H1 2018: GOOD
LEVEL OF SALES AND CASHFLOW GENERATION
-
1.2% organic growth[1] in Q2 2018
sales
-
H1 2018 sales down -0.4% on an
organic basis[2]
-
H1 2018 current EBIT margin
down at 17.2% [3]of
sales
-
18.1% growth in net
attributable income to €60 million in H1 2018
-
H1 2018 cashflow after CAPEX of
€55 million
-
Indications for full-year 2018
updated
Paris, September 25, 2018
Neopost, a global leader in
digital communications, shipping and mail solutions, today
announced its results for first-half 2018 (period ended July 31,
2018) and second-quarter sales. These financial statements were
reviewed and approved by the Board of Directors at its meeting on
Monday, September 24, 2018.
Geoffrey Godet, Chief Executive
Officer of Neopost, commented: "We delivered good organic growth in the second quarter,
owing to an improved performance from our Enterprise Digital
Solutions division, robust growth in rental revenue from our
automated parcel lockers in Japan, and stable revenues for Mail
Solutions in North America.
We therefore ended the first six months of the year with
sales ahead of expectations. In addition, our continued efforts in
developing the Shipping division weighed on our current EBIT
margin. We are thus updating our indications for 2018. We now
have a slightly better outlook in terms of annual sales, while our
expected operating margin has been lowered.
Neopost's financials are
sound and we continue to generate high cashflow."
INCOME STATEMENT
€ million |
H1 2018 |
H1
2017 |
Change |
Sales |
528 |
559 |
-5.6% |
Current operating income before acquisition-related
expenses |
91 |
101 |
-10.2% |
% of sales |
17.2% |
18.0% |
|
Current
operating income |
85 |
95 |
-10.1% |
Net attributable income |
60 |
51 |
+18.1% |
% of sales |
11.4% |
9.1% |
|
Earnings
per share[4] |
1.61 |
1.34 |
+20.1% |
Diluted
earnings per share |
1.50 |
1.27 |
+18.1% |
In H1 2018, the Group achieved
sales of €528 million, down -5.6% year-on-year, and down -0.8%
excluding currency effects, representing an organic decline of
-0.4%.
The Group generated €279 million
in sales in the second quarter of 2018, up 1.2% on an organic
basis. The Group's return to positive growth is due to the
combination of a better performance by the Enterprise Digital
Solutions division, sustained growth in sales by Neopost Shipping
and a slower pace of decline in sales by SME Solutions.
Current operating income, before
acquisition-related expenses, was €91 million in H1 2018. EBIT
margin before acquisition-related expenses stood at 17.2% of sales,
versus 18.0% in first-half 2017.
Net attributable income was €60
million in first-half 2018, up from €51 million one year earlier.
The Group's net margin[5] climbed to
11.4% of sales, from 9.1% in the same period in 2017. Cashflow net
of CAPEX totaled €55 million, from €61 million in H1 2017.
SALES BY DIVISION
€ million |
H1 2018 |
H1
2017 |
Change |
Change at
constant exchange rates |
Organic
change1 |
Enterprise Digital Solutions (EDS) |
69 |
69 |
-0.4% |
+4.7% |
+7.4% |
Neopost Shipping |
31 |
27 |
+15.6% |
+21.5% |
+21.5% |
SME Solutions |
439 |
473 |
-7.2% |
-2.5% |
-2.5% |
Eliminations |
(11) |
(10) |
- |
- |
- |
Total |
528 |
559 |
-5.6% |
-0.8% |
-0.4% |
Enterprise Digital Solutions
(EDS)
Enterprise
Digital Solutions sales rose 4.7%, excluding currency effects,
in first-half 2018. Restated for the scope effects related to the
disposal of DMTI Spatial, sales grew 7.4% on an organic basis.
This growth is above Group
expectations. Sales in Customer Communications Management grew
10.2% as maintenance and service revenues increased, while the
decline in license sales on prior-period high base of comparison
(especially Q2) was less sharp than expected.
In line with expectations, organic
growth in Data Quality activities was down -2.5%.
