 December 2012. Year-on-year mild winter resulted in an increased order book in December 2013.
Trade receivables decreased € 11.6 million in linewith lower sales volume in 4Q. Days outstanding (DSO) improved year-on-year thanks to continued strict credit monitoring policy in spite of an unfavourable legal entity mix.
Trade payables increased by € 7.8 million as a result of higher production volume in 4Q. The operational working capital on 31 December 2013 was 16.4% of annualised sales as compared to 17.6% on 31 December 2012.
Capital expenditures in 2013 increased year-on-year by € 3.2 million to € 26.7 million. Maintenance capex (€ 8.8 million) related to "Building a sustainable home" including capex for finishing the automated Omniral® coating line. € 76. million was spent on new tools and products.
Expansion capex (€ 10.3 million) related to the construction of a woodcomposite compound tower in Gits (B), pultrusion lines in Monroe, OH (US) and additional lines for extruding new products with linktrusion® technology in Gits.
The net financial debt at 31 December 2013 amounted to € 80.6 million compared to € 92.6 million on 31 December 2012. A stronger operational result (EBIT) in combination with a stringent working capital management has led to this lower net financial debt, despite € 26.7 million capex. Management focus on further debt reduction continues to pay off.
Equity
Equity decreased by € 7.1 million to € 204.3 millnio. The decrease was the result of unfavourable impact of CTAs (Currency Translation Adjustments), mainly on Turkish lira and Russian ruble, partly compensated by a positive net result.
The gearing was 39.4% at 31 December 2013 against 43.8% at 31 December 2012.
The Board of Directors will recommend at the Annual General Meeting on 13 May 2014 to pay a gross dividend of € 0.02 per share for the financial year 2013.
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Regulated information - 2013 annual results
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Headcount
On 31 December 2013 Deceuninck employed worldwide 2,746 full time equivalents (FTEs) (including temporary workers and external staff) (31 December 2012: 2,665).
3. Statement of the statutory auditor
Our statutory auditor, Ernst & Young Bedrijfsrevisoren BCVBA represented by Jan De Luyck, has confirmed that the audit procedures on the consolidated financial statements, which have been substantially completed, have not revealed any material adjustments which would have to be made to the accounting data included in the present press release.
Financial calendar 2014
13 | May | 2014 | 1Q 2014 trading update |
13 | May | 2014 | Annual Shareholders meeting at 11 am |
23 | July | 2014 | 2014 half-year results |
23 | October | 2014 | 3Q 2014 trading update |
End of press release
Building a sustainable home
At Deceuninck, our commitment towards innovation, ecology and design provides us with a clear focus: building a sustainable home. A home that is more energy-efficient to live in and more attractive to look at. Deceuninck works worldwide with state-of-the-art materials, resulting in low maintenance, top insulating and long lasting products that can be fully recycled at end of life. Moreover, our values of Candor, Top performance and Entrepreneurship help us build a better world for our Partners and end users. Deceuninck has strong ambitions. We want to build a work environment in which people are proud to contribute, and strengthen our position within the top three market players. Alongside our ecological sustainability, Deceuninck also pursues financial sustainability.
Deceuninck employs 2700 people in 25 countries, of which 590 in Belgium. Deceuninck sales in 2013 were € 536.5 million with a net positive result of € 8.4 million.
Contact Deceuninck: Ludo Debever • T +32 51 239 248 • M +32 473 552 335 • ludo.debever@deceuninck.com
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Regulated information - 2013 annual results
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Annexe 1: Consolidated income statement
For the 12 m onth pe riod e nde d 31 De ce m be r
(in € thousand)
2012 2013
Sales 556,914 536,508
Cos t of goods s old -397,026 -380,817
Gross profit 159,888 155,691
Marketing, s ales and dis tribution expens es -92,132 -91,202
Res earch and developm ent expens es -6,044 -5,957
Adm inis trative and general expens es -38,618 -36,376
Other net operating res ult -2,407 1,465
Operating profit (EBIT) 20,687 23,621
Financial charges -21,775 -17,172
Financial incom e 9,065 8,779
Profit before taxes (EBT) 7,977 15,227
Incom e taxes -3,735 -6,847
Net profit 4,242 8,380
The ne t profit is attributable to: | ||
