CONTINUA IL MIGLIORAMENTO DEL MARGINE EBITA GIUNTO A 4 . 4% NEL TERZO TRIMESTRENONOSTANTE UN CONTESTO ECONOMICO DIFFICILEFORTE EFFETTO DELEVERAGING PER UNA SOLIDA GENERAZIONE DI CASH FLOW- Il fatturato a 2 . 8 miliardi di euro nel terzo trimestre, in linea con i trimestri precedenti, riflette un ambiente economico ancora difficile e volatile- EBITA[1] a 122 milioni di euro nel terzo trimestre; ulteriore miglioramento consecutivo del margine passato a 4 . 4% nel trimestre (dopo il 3 . 0% nel primo trimestre e il 3 . 6% nel secondo trimestre) in seguito a una forte riduzione dei costi- Indebitamento netto ridotto di 124 milioni di euro nel terzo trimestre e di 348 milioni di euro da inizio anno, a 2 . 6 miliardi di euro al 30 settembre, grazie a una forte generazione di cash flow- Il programma proattivo di contenimento dei costi genererà sull intero anno una riduzione netta di 280 milioni di euro nei costi di distribuzione e nelle spese amministrative, superando l obiettivo inizialmente fissato | At September 30 | H1 2009 | YoY Change | Q3 2009 | YoY Change | 9m 2009 | YoY Change | | Sales (Em) | 5 608,9 | -6,4% | 2 793,6 | -19,0% | 8 402,5 | -11,0% | | % change organic same-day | | -17,9% | | -19,4% | | -18,4% | | Gross margin1 as a % sales | 24,5% | +40 bps | 24,0% | +10 bps | 24,3% | +30 bps | | EBITA1 as a % sales | 3,3% | -190 bps | 4,4% | -110 bps | 3,6% | -170 bps | | Free cash flow2 (Em) | 396,3 | +10,6% | 193,1 | +66,3% | 589,5 | +24,3% | | Net debt end of period (Em) | 2 707,9 | -14,0% | 2 584,0 | -19,6% | 2 584,0 | -19,6% |
[1] Constant and adjusted: at comparable scope of consolidation and exchange rates, and excluding the non-recurring effect related to changes in copper-based cables price; an extract of financial statements is presented in Appendix[2] Before interest and tax paidJean-Charles Pauze, Chairman of the Management Board and CEO, said:"Since the beginning of the year, in a very challenging environment, Rexel has delivered on its priorities: we improved profitability quarter after quarter to 4 . 4% in the third quarter and strongly deleveraged our balance sheet . Accelerated implementation of our cost-cutting program will allow us to reduce distribution and administrative expenses by E280 million in the full year, exceeding our earlier target . While we don t expect an economic upturn in the near-term, we are confident that Rexel, thanks to the enhanced resilience of its business model and its teams ability to execute its strategy, is well positioned to continue to gain market share, seize market opportunities and consolidate its leadership position . "Financial Review for the period ended September 30, 2009Unless otherwise stated, all comments are on a constant and adjusted basis and, for sales, at same number of working daysThird-quarter sales of E2 . 8 billion, in line with previous quarters, still reflecting challenging economic environmentIn the third quarter, Rexel recorded sales of E2,793 . 6 million, down 19 . 4% year-on-year on a constant basis and same number of working days . The organic decline in the quarter is to be compared to a fall of 15 . 4% in Q1 and of 20 . 2% in Q2 . At constant copper prices, sales would have decreased by 16 . 6% . This drop in sales continues to reflect very challenging economic conditions across all end-markets, as well as a reduction in the number of branches as Rexel continues to streamline its network . In the first nine months of 2009, sales amounted to E8,402 . 5 million, down 11 . 0% year-on-year on a reported basis and down 18 . 4% on a constant basis and same number of working days . Sales in the period included E844 . 5 million from acquisitions net of divestitures (mainly Hagemeyer impact on Q1) and a positive currency impact of E98 . 8 million . At constant copper prices, sales would have decreased by 14 . 6% . The impact on sales of network streamlining (158 branches closed year-to-date) is estimated to have accounted for 2 . 6 percentage points over the period . Europe (59% of sales): sales in the quarter were down 14 . 2% after a 15 . 7% fall in Q2 . Germany achieved a strong improvement (-3 . 9% compared to -7 . 