Neopost Shipping
Neopost
Shipping sales in the first half increased 21.5%, excluding
currency effects, mainly due to robust growth in the installed base
of Packcity automated parcel lockers in Japan. The installed base
reached 3,100 units at end-July 2018, from 2,200 units at
end-January 2018 and 600 units at end-July 2017. Today,
approximately one hundred parcel lockers are installed a month.
The number of new CVP-500
automated packing systems placed in the first half of the year was
the same as in H1 2017.
Software solutions sales declined
-6.2%, excluding currency effects.
SME Solutions
SME Solutions
sales were down -2.5% in H1 2018 at constant exchange rates.
Mail Solutions sales decreased
-3.9%, excluding currency effects. The pace of decline slowed in
the second quarter (-2.8%), from the first quarter (-5.0%),
reflecting the good level of performance recorded in North
America.
Communication & Shipping
Solutions sales by the SME Solutions divisions rose 6.0%, excluding
currency effects. This growth resulted from a 21.5% (excluding
currency effects) increase in digital communications and shipping
solutions sales, partially offset by the persistent decline in
graphic activities - down -12.0%, excluding currency effects.
Breakdown of sales by activity
and revenue type
Sales by activity
€ million |
H1 2018 |
H1
2017 |
Change |
Change at constant exchange rates |
Organic change1 |
Mail solutions |
372 |
407 |
-8.5% |
-3.9% |
-3.9% |
Communication & Shipping
Solutions[6] |
156 |
152 |
+2.3% |
+7.6% |
+8.9% |
Total |
528 |
559 |
-5.6% |
-0.8% |
-0.4% |
Combined, the Group's Communication & Shipping Solutions6
activities today account for 29.5% of total Group sales versus
27.3% at July 31, 2017.
Sales by revenue type
€ million |
H1 2018 |
H1
2017 |
Change |
Change at constant exchange rates |
Organic change1 |
Equipment and license sales |
155 |
177 |
-12.7% |
-7.9% |
-7.5% |
Recurring revenue |
373 |
382 |
-2.3% |
+2.6% |
+2.8% |
Total |
528 |
559 |
-5.6% |
-0.8% |
-0.4% |
Revenue from equipment and license sales was lower by -7.5% on an
organic basis, reflecting the structural decline in the Mail
Solutions business, the slowdown in graphic activities and the fall
in license sales by the EDS division.
Recurring
revenue was up 2.8% on an organic basis, owing to the increase
in software maintenance and service revenue and to rental revenue
from automated parcel lockers. Recurring revenue continues to
increase as a share of Group sales, accounting for 70.7% of the
total.
LOWER CURRENT OPERATING
MARGIN
EBIT margin by segment
H1 2018 |
|
H1
2017 |
€ million |
EDS |
Neopost
Shipping |
SME
Solutions |
Innovation[7] |
Total |
|
EDS |
Neopost
Shipping |
SME
Solutions |
Innovation7 |
Total |
Sales |
69 |
31 |
439 |
0 |
528[8] |
|
69 |
27 |
473 |
0 |
5598 |
Current operating income3 |
7 |
(11) |
96 |
(1) |
91 |
|
9 |
(7) |
103 |
(4) |
101 |
Current operating margin3 |
10.1% |
(35.7)% |
21.9% |
n/a |
17.2% |
|
12.4% |
(25.9)% |
21.8% |
n/a |
18.0% |
Enterprise
Digital Solutions had lower year-on-year license sales, which
narrowed its EBIT margin3 to 10.1% of
sales, from 12.4% in the same period in 2017.
Neopost
Shipping's EBIT margin3 reached
-35.7% of sales, versus -25.9% one year earlier. Fall in the margin
is owing to a decline in sales of software solutions and continued
efforts to market and develop new software solutions, CVP packing
systems and automated parcel lockers.
The SME
Solutions division maintained its EBIT margin3 the
same as last year at 21.9% of sales, as it continued to keep
operating costs under control.
Outside the three operating
divisions, expenditure on innovation in the
first half was for new projects to develop mobile and cloud
applications. In H1 2017, these expenses concerned the development
of digital apps for small businesses to use on a web distribution
platform, a project in part transferred to the SME Solutions
division as of February 1, 2018.
Group current
operating income before acquisition-related expenses came out
at €91 million, from €101 million in H1 2017. The current EBIT
margin (before acquisition-related expenses) was 17.2% of sales,
versus 18.0% one year earlier.
