PRESS RELEASE,
Q3 Trading Update
Net asset value per share: €145.3 up +4.9% vs.
Very high discount to NAV of 44.4% as of
Net Asset Value as of
Since
- Increase of the value of unlisted assets: 12.0%, of which:
- For approximately 60% of the increase: increase in listed peers’ multiples.
- For approximately 40% of the increase: company forecasts for 2020 revised upwards following better than expected performance over Q3; CPI still valued at transaction price in Q3 2020 as per our methodology.
- Increase of Bureau Veritas’ share price: 0.8%
Consolidated 9M 2020 sales of €5,477.6 million, down 9.1% overall
- Bureau Veritas posts resilient first nine months 2020 despite the economic crisis and an improving performance in the third quarter with limited organic decline
- Constantia Flexibles up slightly organically
IHS Towers delivers strong organic growth- Lockdown impact on other companies in the first nine months at varying levels:
Cromology sales paralyzed during lockdown, with a strong rebound since May and +5.2% growth in Q3- Stahl end markets strongly impacted, with progressive recovery
- CPI’s sales also strongly impacted but with month-on-month revenue growth since the low point in April
Group companies: other noteworthy developments since
- Successful renegotiation of
IHS Towers contract inNigeria with MTN Nigeria inJuly 2020 Pim Vervaat appointed CEO of Constantia Flexibles onJuly 1 st, 2020Wendel and other Tsebo’s shareholders announced in October that they are transferring their shares to the investment arms of its senior lenders in a consensual transaction
Wendel’s financial structure: strong liquidity and low leverage
- LTV ratio at 6.4% as of
September 30, 2020 - Total liquidity at c. €1.9 billion as of
September 30, 2020 , including €1,148 million cash and the €750 million committed credit facility (fully undrawn) - Average debt maturity of 4.8 years
- Investment grade corporate ratings: Moody’s Baa2 with stable outlook / S&P BBB with stable outlook
Return to shareholders:
- Dividend maintained (€2.8 per share, equal to last year) and paid in July
Wendel will resume its opportunistic share buyback program up to the maximum regulatory limit of 0.75% of issued capital by the end of 2020
Solidarity and corporate patronage
- True to its values and to its long-standing tradition of commitment to civil society,
Wendel has decided to show its support to and solidarity with people and organizations which are feeling the impact of the healthcare crisis
ESG and extra financial information
- New ESG strategy and roadmap unveiled in 2019 Universal registration document
COVID19: potential impact of new lockdown measures:
- Portfolio companies benefit from robust financial structures and are equipped to face the situation
- New lockdown measures in
Europe expected to have some impact on sales and earnings, but currently expected to be smaller than in Q2
“In the third quarter, gradual recovery was achieved across our portfolio in spite of COVID effects continuing in most important economies.
No equity was injected into any of our companies, and our financial situation has remained strong. Stahl took advantage of supportive debt market conditions to extend maturities of its banking facilities at attractive terms. Along with most other portfolio companies, its leverage is comparatively low. Anticipating on effects of shutdowns on leverage ratios, CPI obtained a covenant waiver which is expected to address the impact of the COVID crisis for several months.
We have resumed our search for new investments operating from our
ESG strategies are being rolled out energetically across our companies and at
We will carefully analyze implications of recent lockdowns and continue to prudently reposition
Nine months 2020 sales of Group companies
Nine months 2020 consolidated sales
(in millions of euros) | 9 months 2019 | 9 months 2020 | Δ | Organic Δ | |
Bureau Veritas | 3,747.3 | 3,348.8 | -10.6% | -7.4% | |
Constantia Flexibles | 1,146.9 | 1,143.0 | -0.3% | +0.5% | |
520.3 | 470.8 | -9.5% | -9.8% | ||
Stahl | 611.5 | 474.6 | -22.4% | -20.1% | |
CPI (1) | n/a | 40.4 | n/a | -27.3% | |
Consolidated sales (2) | 6,026.0 | 5,477.6 | -9.1% | -7.4% | |
- CPI accounts have been consolidated since
December 31, 2019 . The scope effect corresponds to the 9 months 2020 sales of CPI compared to 2019 consolidated sales ofWendel Group . Indicative organic growth is calculated on 9 months activity. - Comparable sales for 9 months 2019 represent €6,026.0M vs. 2019 published sales of €6 416,6M. The difference of €390.6M corresponds to sales of
TSEBO Group , classified as asset held for sale in accordance with IFRS 5. The contribution of this portfolio company has been reclassified in "Net income from discontinued operations and operations held for sale”.
