Rexel Sa · EURONEXT:RXL
Rexel Sa — H1 2015 Earnings Presentation
49 slides from Rexel Sa's earnings presentation, Oct 16, 2015
Slide 1: Post-Q2 & H1 2015 Results Roadshow presentation
POST-Q2 & H1 2015 RESULTS Roadshow presentation
Slide 2: 1. Results at a glance
1. RESULTS AT A GLANCE As from this announcement, Latin American operations are presented as “Discontinued operations” and related assets/liabilities as “Assets/Liabilities held for sale”
Slide 3: Q2 2015 highlights
Q2 2015 highlights Q2 sales of €3,423.5m, up 8.4% on a reported basis Including a strong positive currency effect of 9.6 percentage points (€303.2m) Sales down 1.6% on a constant and same-day basis (after -0.4% in Q1) Reflecting sequential slowdown in North America (-5.9% after -0.2% in Q1), due to
Slide 4: H1 2015 highlights
H1 2015 highlights H1 sales of €6,645.2m, up 7.8% on a reported basis: Including a strong positive currency effect of 8.9 percentage points (€546.1m) Sales down 1.0% on a constant and same-day basis: Including negative impact from copper of 0.1 percentage points Adjusted EBITA margin of 4.2% of sale
Slide 5: Results by geography
2 » RESULTS BY GEOGRAPHY RexeL De a world of energy
Slide 6: Europe: Sequential sales improvement in Q2
Europe (54% of sales): Sequential sales improvement in Q2 Q2 sales of €1,819.2m, up 4.0% on a reported basis Positive currency effect of €42.0m (i.e. 2.4% of last year’s sales) Q2 sales up 1.5% on a constant and same-day basis (after -0.1% in Q1) France (33% of the region’s sales) improved sequentia
Slide 7: Europe: Profitability impacted by lower gross margin on cable sales
Europe (54% of sales): Profitability mainly impacted by lower gross margin on cable sales in Q2 Rexel’s presence At comparable scope and exchange rates Europe H1 2014 H1 2015 Change (€m) Sales 3,579.4 3,604.8 +0.7% same-day +0.7% Adj. EBITA1 216.6 202.5 -6.5% as % of sales 6.1% 5.6% -45bps 2014 mark
Slide 8: Acquisition of Electro-Industrie en Acoustiek in Belgium
Acquisition of Electro-Industrie en Acoustiek in Belgium Business description EIA locations ► Company founded in 1961, based Antwerp in Antwerp port (5% of Belgian GDP) ► Industrial end-market exposure ► 3 branches and 30 FTEs Strategic Rationale Brussels ► Strengthen regional market share ► Custome
Slide 9: North America: Q2 sales impacted by O&G deterioration and lower cable activity
North America (36% of sales): Q2 sales impacted by strong deterioration in the O&G segment and lower cable activity Q2 sales of €1,250.9m, up 12.8% on a reported basis Positive currency effect of €223.6m (i.e. 20.2% of last year’s sales), mainly due to the appreciation of the USD against the euro On
Slide 10: North America: Profitability impacted by lower activity and higher logistics costs
North America (36% of sales): Profitability impacted by lower activity in Q2 and higher logistics costs Rexel’s presence At comparable scope and exchange rates North America (€m) H1 2014 H1 2015 Change Sales 2,475.7 2,379.3 -3.9% same-day -3.3% Adj. EBITA1 110.9 85.7 -22.7% as % of sales 4.5% 3.6% -
Slide 11: North America: Cost efficiency measures with full effect in H2
North America (36% of sales): Implementation of cost efficiency measures with full effect in H2 US: Strong reduction in cost base and revised DC roll-out plan Branch network optimization 23 branches merged with other existing branches in the same commercial regions 9 branches closed From 400 branche
Slide 12: Asia-Pacific: Sales growth in Asia and sequential improvement in Pacific
Asia-Pacific (10% of sales): Sales growth in Asia and sequential improvement in the Pacific region Q2 sales of €353.4m, up 18.0% on a reported basis Positive currency effect of €37.6m (i.e. 12.6% of last year’s sales) Positive scope effect of €18.2m (i.e. 6.1% of last year’s sales) On a constant and
Slide 13: Asia-Pacific: Profitability impacted by weak Pacific activity