Acquisition-related expenses
accounted for €6 million, unchanged from last year.
Current operating
income was €85 million in the first half of 2018, versus €95
million one year earlier.
ALMOST STABLE OPERATING
INCOME
The Group posted €3 million in
structural optimization expenses in H1 2018, €3 million lower than
the expense incurred in H1 2017.
Note that in the first-half 2017,
the Group had €6 million in non-recurring expenses related to
disposals, including DMTI, and the revised earn-out and goodwill on
Temando.
After factoring in these
non-current items, operating income ended at
€82 million at July 31, 2018, practically unchanged from €83
million one year earlier.
NET INCOME
The net cost of debt was down to
-€15 million from -€17 million in H1 2017. Debt refinancing in 2017
led to carrying charges and early redemption costs for the credit
lines that were redeemed.
The Group also posted exchange
gains in first-half 2018 for €1 million.
Net financial
loss therefore came to -€14 million in H1 2018, from -€17
million in the same period last year.
The Group's tax
rate was 12.5%, versus 26.6% in H1 2017, partially down to the
cut in the US tax rate and the recognition of interest on arrears
in relation to the cancellation of taxes on dividends[9] in France
in the amount of €5 million. Excluding non-recurring items, the tax
rate was 23% in first-half 2018, in line with Group
expectations.
Net attributable
income rose 18.1% to €60 million in the period, from €51
million in H1 2017, giving a net margin of 11.4%, up from 9.1% last
year. Diluted earnings per share4 were €1.50
vs. €1.27 in H1 2017.
STRONG CASHFLOW GENERATION
MAINTAINED
EBITDA[10] totaled
€130 million, from €142 million in first-half 2017.
The change in
working capital requirements (-€41 million) was more negative
than in the same period last year (-€25 million), mainly due to a
time lag between the payment and the collection of approximately
€10 million in VAT related to intra-Group transactions. The payment
took place in first-half 2018 but this difference will be made up
in the second half of 2018 and will not impact full-year 2018. The
change in working capital requirements also reflects an increase in
inventory and a decrease in trade accounts payable.
Leasing
receivables decreased by €29 million, reflecting a 4.0%
contraction in the Group's leasing portfolio, excluding currency
effects. In comparison, leasing receivables decreased by €26
million in first-half 2017. Leasing and other financing services
receivables amounted to €702 million at July 31, 2018, from €711
million at January 31, 2018.
The Group paid €17 million in
interest and taxes versus €33 million one year
earlier. The difference was due to the €13 million received in
French dividend tax repayment and interest on arrears during the
first half.
Investments in
property, plant and equipment and intangible fixed assets came
to €40 million in the period, from €44 million in H1 2017.
Factoring a subsidy of €5 million received from the Japanese
government during the first half of 2018 for the rollout of
Packcity lockers, the Group's investment spend was almost stable
year-on-year.
Total cashflow
net of CAPEX added up to €55 million, versus €61 million one
year earlier.
The Group continued to deleverage,
and net debt was again reduced to €653 million
at July 31, 2018, from €675 million at January 31, 2018. The net
debt/EBITDA ratio was unchanged from H1 2017 at 2.4. Net debt
is fully backed by future cashflows expected from the Group's
rental and leasing activities.
Equity stood
at €1,218 million at July 31, 2018, from €1,169 million at January
31, 2018. As such, gearing came out at 54% of shareholders' equity
versus 58% at January 31, 2018.
UPDATED 2018
INDICATIONS
Given the first-half 2018
performance, the Group outlook for sales evolution has improved
slightly for full-year 2018. However, Neopost continues to expect
an organic decline in annual sales, broken down as:
-
Enterprise Digital Solutions: top line now
expected at high-single-digit growth from low-single-digit growth
previously
-
Neopost Shipping:
double-digit growth confirmed well below H1 2018 performance;
-
SME Solutions: continued slowdown in Mail
Solutions at a pace that, based on trends from previous fiscal
years, is still expected between -4% to -6%; double-digit growth in
Digital communication & Shipping solutions but at a slower pace
than in H1; further decline expected in graphic activities.
