CNOVA N.V.
2018 Financial Results
AMSTERDAM, February 15, 2019, 07:45 CET Cnova N.V. (Euronext Paris: CNV; ISIN: NL0010949392) ("Cnova" or the "Company") today announced its financial results for the full year 2018[1].
| Key figures € in millions | Full year1 | Change | ||
| 2018 | 2017 | Reported | Organic[2] | |
| GMV | 3,645.7 | 3,303.5 | +10.4% | +9.3% |
| Net sales | 2,174.3 | 2,035.0 | +6.8% | +5.1% |
| Gross profit | 336.7 | 274.7 | +22.5% | |
| Gross margin | 15.5% | 13.5% | +2.0 pts | |
| SG&A | (344.4) | (308.0) | +11.8% | |
| Operating EBIT | (7.7) | (33.3) | +€25.6m | |
| EBITDA[3] | 25.5 | (6.3) | +€31.9m | |
| Cdiscount | 29.7 | (0.3) | +€30.0m | |
| Net profit/(loss) (from continuing activities) | (35.3) | (102.6) | +€67.3m | |
| Adjusted EPS € (from continuing activities) | (0.04) | (0.24) | +€0.16 | |
| Operating FCF - continuing activities[4] | 69.7 | (336.2) | +€405.9m | |
| Key figures € in millions | 2nd semester[5] | Change | ||
| 2018 | 2017 | Reported | Organic[6] | |
| GMV | 1,939.1 | 1,751.1 | +7.8% | +10.7% |
| Net sales | 1,205.5 | 1,189.6 | +1.3% | +4.6% |
| Gross profit | 193.8 | 159.0 | +21.8% | |
| Gross margin | 16.1% | 13.4% | +2.7 pts | |
| SG&A | (181.4) | (170.0) | +6.7% | |
| Operating EBIT | 12.4 | (10.9) | +€23.2m | |
| EBITDA | 29.8 | 3.7 | +€26.1m | |
| Cdiscount | 31.9 | 6.5 | +€25.4m | |
| Operating FCF - continuing activities | 99.9 | 31.4 | +€68.5m | |
***
FY2018 operational and financial performance
Gross merchandise volume (GMV) experienced a strong 9.3% organic growth to reach €3.6 billion, driven the increasing contribution of the marketplace (+3.9 points), B2C services (+1.5 point) and Géant showrooms (+1.6 point). Commercial dynamism was boosted by numerous successful events such as the second edition of the French Days, Black Friday and Cdiscount's 20-year anniversary.
The marketplace development is at the heart of the profitable growth strategy. In 2018, marketplace GMV reached a record-high €1.1 billion euros GMV (+12.3%), with a GMV share 2.4 points higher than 2017. Key drivers are the 37% increase in the number of available of SKU and the 7 points gain in Fulfillment By Cdiscount GMV share.
Regarding traffic, Cdiscount consolidated its number 2 status in terms of unique monthly visitors ("UMV") on both desktop and mobile platforms, widening the gap compared to the nearest competitor[7]. In the 4th quarter 2018, Cdiscount reached 21 million UMV overall, now covering more than one third of the French population[8]. 2018 highlighted the growing prominence of mobile traffic, which reached 63% of total traffic share (+4 points) and a GMV share of 44% (+6 points) in 2018.
Cdiscount's loyalty program, Cdiscount à Volonté ("CDAV"), launched a new enriched package at €29 per year in the first semester that enjoyed great success with a +23% growth in its membership.
Net sales amounted to €2.2 billion in 2018, thanks to a 5.1% organic growth driven by the development of showroom revenues and services.
Gross profit was €337 million in 2018, with an associated gross margin of 15.5%, a +2.0-points improvement compared to 2017. It benefited from the increased marketplace GMV share, a continued growth in monetization revenues (especially the advertising agency) as well as an optimized pricing and shipping strategy.