Shareholders of the parent com pany | 4,038 | 8,213 |
Non-controlling interes ts | 204 | 167 |
Earnings pe r s hare dis tributable to the | ||
s hare holde rs of the pare nt com pany (in euro): | ||
Norm al earnings per s hare | 0.04 | 0.08 |
Diluted earnings per s hare | 0.04 | 0.07 |
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Annexe 2: Consolidated statement of financial position
(in € thousand) 31 De ce m be r 2012 31 De ce m be r 2013 Restated (*) |
Assets |
Intangible fixed as s ets 3,030 2,970 Goodwill 10,817 10,759 Tangible fixed as s ets 194,421 187,836 Financial fixed as s ets 66 66 Deferred tax as s ets 15,256 12,932 Long-term receivables 1,047 1,079 |
Non-current assets 224,638 215,642 |
Inventories 71,572 77,045 Trade receivables 100,694 89,126 Other receivables 6,622 7,775 Cas h and cas h equivalents 23,211 21,715 Fixed as s ets held for s ale 8,395 7,166 |
Current assets 210,494 202,826 |
Total assets 435,132 418,468 |
Equity and liabilities | ||
Is s ued capital | 42,495 | 42,495 |
Share prem ium s | 46,355 | 46,355 |
Cons olidated res erves | 151,806 | 160,407 |
Cas h flow hedge res erves Actuarial gains /los s es | -99 -2,754 | 63 -1,885 |
Treas ury s hares Currency trans lation adjus tm ents | -261 -27,746 | -261 -44,264 |
Equity excluding non-controlling interest | 209,796 | 202,911 |
Non-controlling interes t | 1,632 | 1,413 |
Equity including non-controlling interest | 211,428 | 204,324 |
Interes t-bearing loans | 37,326 | 35,390 |
Long-term provis ions | 24,192 | 21,087 |
Deferred tax liabilities | 2,616 | 5,013 |
Non-current liabilities | 64,134 | 61,490 |
Interes t-bearing loans | 78,486 | 66,892 |
Trade payables | 55,900 | 63,651 |
Tax liabilities | 4,630 | 4,899 |
Em ployee related liabilities | 11,582 | 10,246 |
Short-term provis ions | 3,266 | 2,005 |
Other liabilities | 5,706 | 4,962 |
Current liabilities | 159,570 | 152,654 |
Total equity and liabilities | 435,132 | 418,468 |
(*): Certain amo unts sho wn do no t c o rrespo nd to the co ns o lidated financ ial statements as per 31December 2012
and reflect adjustments made fo r the ado ptio n o f IA S 19-Revis ed as detailed in No te 1o f the c o nso lidated financial s tatements as per 31Decem ber 2013.
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Annexe 3: Consolidated statement of cash flows
For the 12 m onth pe r iod e nde d 31 De ce m be r (in € thousand) | 2012 | 2013 |
Operating activities | ||
Net profit | 4,242 | 8,380 |
Depreciations of (in)tangible fixed as s ets | 23,635 | 22,530 |
Im pairm ents on (in)tangible fixed as s ets | 1,344 | 1,646 |
Provis ions for pens ions and other ris ks & charges | 1,740 | -1,838 |
Im pairm ents on current as s ets | 2,595 | 1,434 |
Net financial charges | 12,710 | 8,394 |
Profit on s ale of tangible fixed as s ets | -121 | -109 |
Los s on s ale of tangible fixed as s ets | 93 | 37 |
Incom e taxes | 3,735 | 6,847 |
Share-bas ed paym ent trans actions s ettled in equity | 288 | 388 |
Cash flow from operating activities before movements in working capital and provisions | 50,261 | 47,710 |
Decreas e / (increas e) in trade and other receivables | -2,314 | -721 |
Decreas e / (increas e) in inventories | 7,998 | -12,367 |
Increas e / (decreas e) in trade debts | -2,383 | 12,729 |
Decreas e / (increas e) in other non-current as s ets | -24 | -84 |
Decreas e / (increas e) in other current as s ets | -917 | 1,436 |
Increas e / (decreas e) in other non-current liabilities | -1,002 | -738 |
Increas e / (decreas e) in other current liabilities | -3,109 | -634 |
Cash flow generated from operating activities | 48,510 | 47,331 |
Interes t received | 1,271 | 797 |
Incom e taxes paid (-) / received (+) | -4,385 | -3,736 |
Cash flow from operating activities | 45,396 | 44,392 |
Investing activities | ||
Cas h receipts on s ale of tangible fixed as s ets | 447 | 382 |
Purchas es of tangible fixed as s ets | -23,426 | -26,122 |
Purchas es of intangible fixed as s ets | -99 | -550 |
Other trans actions | -148 | 0 |
Cash flow from investing activities | -23,225 | -26,290 |
Financing activities | ||
New (+) / repaym ents (-) of long-term debts | -43,131 | -4,172 |
New (+) / repaym ents (-) of s hort-term debts | 28,028 | -4,853 |
Interes ts paid | -8,477 | -5,956 |
Dividends paid | 0 | -48 |
Net financial res ult, excl interes ts | -75 | -932 |
Cash flow from financing activities | -23,655 | -15,961 |
Net increase (+) / decrease (-) in cash and cash equivalents | -1,484 | 2,141 |
Cash and cash equivalents as per beginning of period | 24,443 | 23,211 |
Im pact of exchange rate fluctations | 252 | -3,637 |
Cash and cash equivalents as per end of period | 23,211 | 21,715 |
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