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2015/10/21

Q3 2015 results

+10.6% growth in net sales
Organic growth (+0.9%) thanks to North America, EMEA and Sports

  •  Net sales rose by +10.6% vs. Q3 2014 on a reported basis
  • Organic growth(1) of +0.9% thanks to North America (+2.5%), EMEA (+6.2%) and Sports (+11.2%)
  • Adjusted EBITDA(2) stable at €113.2m despite a negative currency impact in CIS countries of -€33.4

    Key figures

Net Sales
Net sales increased by +0.9% on an organic basis in the third quarter, resulting from a positive growth in all regions, with the exception of CIS countries. EMEA continues to deliver a strong performance. Volumes in North America were driven up by good trends in Luxury Vinyl Tiles (LVT) and commercial carpet. The Sports segment maintained a solid momentum. Volume and mix decline in the CIS region was broadly in line with the first half, however reported sales suffered from the sudden ruble devaluation experienced in August: the negative ‘lag effect’ on sales (net impact of currency devaluation mitigated by selling price increases) reached -€43m.
The change in perimeter had a +8.2% positive impact, reflecting primarily the acquisitions of Desso (mainly) and Renner Sport Surfaces. Overall, exchange rates contributed positively for +1.5%.


Adjusted EBITDA

The adjusted EBITDA(2) was stable vs. Q3 2014(3), at €113m. The improvement in EMEA, North America and Sports totally offset the strong negative impact from the ‘lag effect’ in the CIS countries of -€33m. Despite a 140 bps retreat vs. Q3 2014(3), the adjusted EBITDA margin remained at a healthy 14.0% of sales.

Commenting on the financial results, Michel Giannuzzi, CEO of Tarkett, declared:
“We delivered a positive organic growth in the quarter thanks to robust trends in EMEA and Sports segments as well as a progressive recovery in North America. In the CIS, volume and mix decline was in line with the first half, but we have been hit by the sudden devaluation of the ruble in August. We are pleased to report that all other segments have offset the impact of the ruble devaluation on adjusted EBITDA, demonstrating the resilience of our balanced business model.”


Net sales by segment

In EMEA, net sales rose by +6.2% on a like-for-like basis. The LVT category kept gaining share across all the regions. Most countries contributed to the segment’s momentum, with France remaining a noticeable exception. Desso’s EMEA activities delivered once again a very good performance and the integration is progressing as planned.

The third quarter saw a return to organic revenue growth (+2.5%) in North America. This progress reflects an improvement in the commercial activity, especially in the dynamic LVT category and the commercial carpet tiles. The Vinyl Composition Tiles (VCT) production is back to normal and the Group is actively focusing on regaining the lost volumes.
The like-for-like decline in net sales in the CIS, APAC & LATAM segment (strictly reflecting volume and mix) remained contained to -10.5% in the third quarter. Tarkett reacted quickly to the sharp devaluation of the Russian ruble that occurred in August, by implementing a new selling price increase (+8% in average), effective mid-September. However this increase had only a marginal effect in the third quarter: the net effect of the local currencies devaluation (‘lag effect’) reached -€43m on sales and -€33m on adjusted EBITDA.

Sales in Asia Pacific moved up thanks to vigorous trends in Australia. In Latin America, net sales expanded slightly thanks to the selling price increases implemented in Brazil as well as healthy trading in other countries.
After a very strong first half, the Sports segment continued to perform well, with net sales increasing by +11.2% on an organic basis. All business lines delivered growth, artificial turf in North America remaining the largest contributor. The third quarter, which is structurally the busiest for this activity, further demonstrates the healthy fundamentals of this market and the need for innovative and sustainable solutions. Desso Sports’ activities are successfully integrated within the Sports’ division, adding unique solutions to its product offering.


Outlook  
Tarkett will remain highly responsive to adapt its selling prices and cost structure in the CIS countries. The other segments should remain positively oriented and the Group should further benefit from its continuous improvement actions and productivity initiatives. A weak euro and the moderate erosion in the price of certain raw materials should also contribute positively.

An audio-conference will be held for the analysts on Thursday October 22nd at 10:30 am CET and an audio webcast service (live and replay) will also be available at www.tarkett.com.


Financial Calendar - Publications to be released after Paris market closing
•    February 18, 2016: Full year 2015 Financial Results
•    April 26, 2016: Annual General Meeting

To go further, please download the Press Release