SG&A costs amounted to €(344) million and accounted for 15.8% of net sales, increasing by +0.7 point. Fulfillment costs were stable at 7.8% of net sales, thanks to logistics productivity improvements that offset the increase in CDAV eligible SKUs expense. Marketing costs rose to 2.9% of net sales (+0.6 point) due to new media campaigns over key successful promotional events contributing to consolidate its #2 market positioning (21m average UMV over the 4th quarter7) and grow mobile traffic. The efforts made to reduce expenses on Technology & Content (3.5%) compensated for the investments made (and the related amortization), while continued discipline on General & Administrative (1.7%) kept them both stable with, respectively, -0.1 point and +0.0 point as a percentage of net sales.
As a result, EBITDA improved significantly to €25.5 million in 2018, a €32.0m improvement compared to 2017 with an increase quarter after quarter. EBITDA benefited from a progressive expansion of monetization revenues throughout the year, strategic initiatives to stimulate marketplace growth since the beginning of 3Q18 and discipline on SG&A.
Operating EBIT increased by €25.5m compared to 2017 and closed the gap to breakeven (€(7.7) million).
Net financial expense which is mainly related to installment payment solutions offered to customers, amounted to €(49.4) million mostly driven by business growth and the increased GMV share of this mean of payment.
Net loss improved by +€79.8m y-o-y to finish at €(30.8) million with an adjusted EPS of €(0.04). This includes a one-off deferred tax gain of €38m related to the spinoff of Cdiscount's logistics activities into a separate subsidiary.
Free cash flow and Net financial debt:
Free cash flow improvement was one of the key priorities of 2018 and relies on three main drivers:
As a result, net cash from continuing operating activities amounted to €144 million in the last twelve months and free cash flow before interest expenses reached a positive €70 million during the same period (i.e. +€406m vs 2017).
Net financial debt position at December 31, 2018 was stable at €(199) million, despite the impact of a €24m exceptional payment as a result of the class action settlement that marked the closing of the procedure.
2nd half 2018 operational and financial performance
Gross merchandise volume (GMV) experienced a strong organic growth of +10.7% versus 2017, accelerating versus 1H18 growth (+7.5%), to total €2.0 billion in 2H18.
Traffic was marked by the acceleration of mobile, which reached 65% of traffic share (+ 5.1 points) and GMV share of 45% (+ 6.1 points).
Net sales amounted to €1.2 billion in 2H18, a +4.6% organic growth.
Gross profit was €194 million in 2H18 with a gross margin of 16.1%, an increase of +2.7 points.
SG&A costs amounted to €(181) million in 2H18, i.e. 15.1% of net sales (+0.8 point)
EBITDA totaled 29.8 million in 2H18, showing significant improvements compared to both 2H17 and 1H18. This trend reflects the benefits of the strategic focus on profitable growth through the increase in marketplace share and new monetization revenues.
Operating EBIT was €12.4 million in 2H18, a strong increase versus 2H17 (€(10.9) million).
Key business achievements
Development of the marketplace and its related services
Growing services and products offering satisfying even more customer needs
Developing in the automotive industry
Enhanced customer experience and multichannel strategy
Continued delivery edges
Monetization initiatives well advanced
Rapid expansion of Europe-wide deliveries
Dynamic of innovation strengthened
Commitment to best-in-class Corporate Social Responsibility
· 100% electric delivery in Paris and Bordeaux for heavy products started in 4Q18.
· Cdiscount becomes the first e-merchant to receive the "Digital Ad Trust" label, awarding the website with responsible advertising practices regarding brand safety, fraud, user experience and use of personal data.
· Cdiscount is the second largest job creator in Bordeaux region among private companies.
· Cdiscount has engaged in several initiatives related to education and training:
- MasterClass IT: creation of an IT development program mixing theory courses and professional experience for 20 students.
- Partnerships with secondary schools near Bordeaux to promote IT development and responsible use of social networks.
· Cdiscount entered into partnership with the association "Un Rien c'est Tout" to support charity projects through the implementation of an online donation during the order process, when the customer pays his basket.
