MARGINI CHE RESISTONO IN UN DIFFICILE CONTESTO ECONOMICO ATTRAVERSO LA CONTRAZIONE DEI COSTIFORTE RIDUZIONE DEI DEBITI E CLAUSOLE RINEGOZIATE- Vendite per 5,6 miliardi di E (-17,9% organiche stesso giorno) che riflettono il difficile contesto economico- EBITA1 di 184,5 milioni di E; margine che resiste al 3,3%, cali contenuti a 190 bps:- margine lordo migliorato: +40bps- efficace riduzione dei costi del 10%: 126 milioni di E;- Cost savings objective for 2009 raised to E210 million (from E170 million previously)- Net debt reduced by E224 million supported by robust free cash flow- Financial flexibility improved through amendment to Senior Credit Agreement | At June 30 | Q2 2009 | YoY Change | H1 2009 | YoY Change | | Sales (Em) | 2 799,10 | -19,50% | 5 608,90 | -6,40% | | % change on a constant basis and same number of working days | | -20,20% | | -17,90% | | Gross margin as a % sales (on a constant and adjusted basis) | 24,20% | +40 bps | 24,50% | +40 bps | | EBITA as a % sales (on a constant and adjusted basis) | 3,60% | -190 bps | 3,30% | -190 bps | | Free cash flow before interest and tax (Em) | | | 396,3 | 10,60% | | Net debt (Em) | | | 2 707,90 | -14,00% |
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 . Jean-Charles Pauze, Chairman of the Management Board and CEO, said:"Our first half results demonstrate our ability to increase our gross margin, continuously adapt our cost base and generate solid cash-flow in a particularly challenging economic environment . The improvement in performance in the second quarter over the first, notably in EBITA margin, attests to the robustness of our business model . Moreover, we have proactively renegotiated the covenant to our Senior Credit Agreement which improves our financial flexibility over the medium term and will allow us to enhance our business while consolidating our market share through the current economic downturn . The unanimous support of our lenders demonstrates their endorsement of Rexel s strategy and strong fundamentals . Through further efforts to seize market opportunities, cut costs and reduce debt, Rexel will deliver resilient performance in the second half and continue to leverage its leadership position . "First Half 2009 Financial Review(Unless otherwise stated, all comments are on a constant and adjusted basisand, for sales, at same number of working days)Sales continued to be impacted by tough economic environment across all marketsRexel recorded sales of E5,608 . 9 million, down 6 . 4% on a reported basis . Sales included E832 . 0 million from acquisitions net of divestitures (mainly Hagemeyer impact on Q1) and a positive currency impact of E111 . 8 million . On a constant basis and same number of working days, sales were down 17 . 9% compared with the first half 2008, of which about 4 percentage points are due to the drop in copper-based cables prices . At constant copper price, sales would have decreased by 13 . 7% . The 20 . 2% drop in organic sales in the second quarter, following a 15 . 4% decrease in the first quarter, reflected continued weakness in all end-markets and branch network streamlining (224 branches closed over the last 12 months) . However, in the second quarter, the sales decline stopped worsening month-after-month, contrarily to the first quarter . The 20 . 2% reduction in the second quarter included about 4 percentage points due to lower copper-based cables prices; at constant copper price, sales would have diminished by 16 . 1% . Europe (58% of sales): first half sales were up 0 . 7% on a reported basis and down 14 . 3% on a constant and same-day basis . Nonetheless, Rexel continued to gain share in its major markets . Most countries posted a double-digit decrease in sales, with the exception of France (-8 . 