Nine months 2020 sales of equity-accounted companies
(in millions of euros) | 9 months 2019 | 9 months 2020 | Δ | Organic Δ |
813.5 | 919.3 | +13.0% | +15.2% |
Q3 2020 sales of Group companies
Q3 2020 consolidated sales
(in millions of euros) | Q3 2019 | Q3 2020 | Δ | Organic Δ |
Bureau Veritas | 1,270.7 | 1,148.3 | -9.6% | -4.4% |
Constantia Flexibles | 386.0 | 381.6 | -1.1% | +1.6% |
171.7 | 180.6 | +5.2% | +5.3% | |
Stahl | 194.9 | 157.8 | -19.0% | -14.3% |
CPI (1) | n/a | 16.6 | n/a | -20.0% |
Consolidated sales (2) | 2,023.3 | 1,885.0 | -6.8% | -3.4% |
- CPI accounts have been consolidated since
December 31, 2019 . The scope effect corresponds to the Q3 2020 sales of CPI compared to 2019 consolidated Q3 sales ofWendel Group . Indicative organic growth is calculated on 3 months activity. - Comparable sales for Q3 2019 represent 2,023.3M€ vs. 2019 published sales of 2,154.7M€. The difference of 131.4M€ corresponds to sales of
TSEBO Group , classified as asset held for sale in accordance with IFRS 5. The contribution of this portfolio company has been reclassified in "Net income from discontinued operations and operations held for sale”.
Q3 2020 sales of equity-accounted companies
(in millions of euros) | Q3 2019 | Q3 2020 | Δ | Organic Δ |
IHS | 277.5 | 316.5 | +14.1% | +22.3% |
Sales of Group companies
Bureau Veritas – Improving performance in the third quarter of 2020 with limited organic decline of 4.4%
(full consolidation)
Note: Bureau Veritas published its Q3 trading update on
Revenue in the third quarter of 2020 amounted to €1,148.3 million, a 9.6% decrease compared with Q3 2019. Organic decline was limited to 4.4%, compared to a 15.6% decrease in the second quarter. These results were driven by an excellent performance in Certification (+7.0%), Buildings & Infrastructure (+0.6%) and Marine & Offshore (+1.9%) evidencing enhanced resilience through diversification. Nearly half of the Group’s portfolio grew organically in the quarter. The strong rebound in the Certification business benefited from both “Restart Your Business with BV” and Safeguard missions as well as catch-up of audits. Bureau Veritas experimented continued outperformance in
External growth was a negative 0.3%, reflecting the impact from the disposal of the Emissions Monitoring business unit in the US.
Currency fluctuations had a negative impact of 4.9%, mainly due to the depreciation of some emerging countries’ currencies against the euro.
There have been no acquisitions in 2020 year-to-date. Bureau Veritas placed its M&A activity on hold early in the year to protect its cash position and reassess potential targets in light of the pandemic. This forms one of the measures deployed to maintain a tight rein on costs and cash.
At the end of
2020 Outlook
Amongst the different scenarios considered by Bureau Veritas, for the full year 2020, the “Slow & gradual recovery” scenario is the scenario retained to date considering the latest available information and assuming the absence of new lockdown measures in the Bureau Veritas’ main countries
“Slow & gradual recovery” scenario – Retained to date1
Organic revenue | Adjusted operating margin | Net cash generated from operating activities |
|
|
|
For more information: https://group.bureauveritas.com/
Constantia Flexibles – Positive organic growth over the first nine months of the year (+0.5% YTD), with a good performance in
(Full consolidation)
Constantia’s 9-month sales were up organically by +0.5%, reflecting a robust performance from the Pharma end-market, up +9.4% but a decline in the Consumer end market (-2.3%). Total sales amounted to €1,143.0 million, slightly down - 0.3% compared with 9M 2019 (€1,146.9 million) hindered by foreign exchange impacts. Consumer end markets were impacted by lockdown measures due to COVID-19 in particular in
Foreign exchange rate fluctuations had a negative impact of -1.3% over the first nine months of the year, due to the depreciation of the
Organic growth in the third quarter was up +1.6% supported by improvements in sales performance in
Despite the mixed sales trajectory, and as demonstrated in the first half, Constantia worked on improving its profitability based on the various cost reduction initiatives conducted over the past 12 months. In addition to these cost reduction initiatives, a positive business/regional mix (European and Pharma businesses) and in particular favorable raw material costs fluctuations generated higher margins.
Following the arrival of
(Full consolidation)
During the first nine months of 2020, Cromology’s sales totaled €471 million, down 9.5% compared with the year-earlier period, impacted by the extreme COVID-19 lockdown measures in
Over the first nine months of the year, organic growth was negative (-9.8%), but it was even more negative during the first half (-17.2%), illustrating the subsequent recovery. Changes in scope had a positive impact of 0.2% as a result of the acquisition of Districolor in
As already observed in the first half, the transformation and operating recovery plan is paying off.
