Q1 2018 Results
Stable sales at constant exchange rates
Adjusted EBITDA penalized
by raw material prices and currency effects
Paris, April 24, 2018
- Slight organic growth of 0.1%(1), reported net sales down 7.2% year-on-year at €568m due to adverse currencies
- Lower sales than expected in EMEA (-4.6%)(1) and in North America (-1.6%)(1), including negative calendar effects
- Strong organic growth in Sports (up 15.9%)(1) and good start to the year for the CIS, APAC and Latin America segment (up 5.0%)(1)
- Adjusted EBITDA(2) down to €30m versus €52m in Q1 2017, penalized by raw material prices, lower activity in EMEA and North America and currency effects
(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 such as restructuring, acquisitions and share-based payment expenses. See the definition of alternative performance indicators at the end of this press release.
Net sales at constant scope of consolidation and exchange rates remained stable (+0.1%) in Q1 2018. In EMEA (down 4.6%), the basis of comparison to last year was high (Q1 2017 organic growth of 7.0%) and the performance has been penalized by a negative calendar effect (-1.6%) and destocking at key customers. In North America, like-for-like(1) sales were down 1.6%, also affected by a negative calendar effect (-1.6%). The Sports segment continued to enjoy strong growth (up 15.9%) and the CIS, APAC and Latin America segment started the year on a solid 5.0% organic growth.
Reported sales were down 7.2% versus Q1 2017. Currency movements had a significant -7.5% negative impact in the first quarter primarily due to the US dollar, the Russian ruble and the Swedish krone. The perimeter impact accounted for +0.3% thanks to the acquisition of the assets of Grassman, a leading Australian synthetic turf manufacturer that reported approx. €10m of sales in 2017.
The Group adjusted EBITDA amounted to €30m (vs. €52m in Q1 2017) and the adjusted EBITDA margin came in at 5.2%. We delivered a good level of productivity (+€9m) and selling price increases contributed positively (+€2m). However, as expected, raw materials (-€10m) remained adverse in Q1. Currency effects also penalized the adjusted EBITDA (-€5m), mainly owing to the Russian ruble’s devaluation compared to last year, the British pound and Norwegian krone. The net impact of currency and selling prices in the CIS countries (lag effect) is -€2m. In addition, the volume decrease in EMEA and North America has negatively impacted the profit of the Group.
We continue to deploy selling price increases where needed and have implemented cost reduction measures across the Group. In addition, our robust program of new product launches, which are being well received by our customers, will also contribute to mitigate some of the shortfall of the first quarter.
Commenting on these results, Glen Morrison, CEO, stated:
“While the first quarter is traditionally the quietest quarter of the year, revenue level is below our expectations. The adverse effects of raw material price increases and currencies continue to negatively impact our profitability. We have and are taking actions to both accelerate the deployment of our growth initiatives and reduce costs. I am confident that we will return to our usual levels of profitability in the medium term.”