Asia-Pacific (10% of sales): Profitability mainly impacted by weak activity in the Pacific region Rexel’s presence At comparable scope and exchange rates Asia-Pacific (€m) H1 2014 H1 2015 Change Sales 672.4 661.1 -1.7% same-day -1.7% Adj. EBITA1 20.4 12.9 -36.9% as % of sales 3.0% 1.9% -110bps 2014
Slide 14: Financial review
3 » FINANCIAL REVIEW RexeL De a world of energy
Slide 15: Sales up 7.8% reported in H1, down 1.0% constant and same-day
Sales up 7.8% on a reported basis in H1 and down 1.0% on a constant and same-day basis €m Q2 H1 2014 sales 3,157.3 6,161.7 Organic sales evolution Q2 2015 H1 2015 Net currency effect1 +9.6% +8.9% Same-day excl. copper -1.8% -0.9% Net scope effect1 +0.4% +0.3% +/- Copper effect +0.2% -0.1% 2014 compa
Slide 16: Sequential improvement in adj. EBITA margin in Q2
Sequential improvement in adj. EBITA margin in Q2 (at 4.4%) despite slowdown in sales; adj. EBITA margin at 4.2% in H1 H1 2015 Gross margin: €1,614.9m Opex (incl. depr.): €(1,334.3)m Adj. EBITA margin: €280.6m Europe 26.8% -33bps (21.1)% +10bps 5.6% -23bps change yoy -65bps at Group level +20bps at
Slide 17: Net income impacted by Latam divestment and one-off financing costs
Net income mainly impacted by Latam divestment and one-off costs related to financing optimization operations (€m) H1 2014 H1 2015 Change EBITA 297.3 275.4 -7.3% Amortization resulting from PPA (7.6) (8.6) o/w restructurings for €(36.8)m in H1 2015 vs. €(22.6)m in H1 2014 Other income & exp. (33.7)
Slide 18: Solid FCF generation of €144m before I&T in Q2
Solid FCF generation of €144m before I&T in Q2 H1 2014 (€m) Q2 2015 H1 2015 336.1 EBITDA 171.9 319.8 (35.5) Other operating revenues & costs (28.7) (46.4) (26.3) Restructuring outflow (21.2) (37.8) (238.0) Change in working capital 27.0 (213.8) (46.5) Net capital expenditure, o/w: (26.0) (57.2) (41.
Slide 19: Net debt at June 30, 2015
Net debt at June 30, 2015 mainly impacted by negative currency effect and financing optimization one-offs H1 2014 (€m) Q2 2015 H1 2015 16.0 FCF before I&T from continuing op. 144.2 2.4 (74.6) Net interest paid (36.5) (76.6) (50.6) Income tax paid (41.8) (75.6) (109.2) FCF after I&T from continuing o
Slide 20: Sound financial structure
Sound financial structure Breakdown of net debt at June 30, 2015: €2,556.5m Senior unsecured notes €1,614.7m USD Bond issued April 2013 (maturity: June 2020) @ 5.250% €449.4m EUR Bond issued April 2013 (maturity: June 2020) @ 5.125% €670.8m EUR Bond issued May 2015 (maturity: June 2022) @ 3.250% €49
Slide 21: Successful placement of €500m notes due 2022 @ 3.250%
Successful placement of €500m notes due 2022 @ 3.250% Following the straight repayment in Q1 of its 7.000% EUR Senior notes due Dec. 2018, Rexel refinanced in Q2 its 6.125% USD notes due Dec. 2019 through the issuance of €500m 3.250% EUR Senior notes due June 2022 Nominal redeemed USD500m (€442.5m a
Slide 22: Outlook
4 » OUTLOOK Rexeu es a world of energy
Slide 23: Update on estimated FY impacts from O&G and copper
Update on estimated FY impacts from O&G and copper Sales to the O&G segment strongly Copper prices in USD are below deteriorated in Q2 expectations; currently c. USD5,500/t O&G sales Q2 2015 H1 2015 Copper prices Q1 Q2 €m YoY €m YoY 2014 USD 6,999 6,762 USA 69.0 -33% 152.6 -19% 2015 USD 5,801 6,058
Slide 24: FY 2015 targets confirmed at low end of guidance
FY 2015 targets confirmed at low end of guidance In view of the first-half performance, on the one hand, and lower-than- expected copper prices and worse-than-expected Oil & Gas evolution, on the other hand, Rexel now expects to be at the low end of its full-year guidance for sales and profitability
Slide 25: Appendices
5 » APPENDICES Rexeu es a world of energy
Slide 26: Appendix 1: Segment reporting - Group
Appendix 1: Segment reporting - Constant and adjusted basis Group Constant and adjusted basis (€m) Q2 2014 Q2 2015 Change H1 2014 H1 2015 Change Sales 3,473.9 3,423.5 -1.4% 6,727.6 6,645.2 -1.2% on a constant basis and same days -1.6% -1.0% Gross profit 845.1 815.7 -3.5% 1,655.0 1,614.9 -2.4% as a %
Slide 27: Appendix 1: Segment reporting - Europe