Stahl – Q3 sales down 19% vs. last year, with a steady improvement since summer. Cash generation profile remains solid & margin protected thanks to tight cost management
(Full consolidation)
Stahl’s sales totaled €474.6 million over the first 9 months of the year, representing a decrease of -22.4% vs. €611.5 million of sales over the same period in 2019. Organic growth was down -20.1% and foreign exchange rate fluctuations had a negative impact -2.3%. The sale of a small non-strategic Powder Coatings activity to Akzo Nobelin
After a challenging 2019, due to headwinds in automotive end-markets, Stahl began 2020 with positive volume and sales trends. Nevertheless, the rapid spread of COVID-19 derailed this recovery and shifted the company’s focus away from growth towards managing the decline. While over the first quarter, the COVID-19 outbreak was mainly limited to
Stahl’s automotive business, representing one third of total sales, is rebounding since Q2, partially helped by government support policies like in
In this challenging context and thanks to management’s focus and resilient business model, Stahl took swift measures and quickly adjusted its fixed cost base to market conditions and optimized its cash flow generation. Stahl remained strongly cash generative over each of the three quarters, notably thanks to the strict management of working capital.
Early September, Stahl announced the successful achievement of a process of Amend and Extend of its debt, with a temporary increase of its covenants until
By accelerating digital engagement with customers and employees, the position of the company was elevated across all stakeholders whilst increasing its overall service level.
(equity method)
Given the critical nature of the telecommunications infrastructure, even more so in a context of local lockdowns during Q2, IHS’s principal customers (i.e. MNOs) experienced an increase of voice and data consumption. As a result, IHS performed well despite the challenging macro environment, as evidenced by nine months 2020 revenues which totaled
IHS’s sales were strong in Q3 2020, totaling
The Point-of-Presence lease-up rate stands at 1.54x as of end of September.
IHS continued the successful development and rationalization of and growth in its installed base of towers. The company also maintained a tight operating cost control policy and lower capital expenditure since the start of the year.
IHS management reacted quickly to the lockdowns in each of their markets to ensure that the supply chain was not impacted such that operational performance has been good and there have been few disruptions to service over the past months despite the COVID-19 crisis. The macroeconomic environment, in
On
On
On
In October, 2020, Mr.
Mrs.
For more information: https://www.ihstowers.com
(Full consolidation since
Despite a strong start to the year, the impact of the COVID shutdown resulted in reported year-over-year revenue declines of –10.1% in the first quarter and –57.4% in the second quarter. Since the low point in April, CPI has reported consistent month-over-month revenue growth. Q3 2020 revenues were down 21.2% vs. Q3 2019.
The decline in activity reflects restrictions on in-person training, which primarily impacted the Company’s Initial Certification Program (“ICP”) training sessions in which new Certified Instructors (“CIs”) are trained and certified. This decline in ICP volumes was partially offset by revenue generated from the Company’s installed base of CIs, who continued to renew their certifications and train their colleagues during this period, in part through the Company’s e-learning offering. Management facilitated the delivery of this training by introducing new digital and virtual programs for existing CIs and a blended virtual and physical offering for ICPs. CPI’s ongoing recovery has been driven by a combination of these new virtual and blended training capabilities, steady demand for renewals, and sales of learner materials.
More recently, CPI has benefited from sustained growth in ICP and renewal registrations as the
While many customers continue to face challenging work environments, including those in healthcare and education, CPI is helping customers maintain their certifications, as required by regulation and needed to ensure a safe work environment. The recent introduction of new programs, including virtual learning, verbal de-escalation, and specialized renewals related to trauma and autism has expanded the Company’s offering to better serve existing clients and new customers in lower acuity settings. CPI recently developed a mask de-escalation program in partnership with the
The decline in sales had a similarly negative impact on profitability, which was partially offset by cost management initiatives implemented shortly after the lockdown began.
In August, CPI negotiated a leverage covenant waiver with its lenders until the end of Q2 2021, in exchange for a minimum liquidity covenant set at
In October, CPI hired a new CFO,
NAV of €145.3 per share as of
Net asset value was €6,493 million or €145.3 per share as of
Changes in Net Asset Value since
- The value of unlisted assets increased by 12.0%, of which:
- For approximately 60% of the increase: increase in listed peers’ multiples.
- For approximately 40% of the increase: company forecasts for 2020 revised upwards following better than expected performance over Q3; CPI still valued at transaction price in Q3 2020 as per our methodology.
