REVENUE GROWTH FOR THE 12th CONSECUTIVE QUARTER
SAME-DAY SALES UP 0.9%
FULL-YEAR FINANCIAL TARGETS CONFIRMED
→ SALES OF €3,422.2bn (USD $3,808.57bn) IN Q3
- On a constant and same-day basis, sales up 0.9%, or 1.9% excluding asset disposals and turnaround measures, of which:
- Europe: down 0.7%, or +1.0% excluding branch closures in Germany and Spain
- North America: +2.8%, driven by Canada
- Asia-Pacific: +2.7%
- Organic actual-day growth of 1.9%, including +1.0% from calendar and -0.3% from copper
- Reported sales growth of 3.3%, including currency (+1.7%) and scope (-0.3%) effects
→ SLOWER GROWTH THAN IN Q2 2019 EXPLAINED BY LOWER INDUSTRIAL DEMAND, ESPECIALLY IN THE US AND IN GERMANY, AS WELL AS BUSINESS SELECTIVITY AND EXPECTED UNFAVORABLE BASE EFFECT
→ DIGITAL REVENUE UP 13.2% IN Q3, NOW REPRESENTING 17.5% OF TOTAL SALES AND 26.3% OF SALES IN EUROPE (up 300 bps)
→ FULL-YEAR FINANCIAL TARGETS CONFIRMED
“Rexel posted sales growth for the twelfth consecutive quarter in Q3, demonstrating the continuing effectiveness of the various initiatives we have been implementing over the past three years. The third quarter saw a slowdown in growth, partly due to a more difficult environment in the industrial segment in the US and Germany. It also reflects a conscious decision by the Group to be more selective in our mix of business in order to improve profitability and cash generation. Despite a challenging environment, we remain focused on reaching our full-year financial targets.”
Patrick BERARD, CEO
SALES REVIEW FOR THE PERIOD ENDED SEPTEMBER 30, 2019
In Q3, sales were up 3.3% year-on-year on a reported basis and up 0.9% on a constant and same-day basis, reflecting solid sales momentum in Canada, key European countries and China.
In the third quarter, Rexel posted sales of €3,422.2 million (USD $3,422.2 million), up 3.3% on a reported basis, including:
- A positive currency effect of €54.7 million (USD $60.85 million) (i.e. +1.7% of Q3 2018 sales), mainly due to the appreciation of the US and Canadian dollars against the euro,
- A negative net scope effect of €10.4 million (USD $11.57 million) (i.e. -0.3% of Q3 2018 sales), resulting from divestments in China,
- A positive calendar effect of 1.0 percentage point.
On a constant and same-day basis, sales were up 0.9%, including a negative effect from the change in copper-based cable prices (-0.3% in Q3 19 vs +0.3% in Q3 18).
In 9m, Rexel posted sales of €10,221.7 million (USD $11,371.64 million), up 3.6% on a reported basis. On a constant and same day basis, sales were up 2.1%, including a negative impact of 0.3% from the change in copper-based cable prices.
The 3.6% increase in sales on a reported basis included:
- A positive currency effect of €192.7 million (USD $214.38 million) (i.e. +2.0% of 9m 2018 sales), mainly due to the appreciation of the US and Canadian dollars against the euro,
- A negative net scope effect of €33.7 million (USD $37.49 million) (i.e. -0.3% of 9m 2018 sales), resulting from divestments in China.
- A negative calendar effect of 0.2 percentage points.
Europe (52% of Group sales): -0.7% in Q3 on a constant and same-day basis
In the third quarter, sales in Europe increased by 0.8% on a reported basis, including a limited negative currency effect of €1.4m (USD $1.56m) (mainly due to the depreciation of the Swedish Krona against the euro). On a constant and same-day basis, sales were down 0.7% (or up 1.0% excluding branch closures in Germany and Spain).
- Sales in France (37% of the region’s sales) were up 3.3%, with continuing good momentum in commercial and residential markets, while industrial is growing at a slower pace. With a continuous focus on digital, which accounted for 17.3% of sales in the country in Q3 (up 30% vs Q3 18), adoption of analytical tools is accelerating.