3%) which was more resilient with growth in climate control and security products and with governmental and institutional customers which were helped by good progress in public to private partnerships . Belgium, Austria and Switzerland also posted single digit decrease . In the United-Kingdom (-15 . 4%), sales to institutional customers such as hospitals, education and defence customers continued to suffer from projects on hold . The performance in Germany (-11 . 4% in the first half) reflects the level of activity in the industrial end-market which was particularly weak in the automotive, chemical and engineering sectors but the improvement in the second quarter (-7 . 7%) was supported by sales of solar panels . North America (31% of sales): first half sales were down 19 . 2% on a reported basis, with a positive net currency effect, and down 25 . 9% on a constant and same-day basis . Specific initiatives undertaken by Rexel in niche markets such as infrastructure projects helped mitigate the effect of the economic downturn . The performance in the United States (-30 . 2%) reflects the continued deterioration of both commercial and industrial end-markets . Despite the impact of lower manufacturing production, notably in Ontario and British Columbia, Canada was more resilient (-7 . 8%) thanks to strong energy projects-related business although oil-sands and related projects in Alberta slowed down . Asia-Pacific (7% of sales): first half sales were down 6 . 5% on a constant and same-day basis . In Australia (which represents two thirds of the region sales), despite a decline in residential and commercial end-markets, growth with industrial key accounts and large national contractors led to continued market share gain . In China, organic growth of 9 . 5% was supported by the strong performance of Xidian . Other (4% of sales): first half sales were down 17 . 4% on a constant and same-day basis . Quarter-on-quarter improvement in EBITA margin; half-year drop contained to 190 bps through strong measuresEBITA[2] margin improved from 3 . 0% in the first quarter to 3 . 6% in the second quarter . In the first half, it was 3 . 3% compared to 5 . 2% in the same period last year; the margin drop was limited due to:A 40bps gross margin improvement, driven by strong improvement in Europe due to better purchasing terms and a favourable product and country mix . A 10% reduction in distribution and administrative expenses, reflecting further acceleration of cost-cutting actions in order to adjust the cost base to current market trends . The E126 million reduction achieved year-to-date is significantly ahead of the E170 million full-year objective . Synergies from the integration of Hagemeyer are in line with objectives (E30 million in 2009 and E50 million from 2011) . Net income impacted by restructuring expensesNet income[3] was E17 . 9 million compared with E258 . 7 million in the first half 2008, which included E114 . 8 million of capital gains:Other income and expenses amounted to a net charge of E77 . 8 million mainly due to E53 . 0 million of restructuring costs and E12 . 6 million of goodwill impairment (Slovakia and Finland) . Net financial expenses of E74 . 7 million benefited from lower interest rates with an effective rate of 4 . 6% in the period . Recurring net income amounted to E68 . 1 million compared with E171 . 2 million in the first half 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 10 . 6% to E396 . 3 million, reflecting:A E238 . 0 million cash inflow related to a reduction in working capital (vs . a cash outflow of E22 . 0 million in the first half 2008);Selectivity in capital expenditure which were contained at E19 . 9 million . After E59 . 5 million of net interest paid and E43 . 9 million of income tax paid, free cash flow rose by 33 . 6% compared with the first half 2008, at E292 . 