- Bureau Veritas’ share price increased by 0.8%
The Net Asset Value as of
In compliance with the Net Asset Value methodology, Wendel’s investment in CPI is held at the original transaction value ($569 million) until and including the
Of note, Net Asset Value as
Strong financial structure, c.€1.9 billion liquidity and low leverage
- LTV ratio at 6.4% as of
September 30, 2020 - Total liquidity remaining at c.€1.9 billion as of
September 30, 2020 , including €1,148 million cash and a €750 million committed credit facility (fully undrawn) - Average debt maturity of 4.8 years
- Investment grade corporate ratings: Moody’s Baa2 with stable outlook / S&P BBB with stable outlook
Return to shareholders
The company will also restart its opportunistic share buyback program in the coming days, within the regulatory limit of 0.75% of issued capital maximum by the end of 2020. The maximum number of shares to be repurchased complies with French regulation.
ESG commitment
As a long-term shareholder,
In
Significant events since
On
Constantia Flexibles (“Constantia” or the “Company”) announced on
He succeeded
Pim joined Constantia Flexibles after a successful career at
Tsebo’s shareholders transfer their shares to the investment arms of its senior lenders in a consensual transaction
On
Solidarity and corporate patronage
True to its values and to its long-standing tradition of commitment to civil society,
Wendel believes it is very important to support cultural institutions during the current period and as a result it is renewing its sponsorship agreement with Centre Pompidou-Metz for five years.Wendel was the museum's founding sponsor at inception in 2010.Wendel is also reiterating its support for all existing healthcare and educational institutions which already benefit from its philanthropy.- Voluntary 25% reduction in the Executive Board's fixed 2020 and Supervisory Board compensations over three months.
- Amounts deriving from the reduction in the Executive Board's and Supervisory Board’s compensation will be contributed to
Wendel's endowment fund for the benefit of Restaurantsdu Coeur inFrance andThe Bowery Mission and Empty Bowls inthe United States . Wendel would like to add skills patronage to its solidarity initiatives by financing some of the training coursesCrisis Prevention Institute (CPI) offers for preventing violence in the most highly vulnerable French healthcare and specialized educational organizations. CPI is a world leader in evidence-based crisis prevention workplace training, helping professionals ensure best practice in de-escalating & managing challenging behaviors through their “train-the-trainer” model that creates the greatest positive impact on organization culture.
Agenda
2020 Investor Day / Live webcast available on Wendel’s website
2020 Full Year Results - Publication of NAV as of
Q1 2021 Trading update - Publication of NAV as of
Annual General Meeting
H1 2021 results - Publication of NAV as of
Q3 2021 Trading update - Publication of NAV as of
2021 Investor Day - Meeting to take place in the morning
About
Standard & Poor’s ratings: Long-term: BBB, stable outlook – Short-term: A-2 since
Moody’s ratings: Long-term: Baa2, stable outlook – Short-term: P-2 since
For more information:
Follow us on Twitter @WendelGroup
Appendix : NAV as of
(in millions of euros) | 09/30/2020 | |||
Listed equity investments | Number of shares | Share price (1) | 3,129 | |
Bureau Veritas | 160.8 M | €19.5 | 3,129 | |
Investment in unlisted assets (2) | 3,772 | |||
Other assets and liabilities of | 39 | |||
Net cash position & financial assets (4) | 1,148 | |||
Gross asset value | 8,087 | |||
-1,593 | ||||
Net Asset Value | 6,493 | |||
Of which net debt | -446 | |||
Number of shares | 44,682,308 | |||
Net Asset Value per share | €145.3 | |||
Wendel’s 20 days share price average | €80.9 | |||
Premium (discount) on NAV | -44.4% | |||
- Last 20 trading days average as of
September 30, 2020 - Investments in non-publicly traded companies (
Cromology , Stahl, IHS, Constantia Flexibles, Tsebo,Crisis Prevention Institute , indirect investments). As per previous NAV calculation IHS valuation was solely performed based on EBITDA which is at this stage the most relevant sub-total. Aggregates retained for the calculation exclude the impact of IFRS16. - Of which 926 927 treasury shares as of
September 30, 2020 - Cash position and financial assets of
Wendel & holdings. As ofSeptember 30, 2020 , this comprises € 0.9bn of cash and cash equivalents and € 0.3bn short term financial investment.
Assets and liabilities denominated in currencies other than the euro have been converted at exchange rates prevailing on the date of the NAV calculation.
If co-investment and managements LTIP conditions are realized, subsequent dilutive effects on Wendel’s economic ownership are accounted for in NAV calculations. See page 346 of the 2019 Universal Registration Document
1 As per Bureau Veritas’ Q3 2020 revenue release on
2 9M 2020 sales, growth, tower count and lease-up rate include the contribution of the c.1,000 towers transferred to IHS in
Attachment
- Wendel_2020_Q3_CP_EN
© OMX, source