Q3 2017
results:
Strong organic growth at 6.1%
Adjusted EBITDA penalized by
adverse raw materials and currencies
Paris, October 24, 2017
Highlights
- Net sales up 3.7% year-on-year
at €824m, including organic growth of 6.1%(1)
- Very strong organic growth in
CIS, APAC & Latin America (+15.5%)(1) and Sports (+13.6%)(1)
- EMEA (+2.9%)(1) remained well oriented
- North America (-4.2%)(1) lower than expected, mainly due to commercial
carpet
- Adjusted EBITDA(2) of €101m (vs. €119m in Q3 2016) and adjusted EBITDA margin
at 12.3% (vs. 15.0% in Q3 2016) penalized
by adverse raw material prices and currencies
(1) Organic growth: at constant
scope of consolidation and exchange rates (note that in the CIS
segment, price increases implemented to offset currency
fluctuations are not included in organic growth, which only
reflects changes in volumes and the product mix). See the
definition of alternative performance indicators at the end of this
press release.
(2) Adjusted EBITDA: adjustments include expenses relating to
restructuring, acquisitions and certain other non-recurring items.
See the definition of alternative performance indicators at the end
of this press release.
Net sales at
constant scope of consolidation and exchange rates moved up
6.1% in Q3 2017. The CIS, APAC & Latin
America segment demonstrated remarkable momentum (+15.5%) thanks to
vigorous trends in the three regions. The Sports segment also
posted a strong performance (+13.6%), fueled by both artificial
turf and running tracks. EMEA remained on a good trend with a
growth rate of 2.9% in line with H1 2017 when adjusted from the
negative calendar impact (around -1.5%). Only North America fell
short of expectations with sales retreating (-4.2%) on the back of
a weakening situation in commercial carpet.
Reported
sales were up 3.7% on Q3 2016. Exchange
rates accounted for a negative 2.5% impact, mainly due to the
depreciation of the US dollar and the British pound against the
euro and the net impact of selling prices and currencies in the CIS
("lag effect"). The acquisition of the assets of AlternaScapes, a
Florida-based landscape turf distributor and installer, had a minor
scope impact (+0.1%).
Adjusted
EBITDA was €101m versus €119m in Q3 2016
and adjusted EBITDA margin came in at
12.3% compared to 15.0% in Q3 2016. As
anticipated, raw material price increases had a significant adverse
impact of -€8m for the Group as a whole. The adjusted EBITDA has
also been penalized by the ruble's depreciation over the period,
leading to a net impact of currency and selling prices in the CIS
of -€5m. In addition, other currencies weighed negatively by
-€4m mostly owing to the weakening of the US dollar and the still
negative impact of the British pound.
Commenting on these results,
Glen Morrison, CEO, stated:
"The solid third
quarter confirmed the good trends in sales seen in the first-half
2017 in most of the segments, in particular in the CIS, APAC &
Latin America. The CIS countries continue to strengthen, EMEA and
Sports remained well oriented. In North America, revenues remain
patchy particularly in the commercial carpet. The raw material
prices are stabilizing, therefore the headwinds should
progressively ease."
Net sales
€
million |
Q3 2017 |
Q3 2016 |
% Change |
o/w
organic(1) |
EMEA |
227.2 |
222.9 |
+1.9% |
+2.9% |
North
America |
197.9 |
216.6 |
-8.6% |
-4.2% |
CIS, APAC
& LATAM |
178.0 |
157.7 |
+12.9% |
+15.5% |
Sports |
220.4 |
197.2 |
+11.8% |
+13.6% |
Total Group |
823.5 |
794.3 |
+3.7% |
+6.1% |
€
million |
9M 2017 |
9M 2016 |
% Change |
o/w
organic(1) |
EMEA |
708.5 |
694.5 |
+2.0% |
+3.8% |
North
America |
610.6 |
627.7 |
-2.7% |
-2.5% |
CIS, APAC
& LATAM |
453.7 |
392.6 |
+15.6% |
+10.5% |
Sports |
414.7 |
377.6 |
+9.8% |
+9.6% |
Total Group |
2,187.5 |
2,092.4 |
+4.5% |
+4.2% |
Adjusted EBITDA(2)
€
million |
Q3 2017 |
Q3 2016 |
% Change |
Adjusted
EBITDA
% of Net Sales |
101.1
12.3% |
119.2
15.0% |
-15.2%
-270bps |
€
million |
9M 2017 |
9M 2016 |
% Change |
Adjusted
EBITDA
% of Net Sales |
261.4
11.9% |
270.6
12.9% |
-3.4%
-100bps |
(1) Organic growth: at constant scope of consolidation and exchange
rates (note that in the CIS segment, price increases implemented to
offset currency fluctuations are not included in organic growth,
which only reflects changes in volumes and the product mix). See
the definition of alternative performance indicators at the end of
this press release.
