Tarkett Sa · SWB:1T9
Tarkett Sa — Q1 2019 Earnings Presentation
28 slides from Tarkett Sa's earnings presentation, Apr 25, 2019
Slide 1: Q1 2019 Financial Results
Q1 2019 Financial Results April 25, 2019 Tarkett – Q1 2019 Financial Results – April 25, 2019 1
Slide 2: Agenda
Q1 2019 Highlights Q1 2019 Financial Results Conclusion Agenda Appendices Tarkett – Q1 2019 Financial Results – April 25, 2019 2
Slide 3: Q1 2019 Key Highlights
Q1 2019 Key Highlights Fabrice Barthélemy CEO Tarkett – Q1 2019 Financial Results – April 25, 2019 3
Slide 4: Q1 2019 highlights
Q1 2019 highlights Sustained net revenues (€625m), up 10% YoY reflecting robust organic growth(1), integration of Lexmark and positive forex impact Sound organic growth(1) of +3.7%, o/w 1.4% contribution from selling price increases Revenue growth driven by EMEA (+5.8%) & Sports (+19.4%) Sel
Slide 5: Focus on ongoing industrial footprint review
Focus on ongoing industrial footprint review 3 sites closures announced in Q1 Waterloo Truro Laminate Accessories Carpet Park JV(1) North North EMEA America America • 230 people • 70 people • 240 people • Unprofitable product • Consolidation on one • Transfer to Lexmark category in EMEA site in Ohio
Slide 6: 2019 priorities
2019 priorities Profitability improvement and deleveraging Selling price Industrial management Productivity footprint Deleveraging • 2018 price • North American • EMEA Laminate • Working capital increases are sites recovering factory closure well optimization sticking progressively on track • Tight
Slide 7: Q1 2019 Financial Results
Q1 2019 Financial Results Raphaël Bauer CFO Tarkett – Q1 2019 Financial Results – April 25, 2019 7
Slide 8: Solid organic growth in Q1 2019: +3.7%
Solid organic growth in Q1 2019: +3.7% in €m Organic +5.8% -0.6% -2.2% +19.4% growth EMEA growth boosted by a rebound effect in several 21.8 14.2 625 countries vs. Q1 2018 589 11.6 (0.6) 13.2 568 Sports growth remaining (1.0) (2.6) rapid and strong North America slow start offset by selling pr
Slide 9: EMEA Q1 2019
EMEA Q1 2019 in €m Robust organic growth driven by growth in countries which Net sales underperformed in Q1 2018 Selling prices successfully Q1 2019 maintained and enhancing overall performance +4.7% reported 239 Net sales organic Stabilization of sales with a slight 228 growth(1) increase in
Slide 10: North America Q1 2019
North America Q1 2019 in €m Slight decrease in organic growth Net sales Significant selling prices increases, almost fully offsetting lower volumes Q1 2019 +19.7% 196 Net sales Stabilization of the commercial reported carpet sales organic 164 growth(1) Resilient flooring sales slightly below
Slide 11: CIS, APAC & Latam Q1 2019
CIS, APAC & Latam Q1 2019 in €m Russia & CIS > Volume decrease mitigated by Net sales mix improvement > Actions taken to neutralize adverse currency moves paying (3.2)% Q4 2018 off 116 reported Net sales > Weak rouble still weighted on 113 organic Russian market conditions growth(1) Latin Americ
Slide 12: Sports Q1 2019
Sports Q1 2019 in €m Net sales High rate of organic growth in all Q1 2019 regions, particularly in EMEA +29.1% 77 Net sales reported organic Several flagship projects ordered and installed growth(1) 60 Sales performance enhanced by positive forex impact mainly US$- driven +19.4% Strong growt
Slide 13: Q1 Adjusted EBITDA: improving trends
Q1 Adjusted EBITDA: improving trends in €m 5.2% 5.7% 6.9% Selling price increases sticking and fully offsetting material and freight inflation 7.3 43.1 Raw materials and freight 8.1 4.8 35.8 costs still inflationary 29.8 0.7 0.9 0.5 4.1 during the quarter (7.7) Sequential improvement in (5.3)
Slide 14: IFRS 16 EBITDA impact by segment
IFRS 16 EBITDA impact by segment In €m New norm IFRS 16 on leases is effective since 1st of January, 2019 • Assets leased are now recognized as fixed asset financed by financial debt Estimates for Tarkett : • +€100m in Net Financial Debt at end of March 2019 • +€27m in Adjusted EBITDA in FY 2019
Slide 15: Conclusion
Conclusion Fabrice Barthélemy CEO Tarkett – Q1 2019 Financial Results – April 25, 2019 15
Slide 16: 2019 environment and Tarkett's priorities