Group current
EBIT margin is now expected at above 17% for full-year 2018,
from about 18% previously. This new indication is primarily driven
by the EBIT margin for the Neopost Shipping division, which is
expected to remain around H1 performance. EBIT margin for the
Enterprise Digital Solutions is expected to increase versus H1 and
SME Solutions' EBIT margin to achieve a similar performance to H1.
Neopost also expects increased efforts in innovation related to new
projects, which are not factored into operating profitability for
the three divisions.
The Group will continue to
generate high operating cashflow. Attention is
drawn to:
-
The reimbursement of the French tax on dividends
plus interest in the amount of €13 million in H1 2018 was a one-off
item;
-
The time lag issue related to intra-Group VAT
transactions that led to a payment of some €10 million in the first
half of 2018 has led, in turn, to the collection of the same amount
in August 2018.
Webcast of meeting
The
Neopost meeting on Wednesday, September 26,
2018, in Paris will be webcast simultaneously at 09:00 Paris
time and 08.00 London. The meeting will be held in English and the
webcast will be available here: http://www.neopost-group.com/. The recording will be
available for one year.
Calendar
Q3 2018 sales will be published on
December 3, 2018 after market close. An investor meeting will be
held in Paris on January 23, 2019 to present our new strategy.
ABOUT NEOPOST
NEOPOST is a global leader in digital
communications, logistics and mail solutions. Its mission is to
help companies improve the way they manage interactions with their
clients and partners. Neopost provides the most advanced solutions
for physical mail processing (mailing and folder-inserter systems),
digital communication management (Customer Communications
Management and Data Quality applications), and supply chain and
e-commerce process optimization (from point of sale to delivery,
including associated tracking services).
With a direct presence in 29 countries and more than 5,800
employees, Neopost reported annual sales of €1.1 billion in 2017.
Its products and services are sold in more than 90 countries.
Neopost is listed in compartment A of Euronext Paris and belongs to
the SBF 120 index. |
For more information, please
contact:
Gaële Le Men, Neopost |
DDB Financial |
Financial
and Corporate Communications Director |
Isabelle Laurent / Fabrice Baron |
+33 (0)1
45 36 31 39 |
+33 (0)1
53 32 61 51 /+33 (0)1 53 32 61 27 |
g.le-men@neopost.com /
financial-communication@neopost.com |
isabelle.laurent@ddbfinancial.fr /
fabrice.baron@ddbfinancial.fr |
Or visit our website:
www.neopost-group.com
Follow us on: Linkedin @Neopost - Twitter
@NeopostGroup - Instagram @neopostgroup
APPENDICES
Glossary
-
Enterprise Digital Solutions
(EDS): division offering Customer Communications Management and
Data Quality solutions for large companies. This division includes
GMC Software, Human Inference, and Satori, now grouped under
Quadient, and icon Systemhaus.
-
Neopost Shipping: division offering management solutions for shipping
and delivery; tracking of goods and merchandise for players in
e-commerce, distribution and carriers. This division includes
ProShip and Temando.
-
SME Solutions: division
offering Mail Solutions products and services for small and
mid-sized enterprises, the Group's long-standing customers. This
division also delivers digital, shipping and graphic solutions for
the same customer base.
-
Mail Solutions: mailing
systems, document management systems (folder/inserters for office
and mailroom; other mail room equipment) and related
services.
-
Communication & Shipping
Solutions: digital solutions software
(customer communications management and data quality software),
shipping and graphic solutions.
