Second quarter highlights
Key indicators:
- Second quarter volume of 1,672.2 million litres shows organic growth of 0.8% compared to the same period last year (Q2 2014: 1,659.7 litres).
- The key indicator of Refresco Gerber's performance, gross profit margin per litre in euro cents, increased to 14.2 euro cents (Q2 2014: 14.0 euro cents), maintaining the levels of Q1.
- Increased adjusted EBITDA of €67.6 million compared to €66.6 million in the same period last year.
- Revenue - where change of input prices are passed on to customers - showed a slight decrease to €548.4 million compared to the same period last year (Q2 2015: €550.2 million).
- Adjusted for additional refinancing expenses and restructuring costs, net profit amounted to €29.0 million compared to €25.3 million in the same period last year. On an actual basis net profit amounted to €5.4 million (Q2 2014: €23.9 million).
- Adjusted EPS amounted to 35.7 euro cents compared to 31.1 euro cents in the same quarter last year.
- Refinancing fully completed as at the end of June 2015; repayment and replacement of an amount of €660.0 million in financing to a new term loan of €522.0 million and an undrawn €150.0 million RCF.
- With a net debt of €520.7 million at the end of June 2015, net debt ratio, based on LTM adjusted EBITDA, amounted to 2.4 compared to a ratio of 3.8 at the end of June 2014.
| Key figures (x 1 million euro unless stated otherwise) un-audited | Q2 2015 | Q2 2014 | HY 2015 | HY 2014 |
| Sales in litres (millions of litres) | 1,672.2 | 1,659.7 | 3,049.5 | 3,012.6 |
| Revenue | 548.4 | 550.2 | 1,006.6 | 1,009.2 |
| Gross profit margin per litre (euro cents) | 14.2 | 14.0 | 14.2 | 13.9 |
| Adjusted EBITDA¹ | 67.6 | 66.6 | 104.7 | 98.3 |
| IPO related (and other one-time costs) | 0.7 | 0.0 | 20.5 | 0.0 |
| Operating profit | 38.4 | 45.5 | 35.1 | 55.4 |
| Adjusted operating profit | 47.0 | 45.9 | 63.7 | 57.0 |
| Exceptional financing costs | 21.9 | 0.0 | 21.9 | 0.0 |
| Net profit / (loss) | 5.4 | 23.9 | (9.9) | 21.9 |
| Adjusted net profit / (loss) | 29.0 | 25.3 | 31.6 | 25.1 |
| EPS (euro cents) - pro forma | 6.7 | 32.2 | (12.2) | 29.8 |
| Adjusted EPS² (euro cents) - pro forma | 35.7 | 31.1 | 40.6 | 28.8 |
| Net debt ratio (net debt/LTM adjusted EBITDA) | 2.4 | 3.8 | ||
| 1 Adjusted EBITDA is not a measure of our financial performance under IFRS. We apply adjusted EBITDA to exclude the effects of certain exceptional charges that we believe are not indicative of our underlying operating performance. Such adjustments relate primarily to substantial one-off restructurings, costs relating to acquisitions or disposals, and refinancing and IPO relating costs. | ||||
| 2 Adjusted EPS has been calculated based upon adjusted net profit, which excludes the costs related to the IPO, exceptional financing costs, restructuring costs and relating tax effect. The number of issued shares has been determined on 81.2 million for Q2 2015. For Q1 2015 this number was determined on a pro forma basis of 74.3 million shares. YTD 2015 the number of shares was determined on a pro forma basis of 77.9 million. For all calculations in 2014 the number of shares has been determined on a pro forma basis of 74.3 million. | ||||
CEO Hans Roelofs:
"In the first half of 2015 we realized a 1.2% organic growth in volume, in line with the general market trend. Growth was mainly driven by our Co-Packing business where we realized an increase of 12.5% in volume compared to the first half of last year. This increase in Co-Packing has enabled us to maintain a strong gross profit margin per litre, the key indicator in development of our business.
The second and third quarters, based on volume, are traditionally our strongest period of the year, driven by summer weather demand. Typically the average gross profit margin per litre comes down slightly due to a shift in product mix. This year the summer weather did not come through until the end of June. With the absence of the product mix shift this has resulted in a slightly disappointing market volume development and a better gross profit margin per litre.
Revenue showed a slight decrease. Change in revenue is mostly driven by fluctuations in input prices which are passed on to customers, and is therefore not a representative indicator for the development of our business. Volumes developed positively and we maintained gross profit margin per litre at Q1 levels, resulting in a solid adjusted EBITDA for the period under review.
After the successful conclusion of our IPO last March, we were able to refinance our high yield bond related debt, lowering finance costs considerably and thereby creating headroom for the continued execution of our growth strategy. With a healthy pipeline of potential acquisition targets we are well positioned to further pursue our buy & build strategy going forward.