Outlook
Over the past few years, in a context of strong acceleration and consolidation of the ecommerce market, the priority was to reach a critical size.
In 2018 CDiscount reached a milestone towards building a profitable growth, in a more mature e-commerce market, with more loyal clients and an increased monetization strategy.
Leveraging on its 2018 solid financial results, Cdiscount will now focus on accelerating its shift towards a platform model generating a profitable growth. By developing its key assets (customers, partners and state-of-the-art technology) Cdiscount will then further expand:
As a consequence, CDiscount expects for 2019 and the next years an acceleration of its GMV growth pace and a strong improvement of its EBITDA.
***
About Cnova N.V.
Cnova N.V., one of the leading e-Commerce companies in France, serves 8.9 million active customers via its state-of-the-art website, Cdiscount. Cnova N.V.'s product offering provides its clients with a wide variety of very competitively priced goods, fast and customer-convenient delivery options, practical and innovative payment solutions as well as travel, entertainment and domestic energy services. Cnova N.V. is part of Groupe Casino, a global diversified retailer. Cnova N.V.'s news releases are available at www.cnova.com. Information available on, or accessible through, the sites referenced above is not part of this press release.
This press release contains regulated information (gereglementeerde informatie) within the meaning of the Dutch Financial Supervision Act (Wet op het financieel toezicht) which must be made publicly available pursuant to Dutch and French law. This press release is intended for information purposes only.
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| Cnova Investor Relations Contact: investor@cnovagroup.com Tel: +31 20 301 22 40 | Media contact: directiondelacommunication@cdiscount.com Tel: +33 5 56 30 07 14 |
Appendices
Cnova N.V. Consolidated Financial Statements(1)
| Consolidated Income Statement | Full year | Change | ||
| € in millions | 2018 | 2017 | ||
| Net sales | 2,174.3 | 2,034.9 | +6.8% | |
| Cost of sales | (1,837.6) | (1,760.2) | +4.4% | |
| Gross profit | 336.7 | 274.8 | +22.5% | |
| % of net sales (Gross margin) | 15.5% | 13.5% | ||
| SG&A(2) | (344.4) | (308.0) | +11.8% | |
| % of net sales | -15.8% | -15.1% | ||
| Fulfillment | (169.2) | (158.9) | +6.5% | |
| Marketing | (62.3) | (45.4) | +37.3% | |
| Technology and content | (76.1) | (69.8) | +9.1% | |
| General and administrative | (36.8) | (34.0) | +8.2% | |
| Operating EBIT(3) | (7.7) | (33.3) | ||
| % of net sales | -0.4% | -1.6% | ||
| Other expenses | (15.0) | (26.9) | -44.5% | |
| Operating profit/(loss) | (22.7) | (60.2) | nm | |
| Net financial income/(expense) | (49.4) | (40.3) | +22.8% | |
| Profit/(loss) before tax | (72.1) | (100.5) | -28.2% | |
| Income tax gain/(expense) | 36.9 | (2.2) | n.m | |
| Net profit/(loss) from continuing operations | (35.3) | (102.6) | -65.6% | |
| Net profit/(loss) from discontinued operations | 4.5 | (8.0) | n.m | |
| Net profit/(loss) for the period | (30.8) | (110.6) | n.m | |
| % of net sales | -1.4% | -5.4% | ||
| Attributable to Cnova equity holders (incl. discontinued) | (30.8) | (110.3) | ||
| Attributable to non-controlling interests (incl. discontinued) | (0.0) | (0.3) | ||
| Adjusted EPS (€) from continuing operations | (0.04) | (0.24) | ||
| Adjusted EPS (€) from discontinued operations | (0.00) | (0.00) | ||
| Adjusted EPS (€)(4) | (0.04) | (0.24) | ||
| Consolidated Balance Sheet At December 31 (€ in millions) | 2018 | 2017 | ||
