Derichebourg confirms the resilience of its economic model

The Board meeting of May 22, 2019, chaired by Mr. Daniel Derichebourg, approved the half-year financial statements at March 31, 2019. During the meeting, the Chairman and Chief Executive Officer noted the soundness of the Group's economic model and the robustness of its results, despite slowing economic growth and an environment beset by considerable uncertainties. In this context, which reflects a decline in financial performance by all players in the recycling industry, the Group has managed to limit the negative effects thanks to substantive work done on scaling its production facilities, continued attention to unit margins and the level of inventories, and to its dense territorial network, which ensures it has a regular supply, and makes it possible to monetize specialized facilities whose profitability is better than the average in the business.

Revenue amounts to 1.38 billion

Revenue for the first half of the year amounted to €1.38 billion, a decrease by 5.7%. Revenue growth for the Multiservices business did not offset the decline in the Environmental Services business.

(in thousand tons) 03/31/2019 03/31/2018 Change
       
Ferrous metals 1,737.9 1,912.8 -9.1%
Non-ferrous metals 268.0 271.7 -1.4%
Total volumes 2,005.9 2,184.5 -8.2%
       
(in millions of euros) 03/31/2019 03/31/2018 Change
       
Ferrous metals 448.5 511.7 -12.4%
Non-ferrous metals 342.1 382.4 -10.5%
Services 166.1 166.8 -0.4%
Environmental Services revenue 956.7 1,060.8 -9.8%
Multiservices revenue 418.7 397.4 5.4%
Holding company revenue 0.5 0.3 53.1%
Total half-year revenue, Derichebourg Group 1,375.9 1,458.5 -5.7%

Environmental Services

Volumes of ferrous metals processed were negatively impacted by:

Volumes of non-ferrous metals have been maintained, notably thanks to the increased strength of the second aluminum refining unit at Prémery. Nevertheless, a deterioration of business in the automotive sector has been noticeable since last fall, which is pulling prices down. Stainless steel waste is in significant decline (-25%), waste copper has grown (+4.3%).

Revenue for Services has declined slightly (-0.4%), because revenue from waste collection activities in Italy has not been consolidated since February, following divestiture on January 30, 2019.

Multiservices

Revenue for each of the four segments of activity (Services, Industry, HR Sourcing Solution, Urban Areas) have seen sustained growth. Overall, growth is at 5.4%.

Recurring EBITDA [1], €93.4 million

Recurring EBITDA amounted to €93.4 million, down 7% compared to last year. It represents 6.8% of revenue, a similar ratio to that of last year (6.9%).

In the Environmental Services business, the lower volume of ferrous metals processed, and to a lesser extent slightly lower unit margins for non-ferrous metals, partially offset by a fall in expenses, essentially explain this €4.6 million fall.

In the Multiservices business, the apparent €1.2 million fall is explained by:

After restating these two effects, recurring EBITDA from the Multiservices business would be up and represent 4.2% of revenue.

An operating profit  close to that of last year

Operating profit  amounted to €48.1 million, close to that of last year (€49.8 million).

The Multiservices business is seeking to terminate a certain number of engineering contracts in the nuclear sector, and recognized the remaining costs to be incurred on these contracts, in an amount of €2.8 million.

Last year, non-current items recorded the cost of two transactions to end litigation in Italy in the amount of €10 million.

Consolidated net income down 16.3%

After taking into account financial expenses, corporate income tax and profit (loss) from discontinued operations, consolidated net income amounted to €31.6 million, down 16.3% in comparison to the first half of last year.

Outlook for the second half of the fiscal year

In the Environmental Services business, the Group notes that trade (China - USA) and geopolitical tensions have been exacerbated rather than reduced. There appears to be more downside (automotive sector, and European steel sector) than upside in economic conditions. In the short term, the high price of iron ore may serve to support that of ferrous metals. Structural difficulties related to the evacuation of shredding residue cannot be resolved in a few months, even if temporary solutions have been found. The Group will continue to prove the resilience of its business model, and its responsiveness. This situation should make it possible for the Group to strengthen its competitive position in its markets, where its leadership is already on display. An investment policy that allows for constant improvement of its online production facilities with an evolution in sorting techniques and environmental constraints will continue. This strategy, combined with a very solid financial structure and the long-term strategic vision of its family shareholders, confers the status of a structural consolidator, which will allow the company to profit from this situation in order to make strategic acquisitions when valuations in the sector become attractive again.

In the Multiservice business, revenue should grow moderately in the second half of the year, and the second half will be better than the first in terms of income. Catching up with the backlog recorded in the first half of the year is foreseeable, all things being equal.