9 million . Net debt reduced by E224 millionNet debt was reduced to E2,708 million on June 30, 2009, compared with E2,932 million on December 31, 2008 . Financial investments during the period amounted to E33 . 2 million, including E4 . 7 million for the acquisition of 63 . 5% of the capital of Xidian in China and E27 . 2 million for the buy-out of Hagemeyer minority interests . As of June 30, 2009, the Group s liquidity amounted to E1 . 2 billion including E613 million of cash net of overdrafts and E585 million of undrawn revolver credit . Rexel s liquidity therefore exceeds the E858 million mandatory senior debt repayments through the end of 2011 . Amendment to Senior Credit AgreementOn July 30, Rexel agreed with its lenders to amend certain terms and conditions of the Senior Credit Agreement (see - 7 . 2 . 1 on pages 84 sqq . of the 2008 Document de Référence available on the Group s web site: www . rexel . com) . Lenders have unanimously supported the amendment . Improved financial flexibility and preserved liquidityThe amendment improves Rexel s financial flexibility over the medium term through a revision of the covenant and preserves its strong liquidity by maintaining the undrawn revolver facility of E585 million (Facility B) . The Indebtedness Ratio threshold (adjusted consolidated net debt to adjusted consolidated EBITDA) is reset in order to give Rexel the necessary headroom to operate its business in a challenging environment . In return, Rexel has repaid in July E210 million out of the E2,315 million drawn at the end of June and is committed to:Suspending dividend payments in 2010 and as long as the Indebtedness Ratio equals or exceeds 4 . 0x;- Limiting capital expenditure to 0 . 75% of sales as long as the Indebtedness Ratio equals or exceeds 4 . 0x . In line with market practices, the amendment includes:An uplift of the interest margin applicable to amounts drawn under the Senior Credit Agreement ranging from 125bps to 200 bps, depending on the level of the Indebtedness RatioThe payment of a one-off consent fee of 75 bps (about E20 million) . The new Indebtedness Ratio and margin applicable grids, as well as other main terms of the amendment, are detailed in Appendix 5 . OutlookIn the context of a tough economic environment, Rexel s management continues to take all necessary measures in order to protect the Group s profitability and improve its financial flexibility . The acceleration of cost adjustment leads Rexel to raise its 2009 savings goal from E170 million to E210 million . With an improved cost base and greater financial flexibility, Rexel is in a good position to further implement its three-pronged strategy of seizing market opportunities, defending margins and deleveraging its balance sheet . Financial informationRexel announced that its interim financial report for the period ended June 30, 2009 is available to the public and has been filed with the French Autorité des Marchés Financiers . The interim financial report is available on the Internet site of Rexel (www . rexel . com) in the "Regulated information" section . A slideshow of the first half 2009 results is also available on the Company s website at www . rexel . com . Financial calendarNovember 12, 2009 : Third quarter 2009 results announcementFor 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 | | Fineo | Brunswick | | Jean-Michel Koster | Thomas Kamm | | Tel +33 1 56 33 32 38 | Tel +33 1 53 96 83 92 | | koster@fineo . com | 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 E6 . 7 million in Q2 09 and of E7 . 0 million in Q2 08 and a profit of E4 . 1 million in H1 2009 and of E1 . 6 million in H1 2008Group | Constant and adjusted basis (Em) | | Q2 08 | Q2 09 | Change | H1 08 | H1 09 | Change | | | | | | | | | | | Sales | | 3 585,5 | 2 799,1 | -21,9% | 6 936,0 | 5 608,9 | -19,1% | | | on a constant basis and same days | | | -20,2% | | | -17,9% | | Gross profit | | 855,1 | 678,3 | -20,7% | 1 672,0 | 1 372,2 | -17,9% | | | as a % of sales | 23,8% | 24,2% | +40 bps | 24,1% | 24,5% | +40 bps | | Distribution & adm . expenses (incl . depreciation) | | (659,3) | (578,7) | -12,2% | (1 313,9) | (1 187,7) | -9,6% | | EBITA (1) | | 195,8 | 99,6 | -49,1% | 358,1 | 184,5 | -48,5% | | | as a % of sales | 5,5% | 3,6% | -190 bps | 5,2% | 3,3% | -190 bps | | Headcount (end of period) | | 34 623 | 30 367 | -12,3% | 34 623 | 30 367 | -12,3% |