- Sales in Scandinavia (13% of the region’s sales) were up 1.1%, with positive momentum in Sweden, up +5.5% in a good market environment; commercial and industrial projects (including demand in Electric Vehicles) more than offset negative momentum in residential. Norway and Finland were down 3.3%;
- In the UK (10% of the region’s sales), sales dropped by 10.6%, as a result of market deterioration, customer selectivity and branch closures (-1.5% impact – 28 branch closures of which 13 in 2019). London and the Central area are the most affected, down 18% and 12% respectively. In this uncertain business environment, further restructuring measures are under consideration.
- Benelux (10% of the region’s sales) posted solid 9.6% growth, with good momentum in residential and commercial offsetting lower growth in the industrial business. Photovoltaic business was a positive growth driver for the region;
- Sales in Germany (9% of the region’s sales) were down 17.2%, or -4.6% restated for the closure of 17 branches in Q3 2018, mainly due to deterioration in the industrial end-market. Solid fundamentals have been reestablished post-reorganization of our C&I business.
- Sales in Switzerland (7% of the region’s sales) grew by 2.2%, with good underlying demand in building & industrial automation.
North America (39% of Group sales): +2.8% in Q3 on a constant and same-day basis
In the third quarter, sales in North America were up 7.7% on a reported basis, including a positive currency effect of €55.5m (USD $61.74m) (mainly due to the appreciation of the US dollar against the euro). On a constant and same-day basis, sales were up 2.8%, mainly driven by Canada.
- In the US (78% of the region’s sales), sales were up 1.8% on a same-day basis. Same-day sales growth was lower on a slowdown in the industrial business, mainly due to the trade war with China, business selectivity (in order to protect profitability) and a more challenging base effect. Residential is up in mid-single digits in a broadly flat market, thanks to investments in branches and in sales reps, contributing for c. 1.5% of same-day sales growth in Q3;
- In Canada (22% of the region’s sales), sales were up 6.3% on a same-day basis, mainly fueled by commercial projects and cable. We also benefited from positive demand from industry end-users and initiatives in our proximity business (harmonization of our core offer plan across the country). The good momentum is expected to continue thanks to a solid backlog.
Asia-Pacific (9% of Group sales): +2.7% in Q3 on a constant and same-day basis
In the third quarter, sales in Asia-Pacific were down 0.1% on a reported basis, including a negative scope effect of €10.4m (USD $11.57m) following the disposal of our business in China in Q4 18 and a positive currency effect of €0.5m (USD $0.56m), mainly due to the appreciation of the US dollar against the euro. On a constant and same-day basis, sales were up 2.7%.
- In the Pacific (52% of the region’s sales), sales were up 1.2% on a constant and same-day basis:
- In Australia (80% of Pacific’s sales), sales were up 1.5%. Industrial business remained positive, offsetting the slowdown in residential and commercial markets.
- In New Zealand (20% of Pacific’s sales), sales were down 0.4%.
- In Asia (48% of the region’s sales), sales were up 4.4%:
- In China (84% of Asia), sales grew by 7.6%, mainly driven by a large project (€19.6m) whose contribution was nevertheless lower than in Q1 and Q2. Underlying business was down in mid- single digits with the industrial business impacted by the trade war;
- Middle East and India (16% of Asia). Middle East was down 38.2% impacted by a large project that benefited Q3 2018 (+ €6.0M). India posted a strong performance, up 19.9%, with solid industrial demand.
Consistent with our medium-term ambition and assuming no material changes in the macroeconomic environment, we target for 2019, at comparable scope of consolidation and exchange rates:
- A 2% to 4% same-day sales growth, excluding an estimated unfavorable impact of 1% from branch closures in Germany and Spain;
- A 5% to 7% increase in adjusted EBITA1;
- A further improvement of the indebtedness ratio (net debt-to-EBITDA 2).
1 excluding (i) amortization of PPA and (ii) the non-recurring effect related to changes in copper-based cable prices. At comparable scope and 2018 average currency conditions, we estimate an impact of +€1 million on our 2019 adjusted EBITA
2 as calculated under the Senior Credit Agreement terms
NB: The estimated impacts per quarter of (i) calendar effects by geography, (ii) changes in the consolidation scope and (iii) currency fluctuations (based on assumptions of average rates over the rest of the year for the Group’s main currencies) are detailed in appendix 2.Tagged with Biggest News, Rexel