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2017/10/24

Q3 2017 results: Strong organic growth at 6.1% - Adjusted EBITDA penalized by adverse raw materials and currencies

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.”

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