As mentioned, for the first half of 2015 we were able to maintain a strong gross profit margin per litre. Due to product mix effects we envisage this to come down slightly in the second half. For the full year 2015 we reconfirm our guidance, anticipating a low to mid-single digit growth of volume with gross profit margin per litre coming down marginally compared to the full last year (2014: 14.2 euro cents)."
Group volume and revenue development
In a soft market we were able to realize organic volume growth of 0.8% for the quarter. Revenue, of which the change in input prices is passed on to customers, showed some decrease. In the second quarter revenue of €548.4 million was realised compared to €550.2 million in Q2 2014.
Development Co-Packing versus Private Label
In the second quarter of 2015, the share of volume in Co-Packing (CP) business compared to the share of volume in our Private Label (PL) business significantly increased. This resulted in a 21.5% CP share (Q2 2014: 18.5%) versus a 78.5% PL share (Q2 2014: 81.5%).
Volume and revenue by location of sales
Overall Q2 volume showed an increase of 0.8% to 1,672.2 litres compared to the same period last year, with most regions showing a positive development.
The most significant growth in volume in the quarter was realised in Italy, this was mainly driven by the roll out of new contract wins for Ferrero, partly offset by a slight decrease in retail sales compared to the same period last year. In France, North East Europe and Iberia, volume increased with revenue decreasing due to product mix effects. Volume in the Benelux decreased, driven by a continuing weak retail market and adverse weather conditions in Northern Europe during April and May. Volumes in Germany were also impacted as a consequence of the weather conditions. In the UK volumes were slightly up with revenue positively impacted by currency effects.
| Sales in litres (x 1 million) un-audited | Q2 2015 | Q2 2014 | HY 2015 | HY 2014 |
| Benelux | 282.9 | 291.6 | 511.9 | 534.4 |
| Germany | 382.6 | 399.7 | 737.1 | 741.7 |
| France | 260.6 | 250.7 | 468.9 | 451.8 |
| UK | 165.2 | 162.4 | 309.2 | 316.3 |
| Iberia | 148.7 | 144.5 | 270.9 | 259.6 |
| Italy | 255.4 | 238.3 | 435.2 | 416.5 |
| North East Europe | 176.8 | 172.5 | 316.3 | 292.3 |
| Total volume | 1,672.2 | 1,659.7 | 3,049.5 | 3,012.6 |
| Revenue by location of sales (x 1 million euro) un-audited | Q2 2015 | Q2 2014 | HY 2015 | HY 2014 |
| Benelux | 114.2 | 119.7 | 203.4 | 219.0 |
| Germany | 116.1 | 119.4 | 220.6 | 223.0 |
| France | 87.5 | 89.5 | 161.6 | 163.8 |
| UK | 98.5 | 93.0 | 183.4 | 179.9 |
| Iberia | 39.9 | 41.6 | 73.6 | 74.9 |
| Italy | 45.4 | 43.6 | 75.9 | 73.8 |
| North East Europe | 38.9 | 41.1 | 74.2 | 72.5 |
| Holding³ | 7.9 | 2.3 | 13.9 | 2.3 |
| Total revenue | 548.4 | 550.2 | 1,006.6 | 1,009.2 |
| 3 Holding revenue mainly relates to the sale of packaging and raw materials to the divested Waibstadt manufacturing site which has been concluded by the end of July 2015. | ||||
Margin development
Gross profit margin per litre for the second quarter of 2015 amounted to 14.2 euro cents compared to 14.0 euro cents in the same period last year. This was driven by a positive product mix.
Results of operations
Operating costs in Q2 2015 amounted to €199.8 million compared to €186.3 million in the same period last year. The operating costs were affected by the impact of the announced closure of a plant in Germany. Adjusted operating profit amounted to €47.0 million compared to €45.9 million in Q2 2014. Actual operating profit was €38.4 million (Q2 2014: €45.5 million), which was mainly the result of the restructuring costs and impairment for the closure of a German plant.
Reconciliation of operating profit to adjusted EBITDA
Adjusted EBITDA in the second quarter amounted to €67.6 million a slight increase compared to the same period last year (Q2 2014: €66.6 million).
| (x 1 million euro) un-audited | Q2 2015 | Q2 2014 | HY 2015 | HY 2014 |
| Operating profit | 38.4 | 45.5 | 35.1 | 55.4 |
| Depreciation, amortization and impairment costs | 23.9 | 20.7 | 44.3 | 41.3 |
| EBITDA | 62.3 | 66.2 | 79.4 | 96.7 |
| Merger and restructuring costs | 0.2 | 0.4 | 0.7 | 1.6 |
| IPO related costs | 0.7 | 0.0 | 20.5 | 0.0 |
| Restructuring Germany | 3.1 | 0.0 | 3.1 | 0.0 |
| Refinancing related costs | 1.3 | 0.0 | 1.3 | 0.0 |
| Sales of fixed assets | 0.0 | 0.0 | (0.3) | 0.0 |
| Adjusted EBITDA | 67.6 | 66.6 | 104.7 | 98.3 |
Finance result
Finance expenses increased to €30.0 million compared to €12.8 million in the same period under review last year. The additional finance costs made in the quarter under review are fully related to the refinancing announced in April 2015.