(1) Operating income before other income & other expenses and amortization of purchase price allocationEurope | Constant and adjusted basis (Em) | | | Q2 08 | Q2 09 | Change | H1 08 | H1 09 | Change | | | | | | | | | | | | Sales | | | 1 994,8 | 1 626,5 | -18,5% | 3 887,6 | 3 272,6 | -15,8% | | | | on a constant basis and same days | | | -15,7% | | | -14,3% | | o/w | France | | 629,6 | 544,7 | -13,5% | 1 247,0 | 1 116,6 | -10,5% | | | | on a constant basis and same days | | | -10,6% | | | -8,3% | | | United Kingdom | | 273,1 | 217,7 | -20,3% | 536,3 | 449,9 | -16,1% | | | | on a constant basis and same days | | | -17,7% | | | -15,4% | | | Germany | | 214,4 | 186,4 | -13,1% | 415,2 | 358,0 | -13,8% | | | | on a constant basis and same days | | | -7,7% | | | -11,4% | | | Scandinavia | | 226,7 | 182,8 | -19,4% | 433,2 | 366,9 | -15,3% | | | | on a constant basis and same days | | | -15,6% | | | -13,7% | | Gross profit | | | 496,7 | 415,8 | -16,3% | 978,2 | 845,5 | -13,6% | | | as a % of sales | | 24,9% | 25,6% | +70 bps | 25,2% | 25,8% | +60 bps | | Distribution & adm . expenses (incl . depreciation) | | | (387,3) | (352,2) | -9,1% | (771,4) | (720,1) | -6,6% | | EBITA | | | 109,3 | 63,6 | -41,9% | 206,8 | 125,4 | -39,4% | | | as a % of sales | | 5,5% | 3,9% | -160 bps | 5,3% | 3,8% | -150 bps | | Headcount (end of period) | | | 20 756 | 18 258 | -12,0% | 20 756 | 18 258 | -12,0% |
North America | Constant and adjusted basis (Em) | | | Q2 08 | Q2 09 | Change | H1 08 | H1 09 | Change | | | | | | | | | | | | Sales | | | 1 208,3 | 844,3 | -30,1% | 2 367,4 | 1 730,4 | -26,9% | | | | on a constant basis and same days | | | -29,9% | | | -25,9% | | o/w | United States | | 961,3 | 627,8 | -34,7% | 1 907,3 | 1 309,6 | -31,3% | | | | on a constant basis and same days | | | -34,7% | | | -30,2% | | | Canada | | 247,0 | 216,6 | -12,3% | 460,0 | 420,7 | -8,5% | | | | on a constant basis and same days | | | -11,0% | | | -7,8% | | Gross profit | | | 262,3 | 182,1 | -30,6% | 518,3 | 373,2 | -28,0% | | | as a % of sales | | 21,7% | 21,6% | -10 bps | 21,9% | 21,6% | -30 bps | | Distribution & adm . expenses (incl . depreciation) | | | (195,6) | (158,4) | -19,0% | (399,7) | (336,5) | -15,8% | | EBITA | | | 66,7 | 23,6 | -64,5% | 118,5 | 36,7 | -69,0% | | | as a % of sales | | 5,5% | 2,8% | -270 bps | 5,0% | 2,1% | -290 bps | | Headcount (end of period) | | | 9 403 | 7 949 | -15,5% | 9 403 | 7 949 | -15,5% |
Asia-Pacific | Constant and adjusted basis (Em) | | | Q2 08 | Q2 09 | Change | H1 08 | H1 09 | Change | | | | | | | | | | | | Sales | | | 244,3 | 219,3 | -10,2% | 429,2 | 399,4 | -7,0% | | | | on a constant basis and same days | | | -8,5% | | | -6,5% | | o/w | Australia | | 158,5 | 135,3 | -14,6% | 277,8 | 251,6 | -9,4% | | | | on a constant basis and same days | | | -12,4% | | | -8,8% | | | New-Zealand | | 32,1 | 28,6 | -11,1% | 56,5 | 52,0 | -7,9% | | | | on a constant basis and same days | | | -9,9% | | | -7,9% | | | Asia | | 53,7 | 55,4 | +3,2% | 94,9 | 95,8 | +0,9% | | | | on a constant basis and same days | | | +3,4% | | | +0,9% | | Gross profit | | | 56,7 | 47,8 | -15,7% | 101,5 | 90,2 | -11,2% | | | as a % of sales | | 23,2% | 21,8% | -140 bps | 23,6% | 22,6% | -100 bps | | Distribution & adm . expenses (incl . depreciation) | | | (38,2) | (35,4) | -7,3% | (71,3) | (68,6) | -3,8% | | EBITA | | | 18,5 | 12,4 | -33,1% |
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