Q2 2018 sales by division
€ million |
Q2 2018 |
Q2
2017 |
Change |
Change at
constant exchange rates |
Organic
change2 |
EDS |
38 |
37 |
+3.4% |
+6.1% |
+8.1% |
Neopost Shipping |
18 |
15 |
+17.9% |
+21.8% |
+21.8% |
SME Solutions |
229 |
236 |
-3.1% |
-0.7% |
-0.7% |
Eliminations |
(6) |
(5) |
- |
- |
- |
Total |
279 |
283 |
-1.6% |
+1.0% |
+1.2% |
Q2 2018 sales by business
€ million |
Q2 2018 |
Q2
2017 |
Change |
Change at
constant exchange rates |
Organic
change2 |
|
Mail solutions |
192 |
202 |
-5.0% |
-2.8% |
-2.8% |
|
Communication & Shipping
Solutions |
87 |
81 |
+7.0% |
+10.2% |
+11.2% |
|
Total |
279 |
283 |
-1.6% |
+1.0% |
+1.2% |
|
Q2 2018 sales by revenue
type
€ million |
Q2 2018 |
Q2
2017 |
Change |
Change at
constant exchange rates |
Organic
change2 |
|
Equipment and license sales |
86 |
95 |
-9.8% |
-7,1% |
-6.7% |
|
Recurring revenue |
193 |
188 |
+2.6% |
+5.0% |
+5.2% |
|
Total |
279 |
283 |
-1.6% |
+1.0% |
+1.2% |
|
Sales by region: Q2 2018 and H1
2018
€ million |
Q2 2018 |
Q2
2017 |
Change |
Change at
constant exchange rates |
Organic
change2 |
|
H1 2018 |
H1
2017 |
Change |
Change at
constant exchange rates |
Organic
change1 |
North America |
122 |
125 |
-2.0% |
+2.2% |
+2.8% |
|
231 |
252 |
-8.2% |
+0.3% |
+1.1% |
Europe |
135 |
135 |
-0.2% |
+0.4% |
+0.4% |
|
256 |
263 |
-2.7% |
-1.8% |
-1.8% |
Asia-Pacific and others |
22 |
23 |
-6.9% |
-2.5% |
-2.5% |
|
41 |
44 |
-7.6% |
-0.5% |
-0.5% |
Total |
279 |
283 |
-1.6% |
+1.0% |
+1.2% |
|
528 |
559 |
-5.6% |
-0.8% |
-0.4% |
First-half 2018
Consolidated income
statement
€ million |
H1 2018
(period ended on
July 31, 2018) |
H1 2017
(period ended on July 31, 2017) |
FY 2017
(period ended on January 31, 2018) |
|
|
% |
|
% |
|
% |
Sales |
528 |
100.0 % |
559 |
100.0% |
1,112 |
100.0% |
Cost of sales |
(128) |
(24.3)% |
(138) |
(24.7)% |
(280) |
(25.1)% |
Gross margin |
400 |
75.7% |
421 |
75.3% |
832 |
74.9% |
R&D expenses |
(28) |
(5.3)% |
(28) |
(4.9)% |
(57) |
(5.1)% |
Sales expenses |
(132) |
(25.1)% |
(139) |
(25.0)% |
(280) |
(25.1)% |
Administrative and general expenses |
(97) |
(18.3)% |
(100) |
(17.9)% |
(195) |
(17.6)% |
Maintenance and other expenses |
(52) |
(9.8)% |
(52) |
(9.3)% |
(100) |
(9.0)% |
Employee profit-sharing and share-based payments |
(0) |
(0.0)% |
(1) |
(0.2)% |
1 |
(0.0)% |
Current operating income before
acquisition-related expenses |
91 |
17.2% |
101 |
18.0% |
202 |
18.2% |
Acquisition-related expenses |
(6) |
(1.0)% |
(6) |
(1.0)% |
(11) |
(1.0)% |
Current operating income |
85 |
16.2% |
95 |
17.0% |
191 |
17.2% |
Gains/(losses) on disposals and others |
- |
- |
- |
- |
0 |
0.0% |
Structure optimization expenses |
(3) |
(0.6)% |
(6) |
(1.1)% |
(13) |
(1.2)% |
Other operating expenses |
(0) |
(0.0)% |
(6) |
(1.1)% |
(12) |
(1.0)% |
Operating income |
82 |
15.6% |
83 |
14.8% |
166 |
15.0% |
Financial income/(expense) |
(14) |
(2.8)% |
(17) |
(3.0)% |
(34) |
(3.1)% |
Income before taxes |
68 |
12.8% |
66 |
11.8% |
132 |
11.9% |
Income taxes |
(9) |
(1.6)% |
(17) |
(3.1)% |
(1) |
(0.1)% |
Share of results of associated companies |
1 |
0.2% |
0 |
- |
2 |
0.1% |
Net income |
60 |
11.4% |
49 |
8.7% |
133 |
11.9% |
Minority interests |
0 |
0.0% |
2 |
0.4% |
1 |
0.1% |
Net attributable income |
60 |
11.4% |
51 |
9.1% |
134 |
12.0% |
First-half 2018
Simplified consolidated balance
sheet
Assets
€ million |
July 31,
2018 |
July 31,
2017 |
|
January
31, 2018 |
Goodwill |
1,076 |