| ASSETS | ||||
| Cash and cash equivalents | 35.5 | 43.8 | ||
| Trade receivables, net | 187.0 | 162.2 | ||
| Inventories, net | 355.6 | 390.1 | ||
| Current income tax assets | 3.0 | 2.4 | ||
| Other current assets, net | 127.2 | 107.1 | ||
| Total current assets | 708.4 | 705.6 | ||
| Other non-current assets, net | 9.6 | 6.1 | ||
| Deferred tax assets | 38.6 | -- | ||
| Property and equipment, net | 39.1 | 34.3 | ||
| Intangible assets, net | 139.6 | 99.8 | ||
| Goodwill | 61.4 | 58.2 | ||
| Total non-current assets | 288.3 | 198.4 | ||
| TOTAL ASSETS | 996.8 | 904.0 | ||
| EQUITY AND LIABILITIES | ||||
| Current provisions | 9.5 | 9.0 | ||
| Trade payables | 667.9 | 579.7 | ||
| Current financial debt | 234.3 | 237.9 | ||
| Current tax liabilities | 42.3 | 48.8 | ||
| Other current liabilities | 184.1 | 153.3 | ||
| Total current liabilities | 1,138.1 | 1,028.7 | ||
| Non-current provisions | 11.8 | 14.0 | ||
| Non-current financial debt | 2.4 | -- | ||
| Deferred tax liabilities | 1.6 | 0.4 | ||
| Other non-current liabilities | 10.1 | 4.5 | ||
| Total non-current liabilities | 25.9 | 18.9 | ||
| Share capital | 17.2 | 17.2 | ||
| Reserves, retained earnings and additional paid-in capital | (192.9) | (160.6) | ||
| Equity attributable to equity holders of Cnova | (175.7) | (143.3) | ||
| Non-controlling interests | (0.0) | (0.2) | ||
| Total equity | (175.7) | (143.5) | ||
| TOTAL EQUITY AND LIABILITIES | 996.8 | 904.0 |
| Consolidated Cash Flow Statement | |||
| at December 31 (€ in millions) | 2018 | 2017 | |
| Net profit/(loss) from continuing operations | (35.3) | (102.3) | |
| Net profit/(loss), attributable to non-controlling interests | (0.0) | (0.3) | |
| Net profit (loss) for the period excl. discontinued operations | (35.3) | (102.6) | |
| Depreciation and amortization expense | 33.2 | 26.6 | |
| (Income) expenses on share-based payment plans | 0.1 | 0.4 | |
| (Gains) losses on disposal of non-current assets and impairment of assets | (0.6) | 1.8 | |
| Other non-cash items | (0.1) | 0.0 | |
| Financial expense, net | 49.4 | 40.3 | |
| Current and deferred tax (gains) expenses | (36.9) | 2.2 | |
| Income tax paid | (2.2) | (2.4) | |
| Change in operating working capital | 136.0 | (233.9) | |
| Inventories of products | 34.5 | (175.4) | |
| Accounts payable | 84.8 | 13.2 | |
| Accounts receivable | (38.8) | (80.2) | |
| Working capital non-goods | 55.4 | 8.5 | |
| Net cash from/(used in) continuing operating activities | 143.5 | (267.7) | |
| Net cash from/(used in) discontinued operating activities | (24.5) | 6.5 | |
| Purchase of property, equipment & intangible assets | (80.4) | (68.6) | |
| Purchase of non-current financial assets | (0.9) | (1.7) | |
| Proceeds from disposal of prop., equip. intangible assets | 6.5 | 0.0 | |
| Proceeds from disposal of non-current financial assets | 2.1 | 0.0 | |
| Movement of perimeter, net of cash acquired | (1.8) | (2.2) | |
| Investments in associates | 0.0 | 0.0 | |
| Changes in loans granted (including to related parties) | 0.2 | (0.2) | |
| Net cash from/(used in) continuing investing activities | (74.2) | (72.6) | |
| Net cash from/(used in) discontinued investing activities | (0.0) | 2.7 | |
| Transaction with owners of non-controlling interests | -- | (0.1) | |
| Changes in loans received | 9.9 | 384.7 | |
| Additions to financial debt | 0.0 | (1.2) | |
| Repayments of financial debt | (2.7) | 8.5 | |
| Interest paid, net | (48.2) | (39.9) | |
| Net cash from/(used in) continuing financing activities | (41.0) | 352.1 | |