Appendix 1: Segment reporting - Constant and adjusted basis Europe Constant and adjusted basis (€m) Q2 2014 Q2 2015 Change H1 2014 H1 2015 Change Sales 1,787.8 1,819.2 +1.8% 3,579.4 3,604.8 +0.7% on a constant basis and same days +1.5% +0.7% o/w France 586.4 584.4 -0.3% 1,197.6 1,173.5 -2.0% on a co
Slide 28: Appendix 1: Segment reporting - North America
Appendix 1: Segment reporting - Constant and adjusted basis North America Q2 Q2 H1 H1 Constant and adjusted basis (€m) Change Change 2014 2015 2014 2015 Sales 1,330.6 1,250.9 -6.0% 2,475.7 2,379.3 -3.9% on a constant basis and same days -5.9% -3.3% o/w United States 1,012.2 965.3 -4.6% 1,885.0 1,825
Slide 29: Appendix 1: Segment reporting - Asia-Pacific
Appendix 1: Segment reporting - Constant and adjusted basis Asia-Pacific Q2 Q2 Constant and adjusted basis (€m) Change H1 2014 H1 2015 Change 2014 2015 Sales 355.4 353.4 -0.6% 672.4 661.1 -1.7% on a constant basis and same days -1.1% -1.7% o/w China 134.3 134.9 +0.4% 244.7 239.7 -2.0% on a constant
Slide 30: Appendix 2: Consolidated Income Statement
Appendix 2: Consolidated Income Statement Reported basis (€m) Q2 2014 Q2 2015 Change H1 2014 H1 2015 Change Sales 3,157.3 3,423.5 +8.4% 6,161.7 6,645.2 +7.8% Gross profit 771.2 814.9 +5.7% 1,521.3 1,609.4 +5.8% as a % of sales 24.4% 23.8% 24.7% 24.2% Distribution & adm. expenses (excl. depreciation)
Slide 31: Appendix 2: Bridge to adjusted EBITA
Appendix 2: Bridge between operating income before other income and expenses and adjusted EBITA in €m Q2 2014 Q2 2015 H1 2014 H1 2015 Operating income before other income and other expenses 159.5 144.7 289.7 266.8 Change in scope of consolidation 1.2 1.6 Foreign exchange effects 14.9 23.9 Non-recurr
Slide 32: Appendix 2: Recurring net income
Appendix 2: Recurring net income 1 1 In millions of euros Q2 2014 Q2 2015 Change H1 2014 H1 2015 Change Reported net income 47.3 20.0 -57.7% 90.5 43.2 -52.2% Non-recurring copper effect 3.7 0.7 6.3 5.1 Other expense & income 38.8 42.1 57.6 59.2 Financial expense 32.9 52.5 Tax expense -3.5 -14.7 -9.4
Slide 33: Appendix 2: Sales and profitability by segment - Reported basis
Appendix 2: Sales and profitability by segment - Reported basis Reported basis (€m) Q2 2014 Q2 2015 Change H1 2014 H1 2015 Change Sales 3,157.3 3,423.5 +8.4% 6,161.7 6,645.2 +7.8% Europe 1,748.6 1,819.2 +4.0% 3,508.0 3,604.8 +2.8% North America 1,109.0 1,250.9 +12.8% 2,081.1 2,379.3 +14.3% Asia-Paci
Slide 34: Appendix 2: Consolidated Balance Sheet
Appendix 2: Consolidated Balance Sheet1 Assets (€m) December 31, 2014 June 30, 2015 Goodwill 4 243,9 4 377,0 Intangible assets 1 084,0 1 114,9 Property, plant & equipment 287,1 289,0 Long-term investments 24,8 35,0 Deferred tax assets 175,2 164,3 Total non-current assets 5 815,0 5 980,2 Inventories
Slide 35: Appendix 2: Change in Net Debt
Appendix 2: Change in Net Debt €m Q2 2014 Q2 2015 H1 2014 H1 2015 EBITDA 182.8 171.9 336.1 319.8 Other operating revenues & costs(1) (15.6) (28.7) (35.5) (46.4) Operating cash flow 167.2 143.2 300.6 273.4 Change in working capital (50.0) 27.0 (238.0) (213.8) Net capital expenditure, of which: (22.7)
Slide 36: Appendix 3: Working Capital
Appendix 3: Working Capital Constant basis June 30, 2014 June 30, 2015 Net inventories as a % of sales 12 rolling months 10.9% 11.3% as a number of days 49.6 52.3 Net trade receivables as a % of sales 12 rolling months 17.3% 16.8% as a number of days 53.4 52.9 Net trade payables as a % of sales 12 r
Slide 37: Appendix 4: Headcount & Branch Evolution
Appendix 4: Headcount & Branch Evolution FTEs at end of period Year-on-Year 30/06/2014 31/12/2014 30/06/2015 comparable Change Europe 16,544 16,296 16,179 -2.2% USA 6,131 6,297 6,073 -1.0% Canada 2,356 2,355 2,226 -5.5% North America 8,487 8,652 8,298 -2.2% Asia-Pacific 3,260 3,312 3,264 0.1% Other
Slide 38: Appendix 5: Discontinued operations
Appendix 5: Discontinued operations On April 30, Rexel announced the sales of its operations in Latin America As from Q2 & H1 results announcement, Latin American operations are presented as “Discontinued operations” and related net assets as “Assets held for sale” In H1, net income from discontinue