2019 environment and Tarkett’s priorities • 2019 Market perspectives • Group’s expectations unchanged compared to February 2019 • Persistent inflation of raw materials and freight costs • Full year raw material and freight impact estimated between €15m and €20m(1) • Tarkett key priorities in 2019 •
Slide 17: Appendices
Appendices Tarkett – Q1 2019 Financial Results – April 25, 2019 17
Slide 18: Sales and adjusted EBITDA performance Q1
Sales and adjusted EBITDA performance Q1 Sales performance by quarter €m Q1 2019 Q1 2018 % growth Organic Growth(1) EMEA 239.0 228.3 +4.7% +5.8% North America 195.8 163.5 +19.7% (0.6)% CIS, APAC & LATAM 112.5 116.3 (3.2)% (2.2)% Sports 77.2 59.8 +29.1% +19.4% TOTAL 624.5 567.9 +10.0% +3.7% €m Q1 201
Slide 19: Tarkett benefits from balanced exposures
Tarkett benefits from balanced exposures NET SALES BY GEOGRAPHIES NET SALES BY REPORTING SEGMENTS A BALANCED PROFITABILITY PROFILE Adjusted EBITDA(1) split by reporting segments 20% 19% 17% 35% 31% 31% 20% 24% 45% 30% 28% EMEA (incl.Sport) EMEA EMEA North America (incl. Sports) North America North A
Slide 20: … and one of the broadest product offering
… and one of the broadest product offering providing resilience to industry cycles ONE OF THE BROADEST PRODUCT PORTFOLIOS IN THE FLOORING INDUSTRY ATTRACTIVE END-MARKETS EXPOSURE Housing 8% 8% Education Health & Aged Care 45% 19% Workplace Stores & Shops Hospitality, Travel 20% & Leisure 30% Commerc
Slide 21: Russia: Selling price strategy to adapt to the exchange rate evolution
Russia: Selling price strategy to adapt to the exchange rate evolution Evolution of Tarkett Vinyl prices in Russia and EUR/RUB exchange rate 78 74 70 +5% 68 +5% Sources: Reuters and Tarkett Tarkett – Q1 2019 Financial Results – April 25, 2019 21
Slide 22: Russia: consumer confidence, real retail sales and real wages
Russia: consumer confidence, real retail sales and real wages 25% 50 20% 40 15% 30 10% 20 Real wages, retail sales YoY, % Consumer confidence YoY 5% 10 0% 0 Jan'08 Jan'09 Jan'10 Jan'11 Jan'12 Jan'13 Jan'14 Jan'15 Jan'16 Jan'17 Jan'18 Jan'19 -5% -10 -10% -20 -15% -30 -20% -40 -25% -50 Consumer confid
Slide 23: Cost of goods sold and Raw materials details
Cost of goods sold and Raw materials details Based on FY 2018 results COGS BREAKDOWN MATERIAL CONSUMPTION DETAIL Others Traded goods 20% 23% Oil derivatives 53% Transport Total COGS Raw materials and logistics €2,184m 54% 10% Other raw materials Payroll 24% 16% As of December 2018 As of December 201
Slide 24: Key Oil Derivatives: Purchasing Price Drivers
Key Oil Derivatives: Purchasing Price Drivers Oil Barrel / Raw Material P&L Feedstock Shale Gas purchased by Tarkett impact Chemical Cracking Transformation Transformation Inventory Month M(1) Month M+1.5(1) Month M+3(1) Month M+5(1) • Nafta • PVC • Ethylene • Plasticizers • Polypropylene • Nylon •
Slide 25: Vinyl and carpet key oil derivatives - Price evolution
Vinyl and carpet key oil derivatives(1) - Price evolution Index Base 100 January 2014 Crude Oil (Brent) Naphta Ethylene Caprolactam Force majeure Capacity shutdown 2014 2015 2016 2017 2018 2019 (1) Selection of oil derivatives feedstock – Oil derivatives purchase represent 54% of Tarkett material co
Slide 26: Global flooring market
Global flooring market World flooring market = 13.1bn sqm(1) Flooring market is growing more or less in line with GDP growth, with specificities by region and product Ceramics 61% Wood & Laminate Flooring market (excluding ceramics) 11% is ~80% exposed to renovation 26% Vinyl, Linoleum addressed & R
Slide 27: Flooring preferred categories vary greatly across world
Flooring preferred categories vary greatly across world North America: 1.7bn sqm Europe(1): 1.6bn sqm CIS: 0.6bn sqm 17% 31% 37% 51% 26% 10% 17% 18% 28% 14% 21% 25% 1% 4% 0% Ceramics Carpet 13% 12% 5% Vinyl, Linoleum & Rubber Wood & Laminate Other (non-resilient) 8% 12% 50% Latin America: 1.1bn sqm
Slide 28: Disclaimer
Disclaimer This document may contain estimates and/or forward-looking statements. Such statements do not constitute forecasts regarding Tarkett’s results or any other performance indicator, but rather trends or targets, as the case may be. These statements are by their nature subject to risks and un