7% in Q2) supported by sales to industry and sales of solar panels . Belgium, Norway, Switzerland and Austria also showed improved performance over the previous quarter, with sales declines limited to single digits . In the first nine months, sales amounted to E4,928 million and were down 14 . 3% over the same period of 2008 . France remained more resilient than the average of European sales (-9 . 5%) . Since the beginning of the year, Rexel estimates it has outperformed the market in most countries, and particularly in its main markets of France, the UK and Germany, which accounted for close to 60% of sales in the period . North America (30% of sales): sales in the quarter were down 30 . 0% in line with Q2 (-29 . 9%) . Sales evolution in the United States (-34 . 8%) was broadly in line with Q2 while sales in Canada (-14 . 0%) remained impacted by lower industrial activity in Ontario and British Columbia and by the slowdown of oil-sands and related projects in Alberta . In the first nine months, sales amounted to E2,542 million and were down 27 . 2% over the same period of 2008 . The United States (-31 . 7%) continues to be impacted by the low level of residential construction while commercial end-markets and several industrial sectors (steel, oil & gas and paper mills) weakened over the period . Branch closures accounted for a 4 . 5 percentage-point drop in sales over the period . In Canada, sales were down 10 . 1% but Rexel estimates it has outperformed the market since the beginning of the year . Asia-Pacific (7% of sales): sales in the quarter were down 9 . 6% after an 8 . 5% fall in Q2 . In Australia (-15 . 3%), sales remained impacted by the drop in projects and the slowdown of residential, industrial and mining markets . New-Zealand (-9 . 4%) was in line with Q2 . Operations in China continued to perform strongly (+22 . 3% after +10 . 3% in Q2), reflecting the country s economic dynamism and robust sales in the automation, energy and rail sectors . In the first nine months, sales amounted to E624 million and were down 7 . 7% over the same period of 2008 . Growth in China (+14 . 0%) mitigated sales drops in New-Zealand and Australia where Rexel estimates it outperformed the market . Other (4% of sales): sales in the quarter were down 19 . 4% after a 19 . 9% fall in Q2 . In the first nine months, sales amounted to E309 million and were down 18 . 1% over the same period of 2008 . Third-quarter EBITA margin improved sequentially to 4 . 4%, as a result of accelerated cost reductionIn the third quarter, EBITA[2] margin improved to 4 . 4%, up from 3 . 0% in Q1 and 3 . 6% in Q2 . This sequential improvement reflects the acceleration of the cost reduction programme across all the Group s regions with an overall 14% reduction in distribution and administrative expenses vs . Q3 2008 . In the first nine months, EBITA margin stood at 3 . 6% compared to 5 . 3% in the same period of 2008 . The year-on-year margin drop of 170 bps, when compared to the 18 . 4% organic decline in sales, demonstrates the Group s ability to improve its profit resilience since the beginning of the year (9 bps reduction in EBITA margin for each 100 bps of sales drop in the first nine months compared to 11 bps in the first half) . This strong performance was achieved in a very challenging economic context through:- A 30 bps gross margin improvement, driven by better purchasing terms and a favourable product and country mix in Europe;- An 11% reduction in distribution and administrative expenses, reflecting the acceleration of cost-cutting initiatives aimed at adjusting the cost base to current market trends . Year-to-date, Rexel has reduced its cost base by E214 million . Synergies from the integration of Hagemeyer are in line with Rexel s objectives of E30 million in 2009 and E50 million per year from 2011 onwards . Net income impacted by restructuring expensesNet income[3] in the first nine months was E46 . 2 million compared with E293 . 0 million in the same period of 2008, which included capital gains of E117 . 8 million . - Other income and expenses amounted to a net charge of E107 . 9 million and included E73 . 3 million of restructuring costs and E12 . 6 million of goodwill impairment (already booked at the end of June) . - Net financial expenses amounted to E127 . 6 million compared to 140 . 