Slide 39: Appendix 6: 2014 continuing operations at 2014 exchange rate
Appendix 6: 2014 continuing operations (ie. excl. Latin American operations) at 2014 exchange rate In €m Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Sales 3,004.4 3,157.3 3,260.4 3,402.3 12,824.3 Gross margin 750.2 771.2 779.4 817.8 3,118.6 EBITA 134.0 163.3 168.6 180.8 646.7 Q2 & H1 2015 Results 39
Slide 40: Appendix 7: Calendar, scope and change effects on sales
Appendix 7: Calendar, scope and change effects on sales Based on the assumption of the following average exchange rates: 1€ = 1.12USD 1€ = 1.38CAD 1€ = 1.44AUD 1€ = 0.72GBP and based on acquisitions to date, 2014 sales from continuing operations should take into account the following estimated impac
Slide 41: Appendix 8: Historical copper price evolution
Appendix 8: Historical copper price evolution USD/t Q1 Q2 Q3 Q4 FY €/t Q1 Q2 Q3 Q4 FY 2013 7,954 7,187 7,104 7,168 7,353 2013 6,024 5,502 5,363 5,267 5,539 2014 6,999 6,762 6,975 6,573 6,827 2014 5,111 4,932 5,263 5,261 5,142 2015 5,801 6,058 2015 5,154 5,483 2014 vs. 2013 -12% -6% -2% -8% -7% 2014
Slide 42: Appendix 9: Framework of portfolio review
Appendix 9: Framework of portfolio review Determine the key actions to be implemented with regards to underperforming operations and countries Portfolio review Focus on the Group’s core end-markets and objectives most promising countries Reallocate investment to countries offering the best opportuni
Slide 43: Appendix 9: Update and expected impacts of portfolio review
Appendix 9: Update and expected impacts of portfolio review Disposal process underway will primarily target underperforming countries, in which Rexel is sub-scale, and is expected to be completed by end of 2016 On April 30, Rexel announced the disposal of its operations in Latin America (representin
Slide 44: Appendix 10: 2015 business priorities
Appendix 10: 2015 business priorities 1. Drive profitable growth through continued investment in high-growth initiatives 2. Enhance core business through a customer-centric digitally-powered and multi-channel business model 3. Focus on gross margin optimization while differentiating cost-to-serve ac
Slide 45: Appendix 10: Rexel is a global leader in professional distribution
Appendix 10: Rexel is a global leader in the professional distribution of products and services for the energy world MARKET Mapping of Rexel’s 19 biggest countries CONCENTRATION (2014 sales > €50m) c.60% of Group sales Mkt share Mkt share Mkt share above 30% 20%<30% below 20% • Global market share o
Slide 46: Appendix 10: Well-balanced business profile
Appendix 10: Rexel has a well-balanced business profile1 By geography2 By customers By end-market Europe over 50% Small & medium contractors 36% Commercial 44% North America over 33% Large contractors 22% Industrial 35% Asia-Pacific c.10% Industrial companies 22% Residential 21% Other 11% Commercial
Slide 47: Appendix 10: Value creation at the heart of Rexel's business model
Appendix 10: Value creation at the heart of Rexel’s business model A clear and attractive dividend policy At least 40% of recurring net income FOCUSED CASH & CAPITAL ALLOCATION Continued A sound and sustained and balanced M&A activity financial structure Average annual Net debt/EBITDA ratio budget o
Slide 48: Financial Calendar and contacts
Financial Calendar and contacts Financial Calendar Contacts • October 29, 2015 • Investors & Analysts Q3 and 9m results Marc MAILLET Tel: +33 1 42 85 76 12 Email: [email protected] Florence MEILHAC Tel: +33 1 42 85 57 61 Email: [email protected] • Press Pénélope LINAGE Tel: +33 1 42 85
Slide 49: Disclaimer
Disclaimer The Group is exposed to fluctuations in copper prices in connection with its distribution of cable products. Cables accounted for approximately 14% of the Group's sales, and copper accounts for approximately 60% of the composition of cables. This exposure is indirect since cable prices al