(2) Adjusted EBITDA: adjustments include expenses relating to
restructuring, acquisitions and certain other non-recurring items.
See the definition of alternative performance indicators at the end
of this press release.
Comments by reporting
segment
Europe, Middle
East, Africa (EMEA)
Net sales at
constant scope of consolidation and exchange rates rose
2.9% in Q3 2017, despite a negative calendar
impact (estimated around -1.5%). Germany and Poland delivered
strong growth in Q3. The UK enjoyed better growth than expected.
France remained on the positive momentum initiated in H1 2017.
Spain continued to grow nicely, although the recent developments in
Catalonia create uncertainties for the rest of the year. After
several quarters of dynamic growth, the Nordic countries sales were
flat. The Middle East remained down, in line with H1 2017.
We are currently implementing
selling price increases and we anticipate them to bring full
benefit in 2018.
Sales advanced 1.9% on a reported basis, penalized by unfavorable
exchange rate fluctuations (mainly the British pound).
North
America
In North America, Q3 2017
sales declined -4.2% on
Q3 2016 at constant scope of consolidation and
exchange rates.
The resilient activity and the
accessories performed well in Q3 2017, thanks to efforts that have
been made over the last two years in terms of service, products and
operational performance.
Market indications point toward a
softer commercial carpet market. Our sales were lower than expected
and retreated over the quarter. The performance, however, varied by
region. We are taking actions which are designed to address these
specific issues and improve our competitive positioning. In
addition, over the last two years we have invested in product
development and launched a large range of new products constituting
a good basis of growth for the future. We are receiving very
positive feedback on our new designs.
We are beginning to see some
effects of the selling price increases that have been implemented.
We anticipate them to bring full benefit in 2018.
Reported
sales decreased by 8.6% on the back of the
depreciation of the US dollar against the euro over the
quarter.
CIS, APAC &
Latin America
Organic sales
growth in Q3 2017 was 15.5% (excluding
selling price changes in the CIS region). In the CIS countries, we
fully benefited from the recovery thanks to our solid positioning.
The strong growth was driven by a further expansion in volumes
along with continued improvement in product mix.
Sales in the Asia-Pacific region posted further growth, fueled by
nice trends in China, South-East Asia and Australia. Latin America
came back to growth despite the difficult environment in Brazil,
lifted by dynamic LVT (Luxury Vinyl Tile) volumes.
On a reported
basis, sales rose by 12.9%, due to the net
impact of the selling prices evolution and the Russian ruble that
has depreciated over the period.
In Russia, selling prices have
been reduced in Q2 prior to the peak season by 5% to 15% (compared
to November 2016 pre-promotional prices). Since then, the ruble
depreciated gradually resulting in a negative impact on the segment
adjusted EBITDA ("lag effect") of -€5m. Given the exchange rates'
evolution in the CIS, we are currently assessing the timing of a
price increase.
Sports
Sports posted a dynamic 13.6% organic growth in Q3 2017, led by both artificial
turf and running tracks. As seen in H1 2017, the proportion of
turnkey projects (including billings for subcontracted civil
engineering work) remained high in the third quarter. New
high-profile projects have been completed in Q3, including the Lay
& Play hybrid turf (PlayMaster®) at the
Amsterdam Arena for the FC Ajax, the Estadio San Mamés for Athletic
Bilbao and the Stade Matmut Atlantique for Girondins de Bordeaux.