9 in the first nine months of 2008; this decrease is mainly driven by both reduced average debt and lower interest rates over the period, despite the increased margin on Senior Credit as from August, 1st . Recurring net income amounted to E110 . 7 million compared with E257 . 5 million in the first nine months of 2008 (see table in Appendix 4) . Strong free cash flow supported by reduction in working capitalFree cash flow before interest and tax paid[4] increased by 24% in the first nine months to E589 . 5 million, reflecting:- A E306 . 1 million cash inflow related to a reduction in working capital (vs . a cash outflow of E74 . 9 million in the first nine months of 2008);- Selectivity in capital expenditure which was contained at E28 . 7 million, net of disposals . After E104 . 1 million of net interest paid and E48 . 1 million of income tax paid, free cash flow stood at E437 . 4 million, a 70% rise compared with the first nine months of 2008 . Net debt reduced by E348 millionNet debt was reduced to E2,584 million at September 30, 2009, compared with E2,932 million at December 31, 2008 . Financial investments during the period amounted to E37 . 5 million, including E4 . 7 million for the acquisition of 63 . 5% of Xidian (China), E3 . 6 million for the increase, from 51% to 70%, of the Group s interest in Huazhang (China) and E27 . 2 million for the buy-out of Hagemeyer minority interests . As of September 30, 2009, the Group s liquidity amounted to E1,106 million including E521 million of cash net of overdrafts and E585 million of undrawn revolver credit . Rexel s liquidity therefore exceeds the E648 million mandatory senior debt repayments through the end of 2011 . OutlookIn the coming months, market trends will remain challenging in all of Rexel s end-markets . Nevertheless, Rexel is confident that profitability in the fourth quarter will continue to improve sequentially, as was achieved since the beginning of this year, thanks to the acceleration of its cost reduction programme . The net reduction in distribution and administrative expenses for the full year is now expected to reach E280 million . With strong fundamentals and a more resilient business model, Rexel is well positioned to continue implementing its strategy aimed at seizing market opportunities, protecting margins and deleveraging its balance sheet . Financial informationThe interim financial report is available on Rexel s website (www . rexel . com) in the "Regulated information" section . A slideshow of the period ended September 30, 2009 results is also available on the Company s website . CalendarDecember 4, 2009: Investor Day in Lyon (France) . February 11, 2010: Fourth-quarter and full-year 2009 results . For further information, please contact: | Financial Analysts / Investors | Press | | Marc Maillet | Pénélope Linage | | Tel . +33 1 42 85 76 12 | Tel . +33 1 42 85 76 28 | | mmaillet@rexel . com | plinage@rexel . com | | | Brunswick | | | Thomas Kamm | | | Tel . +33 1 53 96 83 92 | | | tkamm@brunswickgroup . com |
Appendix 1Segment reporting - Constant and adjusted basis (*)(*) At 2009 constant scope of consolidation and exchange rates and excluding the non-recurring effect related to changes in copper-based cables price which was, at the EBITA level, a profit of E8 . 0 million in Q3 2008 and a charge of E8 . 6 million in Q3 2009 and a profit of E6 . 4 million in the first nine months of 2008 and a charge of E12 . 7 million in the first nine months of 2009 . Group | Constant and adjusted basis (Em) | Q3 08 | Q3 09 | Change | 9m 08 | 9m 09 | Change | | Sales | 3 447,4 | 2 793,6 | -19,0% | 10 383,4 | 8 402,5 | -19,1% | | on a constant basis and same days | | | -19,4% | | | -18,4% | | Gross profit | 823,2 | 669,5 | -18,7% | 2 495,2 | 2 041,7 | -18,2% | | as a % of sales | 23,9% | 24,0% | +10 bps | 24,0% | 24,3% | +30 bps | | Distribution & adm . expenses (incl . depreciation) | (635,3) | (547,6) | -13,8% | (1 949,1) | (1 735,3) | -11,0% | | EBITA (1) | 187,9 | 121,9 | -35,1% | 546,0 | 306,5 | -43,9% | | as a % of sales | 5,5% | 4,4% | -110 bps | 5,3% | 3,6% | -170 bps | | Headcount (end of period) | 34 130 | 29 644 | -13,1% | 34 130 | 29 644 | -13,1% |