| (x 1 million euro) un-audited | Q2 2015 | Q2 2014 | HY 2015 | HY 2014 |
| Interest expenses | 8.1 | 12.8 | 20.2 | 25.5 |
| Refinancing costs | 21.9 | 0.0 | 21.9 | 0.0 |
| Interest receivables | 0.0 | 0.0 | (0.3) | (0.1) |
| Net finance result | 30.0 | 12.8 | 41.8 | 25.4 |
Reconciliation of net result to adjusted net result
Adjusted for amongst others additional finance expenses and restructuring costs, net profit amounted to €29.0 million compared to a net profit of €25.3 million in the same period last year. Actual net profit for the second quarter was €5.4 million compared to a net profit of €23.9 million for the second quarter of 2014.
| (x 1 million euro unless stated otherwise) un-audited | Q2 2015 | Q2 2014 | HY 2015 | HY 2014 |
| Net profit / (loss) | 5.4 | 23.9 | (9.9) | 21.9 |
| Non-controlling interest | 0.0 | 0.0 | 0.4 | 0.1 |
| Profit attributable to shareholders | 5.4 | 23.9 | (9.5) | 22.0 |
| Result of discontinued business | 0.0 | 1.1 | 0.0 | 1.9 |
| Merger and restructuring costs | 0.2 | 0.4 | 0.7 | 1.6 |
| IPO related costs | 0.7 | 0.0 | 20.5 | 0.0 |
| Restructuring Germany | 3.1 | 0.0 | 3.1 | 0.0 |
| Refinancing related costs | 1.3 | 0.0 | 1.3 | 0.0 |
| Additional refinancing expenses | 21.9 | 0.0 | 21.9 | 0.0 |
| Sales of fixed assets | 0.0 | 0.0 | (0.3) | 0.0 |
| Impairment plant Germany | 3.3 | 0.0 | 3.3 | 0.0 |
| Tax effect | (6.9) | (0.1) | (9.4) | (0.4) |
| Adjusted net profit / (loss) | 29.0 | 25.3 | 31.6 | 25.1 |
| Pro forma no. of shares (x1 million) | 81.2 | 74.3 | 77.9 | 74.3 |
| EPS (euro cents) - pro forma | 6.7 | 32.2 | (12.2) | 29.8 |
| Adjusted EPS profit/ (loss) - pro forma (euro cents) | 35.7 | 31.1 | 40.6 | 28.8 |
Balance sheet and financial position as of June 30, 2015
Balance sheet total amounted to €1,643.5 million compared to €1,643.1 million at December 31, 2014.
As of June 30, 2015, net debt amounted to €520.7 million consisting of €556.8 million in loans and borrowings and €36.1 million cash and cash equivalents, compared to a net debt of €658.7 million on June 30, 2014.
At the end of June 2015, net debt ratio, based on LTM adjusted EBITDA, amounted to 2.4 compared to a ratio of 3.8 at the end of June 2014.
Capex spending for the quarter was €19.9 million compared to €12.4 million in the same period last year, this increase was mainly attributable to investments for new contracts.
Working capital increased by €33.1 million for the quarter, mainly due to the seasonal nature of our business. Working capital for the half year period increased by €19.4 million.
Outlook
As mentioned previously and based on the current market outlook, we expect volume for the year to grow organically at low to mid-single digit levels compared to the full year 2014 volume (FY 2014: 6.0 billion litres). As we have seen raw material prices coming down, organic revenue growth will be slightly below organic volume growth.
We expect that, based on the current market and competitive environment, gross profit margin per litre for 2015 will come down marginally compared to the gross profit margin per litre over 2014 (€ 14.2 euro cents), due to product mix effects. These product mix effects are driven by an increase in sales of lower margin products.
For further information, please contact:
Claire Verhagen, tel. +31 10 440 5165
claire.verhagen@refrescogerber.com
Next financial reporting
Refresco Gerber N.V.'s third quarter 2015 results will be published November 12, 2015.
Notes to the editors:
About Refresco Gerber N.V.
Refresco Gerber (Euronext: RFRG) is the leading European bottler of soft drinks and fruit juices for retailers and branded players with production in the Benelux, France, Germany, Iberia, Italy, the UK, Poland and Finland. The company realized full year volumes and revenue of circa 6.0 billion litres and circa €2.0 billion, respectively. Refresco Gerber offers an extensive range of product and packaging combinations from 100% fruit juices to carbonated soft drinks and mineral waters in carton, PET, Aseptic PET, cans and glass.
Focused on innovation, Refresco Gerber continuously searches for new and alternative ways to improve the quality of its product and packaging combinations in line with consumer and customer demand, environmental responsibilities and market demand. Refresco Gerber is headquartered in Rotterdam, the Netherlands and employs circa 4,100 staff.