Also, our high range stitched hybrid turf
(GrassMaster®) is now
installed on the training pitches of the Olympique Lyonnais and
Manchester United teams. In North America, Tarkett installed its
very innovative Beynon Rise-N-Run product (banked hydraulic track)
in the University of Michigan.
Reported
sales were up 11.8%, affected by the
depreciation of the US dollar against the euro.
French
Competition Authority Decision
The decision from the French
Competition Authority in relation to the inquiry towards several
resilient flooring manufacturers on the French market was made
public on October 19, 2017. The penalty amounts to €165m, which
slightly exceeds the provision booked by Tarkett in the first-half.
Tarkett is currently reviewing the decision. In the meantime the
Group will incur an additional charge of €15m in Q4. The payment of
the total amount of the fine will be effective before the end of
2017 or early 2018. This exceptional charge will lead to Tarkett
reporting a negative net income for 2017, but this will not result
in any changes in the 2020 strategic plan's financial targets or
impact its ability to meet its financial covenants.
Outlook
During the rest of the year, we anticipate moderate growth in EMEA
and a continuation of good trends in Sports. Following nine months
of strong improvement, the CIS region should continue to grow
albeit at a slower pace.
In North America, we are currently
putting in place actions to address the difficulties we have
encountered and improve our sale performance to ensure a better
positioning in 2018. However, we believe the fundamentals remain
sound.
We confirm that the higher raw
material prices will weigh on adjusted EBITDA by €30m to €35m for
the full year. Headwinds from raw materials should ease during
2018.
We will continue to focus on
selling prices in EMEA and North America to mitigate the impact of
raw materials prices in 2018. Given the exchange rates' evolution
in the CIS, we are currently assessing the timing of a price
increase.
At this stage, we anticipate a
moderate reduction in the 2017 adjusted EBITDA for the Group
compared to last year.
Tarkett confirms the financial
targets of the 2020 strategic plan, and given its solid balance
sheet, continues to assess acquisitions opportunities that create
value for its customers and its shareholders.
Changes in the Supervisory
Board
Following a meeting held on
October 24th, 2017,
Tarkett's Supervisory Board has decided or confirmed the
following:
-
Mr. Eric La Bonnardière has been appointed
Vice-Chairman of the Board, effective on July 26th,
2017. He replaces Mr. Jacques Garaïalde who will continue to
sit on the Supervisory Board as an independent member.
-
Ms. Françoise Leroy has been appointed Chairman
of the Nominations and Compensation Committee, for the term of her
current office as an Independent member. She replaces Mr. Gérard
Buffière who resigned as an independent member of the Supervisory
Board and Chairman of the Nominations and Compensation
Committee.
-
Ms. Sabine Roux de Bézieux has been appointed
member of the Nominations and Compensation Committee. Furthermore,
after due analysis by the Nominations and Compensation Committee,
the Board concluded that Ms. Roux de Bézieux meets the requirements
to be considered as an independent member.
Didier Deconinck, Chairman of the
Supervisory Board, and all its members, would like to thank Gérard
Buffière for his active contribution to the work of the Board and
the Nominations and Compensation Committee, and look forward to
welcoming in their new role within the Supervisory Board, Eric La
Bonnardière, Françoise Leroy and Sabine Roux de Bézieux.
The conference
for analysts will be held at 11:00 am CET on Wednesday October 25
and an audio webcast (live and replay, in English) will also be
available on www.tarkett.com.
Financial calendar
- February 8, 2018: 2017 Yearly financial results -
press release after close of trading on the Paris
market and presentation in person the following morning
- April 24, 2018: Q1 2018 financial results -
press release after close of trading on the Paris
market and conference call the following morning
- April 26, 2018: Annual General Meeting
- July 25, 2018: H1 2018 financial results -
press release after close of trading on the Paris
market and presentation in person the following morning
- October 23, 2018: Q3 2018 financial Results
- press release after close of trading on the
Paris market and conference call the following morning
About
Tarkett
With net sales of more than €2.7bn in 2016, Tarkett is a worldwide
leader of innovative flooring and sports surface solutions.