(1) Operating income before other income & other expenses and amortization of purchase price allocationEurope | Constant and adjusted basis (Em) | Q3 08 | Q3 09 | Change | 9m 08 | 9m 09 | Change | | Sales | 1 912,9 | 1 655,0 | -13,5% | 5 800,4 | 4 927,6 | -15,0% | | on a constant basis and same days | | | -14,2% | | | -14,3% | | o/w France | 589,6 | 527,7 | -10,5% | 1 836,6 | 1 644,3 | -10,5% | | on a constant basis and same days | | | -12,1% | | | -9,5% | | United Kingdom | 281,2 | 237,2 | -15,6% | 817,5 | 687,1 | -15,9% | | on a constant basis and same days | | | -15,6% | | | -15,5% | | Germany | 232,3 | 222,9 | -4,0% | 647,5 | 581,0 | -10,3% | | on a constant basis and same days | | | -3,9% | | | -8,7% | | Scandinavia | 212,6 | 185,2 | -12,9% | 645,8 | 552,2 | -14,5% | | on a constant basis and same days | | | -13,0% | | | -13,5% | | Gross profit | 477,7 | 418,3 | -12,4% | 1 455,8 | 1 263,8 | -13,2% | | as a % of sales | 25,0% | 25,3% | + 30 bps | 25,1% | 25,6% | + 50 bps | | Distribution & adm . expenses (incl . depreciation) | (370,1) | (330,9) | -10,6% | (1 141,4) | (1 051,0) | -7,9% | | EBITA | 107,6 | 87,5 | -18,7% | 314,4 | 212,8 | -32,3% | | as a % of sales | 5,6% | 5,3% | - 30 bps | 5,4% | 4,3% | - 110 bps | | Headcount (end of period) | 20 420 | 17 761 | -13,0% | 20 420 | 17 761 | -13,0% |
North America | Constant and adjusted basis (Em) | Q3 08 | Q3 09 | Change | 9m 08 | 9m 09 | Change | | Sales | 1 159,8 | 811,6 | -30,0% | 3 527,2 | 2 542,0 | -27,9% | | on a constant basis and same days | | | -30,0% | | | -27,2% | | o/w United States | 895,6 | 584,6 | -34,7% | 2 803,0 | 1 894,2 | -32,4% | | on a constant basis and same days | | | -34,8% | | | -31,7% | | Canada | 264,2 | 227,0 | -14,1% | 724,2 | 647,7 | -10,6% | | on a constant basis and same days | | | -14,0% | | | -10,1% | | Gross profit | 251,1 | 169,6 | -32,5% | 769,3 | 542,8 | -29,4% | | as a % of sales | 21,6% | 20,9% | - 70 bps | 21,8% | 21,4% | - 40 bps | | Distribution & adm . expenses (incl . depreciation) | (189,3) | (146,9) | -22,4% | (589,0) | (483,4) | -17,9% | | EBITA | 61,8 | 22,6 | -63,3% | 180,3 | 59,4 | -67,1% | | as a % of sales | 5,3% | 2,8% | - 250 bps | 5,1% | 2,3% | - 280 bps | | Headcount (end of period) | 9 176 | 7 783 | -15,2% | 9 176 | 7 783 | -15,2% |
Asia-Pacific | Constant and adjusted basis (Em) | Q3 08 | Q3 09 | Change | 9m 08 | 9m 09 | Change | | Sales | 248,5 | 224,9 | -9,5% | 677,7 | 624,2 | -7,9% | | on a constant basis and same days | | | -9,6% | | | -7,7% | | o/w Australia | 164,9 | 139,8 | -15,2% | 442,7 | 391,4 | -11,6% | | on a constant basis and same days | | | -15,3% | | | -11,2% | | New-Zealand | 34,2 | 31,0 | -9,4% | 90,6 | 82,9 | -8,5% | | on a constant basis and same days | | | -9,4% | | | -8,5% | | Asia | 49,4 | 54,0 | 9,3% | 144,4 | 149,9 | 3,8% | | on a constant basis and same days | | | +8,9% | | | +3,6% | | Gross profit | 57,5 | 50,1 | -13,0% | 159,0 | 140,2 | -11,8% | | as a % of sales | 23,1% | 22,3% | - 80 bps | 23,5% | 22,5% | - 100 bps | | Distribution & adm . expenses (incl . depreciation) | (39,9) | (36,8) | -7,7% | (111,2) | (105,4) | -5,2% | | EBITA | 17,6 | 13,2 | -25,0% | 47,8 | 34,8 | -27,2% | | as a % of sales | 7,1% | 5,9% | - 120 bps | 7,1% | 5,6% | - 150 bps | | Headcount (end of period) | 2 912 | 2 633 | -9,6% | 2 912 | 2 633 | -9,6% |
Other | Constant and adjusted basis (Em) | Q3 08 | Q3 09 | Change | 9m 08 | 9m 09 | Change | | Sales | 126,2 | 102,1 | -19,1% | 378,1 | 308,7 | -18,3% | | on a constant basis and same days | | | -19,4% | | | -18,1% | | Gross profit | 36,9 | 31,6 | -14,6% | 111,0 | 94,9 | -14,5% | | as a % of sales | 29,3% | 30,9% | + 160 bps | 29,4% | 30,7% | + 130 bps | | Distribution & adm . expenses (incl . depreciation) | (36,0) | (32,9) | -8,5% | (107,5) | (95,5) | -11,2% | | EBITA | 0,9 | (1,4) | -255,6% | 3,5 | (0,5) | -114,3% | | as a % of sales | 0,7% | -1,3% | - 200 bps | 0,9% | -0,2% | - 110 bps | | Headcount (end of period) | 1 622 | 1 468 | -9,5% | 1 622 | 1 468 | -9,5% |
Appendix 22008 pro forma financial information by quarter | Adjusted basis (Em) | Q1 08 | Q2 08 | Q3 08 | Q4 08 | FY 08 | | Sales | 3 335,7 | 3 527,5 | 3 448,5 | 3 426,2 | 13 737,9 | | Organic growth | +4,3% | +1,9% | +0,4% | -6,7% | -0,8% | | Gross profit | 821,3 | 846,3 | 824,3 | 831,4 | 3 323,3 |
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