1,065 |
|
1,062 |
Intangible fixed assets |
186 |
205 |
|
191 |
Tangible fixed assets |
139 |
128 |
|
136 |
Other non-current financial assets |
73 |
55 |
|
60 |
Leasing receivables |
702 |
733 |
|
711 |
Other non-current receivables |
4 |
2 |
|
4 |
Deferred tax assets |
5 |
23 |
|
5 |
Inventories |
72 |
73 |
|
66 |
Receivables |
205 |
230 |
|
243 |
Other current assets |
100 |
95 |
|
102 |
Current financial instruments |
2 |
3 |
|
10 |
Cash and cash equivalents |
198 |
169 |
|
193 |
TOTAL ASSETS |
2,762 |
2,781 |
|
2,783 |
Liabilities
€ million |
July 31,
2018 |
July 31,
2017 |
|
January
31, 2018 |
Shareholders' equity |
1,218 |
1,136 |
|
1,169 |
Long-term provisions |
28 |
32 |
|
28 |
Non-current financial debt |
816 |
868 |
|
846 |
Other non-current liabilities |
13 |
18 |
|
14 |
Current financial debt |
35 |
16 |
|
22 |
Deferred tax liabilities |
158 |
190 |
|
156 |
Non-current financial instruments |
0 |
0 |
|
0 |
Deferred income |
179 |
186 |
|
201 |
Current financial instruments |
0 |
0 |
|
0 |
Other current liabilities |
315 |
335 |
|
347 |
TOTAL LIABILITIES |
2,762 |
2,781 |
|
2,783 |
First-half 2018
Simplified cashflow
statement
€ million |
H1 2018
(period ended on July 31, 2018) |
H1 2017
(period ended on July 31, 2017) |
EBITDA |
130 |
142 |
Other elements |
(6) |
(5) |
Cashflow before net cost of debt and income
tax |
124 |
137 |
Change in the working capital requirement |
(41) |
(25) |
Net change in leasing receivables |
29 |
26 |
Cashflow from operating activities |
112 |
138 |
Interest and tax paid |
(17) |
(33) |
Net cashflow from operating
activities |
95 |
105 |
Capital expenditures |
(40) |
(44) |
Net cashflow from investing
activities |
55 |
61 |
Acquisition of shares and granting of loans |
(2) |
(1) |
Disposals of assets and other |
1 |
2 |
Net cashflow after acquisitions and
disposals |
54 |
62 |
Capital increase |
- |
- |
Dividends paid |
(28) |
(28) |
Change in debt and other |
(34) |
52 |
Net cashflow from financing
activities |
(62) |
24 |
Cumulative translation adjustments on cash |
14 |
(10) |
Change in net cash position |
6 |
76 |
1
Second-quarter 2018 sales are compared at constant exchange rates
with sales for the same period in 2017, minus €0.7 million for the
disposal of DMTI (two months and one week).
[2] First-half
2018 sales are compared at constant exchange rates with sales for
the same period in 2017, minus €1.8 million for the disposal of
DMTI (five months and one week).
[3] Excluding
acquisition-related expenses.
4 Net income
per share is calculated after deducting dividends paid to ODIRNANE
bondholders.
[5] Net margin
= Net attributable income/sales.
[6] Including
graphic activities
[7] Innovation
relates to expenditure to develop a web platform and dedicated SaaS
apps for small sized companies in 2017 and the project to develop
mobile and cloud apps in 2018.
[8] After
elimination for intercompany sales for €11 million in H1 2018 and
€10 million in H1 2017.
[9] The
dividend tax repayment was booked to the income statement in FY
2017, but not the interest on arrears. The amounts in repayment of
tax and interests were received in H1 2018.
[10] EBITDA =
current operating income + provisions for depreciation of tangible
and intangible fixed assets
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responsible for the content, accuracy and originality of the
information contained therein.
Source: NEOPOST via Globenewswire