Offering a wide range of products including vinyl, linoleum,
rubber, carpet, wood and laminate flooring, artificial turf and
athletics tracks, the Group serves customers in over 100 countries
across the globe. With 12,500 employees and 34 industrial sites,
Tarkett sells 1.3 million square meters of flooring every day, for
hospitals, schools, housing, hotels, offices, stores and sports
fields. Committed to sustainable development, the Group has
implemented an eco-innovation strategy and promotes a circular
economy. Tarkett is listed on Euronext Paris (compartment A, ISIN:
FR0004188670, ticker TKTT) as well as on the SBF 120 and CAC Mid 60
indexes. www.tarkett.com
Investor
Relations contact
Tarkett - Alexandra Baubigeat Boucheron -
alexandra.baubigeatboucheron@tarkett.com
Media Relations
contacts
Tarkett - Véronique Bouchard Bienaymé -
communication@tarkett.com
Brunswick - tarkett@brunswickgroup.com - Tél. : +33 (0) 1 53
96 83 83
Disclaimer
The information contained in this press release has not been
independently verified and no representation or warranty expressed
or implied is made as to, and no reliance should be placed on, the
fairness, accuracy, completeness or correctness of the information
or opinions contained herein.
This press release may contain
estimates and/or forward-looking statements. These do not represent
forecasts of Tarkett's results or other performance indicators, but
rather trends or targets as appropriate. These statements are
inherently subject to risks and uncertainties, most of which are
outside Tarkett's control, including but not limited to the risks
described in Tarkett's registration document, the French version of
which was filed on March 21, 2017 and is available on
www.tarkett.com. These risks and uncertainties include those
discussed or identified in the "Risk factors" section of its
registration document filed with the AMF. These statements do not
constitute guarantees as to Tarkett's future performance, which may
differ materially from these forward-looking statements. Tarkett
disclaims any intention or obligation to update these
forward-looking statements in light of events or circumstances that
may arise subsequent to the date of publication of this press
release.
Appendices
Net sales by segment
€
million |
Q1 2017 |
Q1 2016 |
% Change |
o/w Organic growth(1) |
EMEA |
243.4 |
232.4 |
+4.7% |
+7.0% |
North
America |
190.3 |
187.2 |
+1.6% |
-2.1% |
CIS, APAC
& Latin America |
121.3 |
103.5 |
+17.2% |
+2.0% |
Sports |
56.7 |
53.2 |
+6.6% |
+3.6% |
TOTAL |
611.7 |
576.3 |
+6.1% |
+2.8% |
€
million |
Q2 2017 |
Q2 2016 |
% Change |
o/w Organic growth(1) |
EMEA |
237.9 |
239.3 |
-0.5% |
+1.5% |
North
America |
222.4 |
223.9 |
-0.7% |
-1.3% |
CIS, APAC
& Latin America |
154.4 |
131.4 |
+17.4% |
+11.3% |
Sports |
137.6 |
127.3 |
+8.0% |
+5.9% |
TOTAL |
752.3 |
721.8 |
+4.2% |
+3.2% |
€
million |
H1 2017 |
H1 2016 |
% Change |
o/w Organic growth(1) |
EMEA |
481.3 |
471.6 |
+2.1% |
+4.2% |
North
America |
412.7 |
411.1 |
+0.4% |
-1.6% |
CIS, APAC
& Latin America |
275.7 |
234.9 |
+17.4% |
+7.2% |
Sports |
194.3 |
180.5 |
+7.6% |
+5.3% |
TOTAL |
1,364.0 |
1,298.1 |
+5.1% |
+3.0% |
€
million |
Q3 2017 |
Q3 2016 |
% Change |
o/w
organic(1) |
EMEA |
227.2 |
222.9 |
+1.9% |
+2.9% |
North
America |
197.9 |
216.6 |
-8.6% |
-4.2% |
CIS, APAC
& LATAM |
178.0 |
157.7 |
+12.9% |
+15.5% |
Sports |
220.4 |
197.2 |
+11.8% |
+13.6% |
TOTAL |
823.5 |
794.3 |
+3.7% |
+6.1% |
€
million |
9M 2017 |
9M 2016 |
% Change |
o/w
organic(1) |
EMEA |
708.5 |
694.5 |
+2.0% |
+3.8% |
North
America |
610.6 |
627.7 |
-2.7% |
-2.5% |
CIS, APAC
& LATAM |
453.7 |
392.6 |
+15.6% |
+10.5% |
Sports |
414.7 |
377.6 |
+9.8% |
+9.6% |
TOTAL |
2,187.5 |
2,092.4 |
+4.5% |
+4.2% |
(1) Organic growth: at constant
scope of consolidation and exchange rates (note that in the CIS
segment, price increases implemented to offset currency
fluctuations are not included in organic growth, which only
reflects changes in volumes and the product mix). See the
definition of alternative performance indicators at the end of this
press release.