| Net cash from/(used in) discontinued financing activities | 0.0 | (1.7) | |
| Effect of changes in foreign currency translation adjustments from discontinued operations | 0.0 | (0.1) | |
| Change in cash and cash equivalents from continuing operations | 28.3 | 11.8 | |
| Change in cash and cash equivalents from discontinued operations | (24.5) | 7.5 | |
| Cash and cash equivalents, net, at period begin | 23.6 | 4.2 | |
| Cash and cash equivalents, net, at period end | 27.3 | 23.6 | |
| Upcoming Event | |
| Tuesday, February 15, 2019 at 16:00 CET | Cnova 2018 Financial Results Conference Call & Webcast |
| Conference Call and Webcast connection details | |
| Conference Call Dial-In Numbers: | |
| Toll-Free: | |
| France | 0 800 912 848 |
| UK | 0 800 756 3429 |
| USA | 1 877 407 0784 |
| Toll: | 1 201 689 8560 |
| Conference Call Replay Dial-In Numbers: | |
| Toll-Free: | 1 844 512 2921 |
| Toll: | 1 412 317 6671 |
| Available From: February 15, 2019 at | 13:00 ET / 19:00 CET |
| To: February 22, 2019 at | 00:00 ET / 06:00 CET |
| Replay Pin Number: | 13686863 |
| Webcast: | |
| http://public.viavid.com/index.php?id=132996 | |
| Presentation materials to accompany the call will be available at cnova.com on February 15, 2019. | |
| An archive of the conference call will be available for 3 months at cnova.com. | |
[1] The audit procedures by the statutory auditors are underway. 2017 financial figures were adjusted for IFRS 15 (new standard on revenue) which came into force on January 1st, 2018 with retroactive application. Its main impact is that certain suppliers' contributions are now recognized as a reduction of purchase price and deducted from inventories instead of revenue in previous standard.
[2] Organic growth: figures include showroom sales and services; exclude technical goods and home category sales made in Casino Group's hypermarkets and supermarkets as well as 1001Pneus (tire company acquired in October 18). Total exclusion of -1.1 point and -1.7 point respectively on GMV and net sales. 1001pneus started to be consolidated from 16th October 2018 and Stootie from 1st January 2019.
[3] EBITDA: operating profit/(loss) from ordinary activities (EBIT) adjusted for depreciation & amortization and share based payment expenses.
[4] Defined as EBITDA - other cash operating expenses (taxes and exceptional expenses) - change in working capital - net capex
[5] The audit procedures by the statutory auditors are underway. 2017 financial figures were adjusted for IFRS 15 (new standard on revenue) which came into force on January 1st, 2018 with retroactive application. Its main impact is that certain suppliers' contributions are now recognized as a reduction of purchase price and deducted from inventories instead of revenue in previous standard.
[6] Organic growth: figures include showroom sales and services; exclude technical goods and home category sales made in Casino Group's hypermarkets and supermarkets as well as 1001Pneus (tire company acquired in October 18). Total exclusion of +2.9 points and +3.3 points respectively on GMV and net sales. 1001pneus started to be consolidated from 16th October 2018 and Stootie from 1st January 2019.
[7] Source: Médiamétrie study
[8] Source: Médiamétrie study over the 4th quarter 2018
[9] CAPEX: i.e. capital expenditures, purchase of property, equipment & intangible assets less proceeds from disposal of prop., equip., intangible assets, excluding net proceeds from financial assets of €1.3 million
[10] Prize awarded by Bain for the best cooperation between a startup and a big firm
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