Treasury shares cancellation

The Board of Directors also exercised the delegation granted by the Extraordinary General Meeting of February 5th 2019, and cancelled 4,481,291 treasury shares representing 2.73% of the share capital. The company's share capital now comprises 159,397,489 shares.


INCOME STATEMENT

In millions of euros 03/31/2019 03/31/2018 Change
       
Revenue 1,375.9 1,458.5 (5.7%)
of which Environmental Services 956.7 1,060.8 (9.8%)
of which Multiservices 418.7 397.4 5.4%
       
Recurring EBITDA 93.4 100.5 (7.0%)
of which Environmental Services 83.9 88.5 (5.2%)
of which Multiservices 13.5 14.7 (8.3%)
       
Recurring operating profit 50.9 61.0 (16.6%)
of which Environmental Services 48.0 55.5 (13.5%)
of which Multiservices 8.0 9.7 (17.1%)
       
Net non-current items (2.8) (11.3)  
       
Operating Profit 48.1 49.8 (3.3%)
       
Net financial expenses (5.2) (5.3)  
Other financial items (1.2) 0.1  
       
Profit  before tax 41.7 44.5 (6.3%)
       
Income tax (10.9) (10.9)  
Income from associates 0.8 0.7  
Income from discontinued or held-for-sale activities   3.4  
Net profit (loss) attributable to non-controlling interests (1.1) (0.6)  
       
Net profit (loss) attributable to shareholders 30.5 37.1 (18.0%)



BALANCE SHEET

(in millions of euros) 03/31/2019 09/30/2018 Variation (%)
Goodwill 220.0 217.9  
Intangible assets 7.5 6.2  
Property, plant and equipment 507.9 480.9  
Financial assets 14.9 10.5  
Equity interests in associates and joint ventures 17.5 17.1  
Deferred taxes 25.9 22.0  
Total non-current assets 793.7 754.6 5.2%
Inventories 76.3 76.7  
Trade receivables 301.2 286.6  
Tax receivables 3.1 11.4  
Other assets 63.6 82.7  
Financial assets 13.4 13.8  
Cash and cash equivalents 131.5 145.6  
Total current assets 589.1 616.9 (4.5%)
Total non-current assets and groups of assets held for sale   41.4  
Total assets 1,382.8 1,412.9 (2.1%)
    
     
(in millions of euros) 03/31/2019 09/30/2018 Variation (%)
Group shareholders' equity 500.7 507.9  
Non-controlling interests 4.3 3.8  
Total shareholders' equity 505.0 511.7 (1.3%)
Loans and financial debts 157.6 156.2  
Provisions for pensions and similar benefits 42.8 42.6  
Other provisions 23.7 25.3  
Deferred taxes 16.4 17.5  
Other liabilities 1.7 1.7  
Total non-current liabilities 242.1 243.4 (0.5%)
Loans and financial debts 82.5 84.5  
Provisions 7.4 4.8  
Trade payables 283.1 281.2  
Tax payables 14.7 3.3  
Other liabilities 246.3 255.0  
Financial instruments 1.8 1.1  
Total current liabilities 635.8 629.9 0.9%
Total liabilities related to a group of assets held for sale   27.9  
Total liabilities 1,382.8 1,412.9 (2.1%)



Passage of net financial debt from September 30, 2018 to March 31, 2019

Net financial debt at September 30, 2018 95.1
Recurring EBITDA (93.4)
Net financial expenses 5.2
Corporate income taxes (3.2)
Change in working capital requirement 8.6
Tangible and intangible capital investments 59.7
Own shares 16.9
Dividends 22.4
Acquisitions 4.2
Disposals of companies (8.2)
Other 1.2
Net financial debt at March 31, 2019 108.5

About Derichebourg

The Derichebourg Group is a major player working for companies and local authorities on an international scale. It offers a comprehensive and integrated range of services in two complementary business segments: environmental services (recycling, recovery, collection of household waste, urban cleaning, management of waste reception centers, etc.) and business services (cleaning, energy, interim, aeronautics, etc.). The Group is present today in 15 countries, on 3 continents, and has some 39,400 employees worldwide. In 2018, the Derichebourg Group's revenue amounted to €2.9 billion. For more information: www.derichebourg.com

ISIN code: FR0000053381 - DBG




[1] Recurring EBITDA = Recurring operating profit (loss) + net depreciation and amortization on tangible and intangible assets

Recurring operating profit (loss) = Operating profit (loss) +/- non-recurring items


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