Quarterly Group adjusted
EBITDA(1)
€
million |
2017 |
2016 |
2017 Margin
(% net sales) |
2016
Margin
(% net sales) |
Q1 |
51.5 |
45.0 |
8.4% |
7.8% |
Q2 |
108.8 |
106.5 |
14.5% |
14.8% |
Q3 |
101.1 |
119.2 |
12.3% |
15.0% |
9M |
261.4 |
270.6 |
11.9% |
12.9% |
Half-year adjusted
EBITDA(1) by segment
€
million |
H1 2017 |
H1 2016 |
H1 2017 Margin
(% net sales) |
H1 2016
Margin
(% net sales) |
EMEA |
68.5 |
74.8 |
14.2% |
15.9% |
North
America |
51.7 |
59.3 |
12.5% |
14.4% |
CIS, APAC
& Latin America |
40.2 |
24.8 |
14.6% |
10.6% |
Sports |
23.0 |
18.2 |
11.8% |
10.1% |
Central
costs not allocated |
(23.1) |
(25.7) |
- |
- |
Total |
160.3 |
151.4 |
11.8% |
11.7% |
(1) Adjusted EBITDA:
adjustments include expenses relating to restructuring,
acquisitions and certain other non-recurring items. See the
definition of alternative performance indicators at the end of this
press release.
Definition of
alternative performance indicators
(not defined by IFRS)
The Tarkett Group uses the
following non-IFRS financial indicators:
-
Organic growth
-
Adjusted EBITDA
These indicators are calculated as described below.
-
Organic growth:
-
Organic growth measures the change in net sales
as compared with the same period in the previous year, at constant
scope of consolidation and exchange rates.
-
The exchange rate effect is calculated by
applying the previous year's exchange rates to sales for the
current year and calculating the difference as compared with sales
for the current year. It also includes the impact of price
adjustments in CIS countries intended to offset movements in local
currencies against the euro.
-
The scope effect reflects:
-
current-year sales for entities not included in
the scope of consolidation in the same period in the previous year,
up to the anniversary date of their consolidation;
-
the reduction in sales relating to discontinued
operations that are not included in the scope of consolidation for
the current year but were included in sales for the same period in
the previous year, up to the anniversary date of their
disposal.
Year-on-year
net sales trends can be analyzed as follows:
€
million |
2017 |
2016 |
%
Change |
o/w Exchange rate effect |
o/w
Scope effect |
o/w
Organic growth |
Total Group - Q1 |
611.7 |
576.3 |
+6.1% |
+3.3% |
0.0% |
+2.8% |
Total Group - Q2 |
752.3 |
721.8 |
+4.2% |
+0.9% |
+0.1% |
+3.2% |
Total Group - H1 |
1,364.0 |
1,298.1 |
+5.1% |
+2.0% |
+0.1% |
+3.0% |
Total Group - Q3 |
823.5 |
794.3 |
+3.7% |
-2.5% |
+0.1% |
+6.1% |
Total Group - 9M |
2,187.5 |
2,092.4 |
+4.5% |
+0.2% |
+0.1% |
+4.2% |
Tarkett_PR_Q3 2017
Results
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Tarkett via Globenewswire
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