WENDEL: Q3 2021 Trading update
PRESS RELEASE - october 28, 2021
Q3 2021 Trading update
Net Asset Value as of September 30, 2021:
€8,252 million, or €184.5 per share, up 16.0% since December 31,
2020 (€159.1 per share)
Consolidated net sales for first nine months
of 2021 were €5,520.6 million, up 10.3% overall and up 12.0%
organically year-on-year. All companies’ nine-month sales surpassed
those of 2019’s on an organic basis.
- Strong organic growth generated by Bureau Veritas (+11.9%) and
Stahl (+33.8%)
- At Crisis Prevention Institute, the strong rebound has
continued (+68.6%), with 9 months 2021 revenue significantly above
pre-Covid levels (+17.6%)
- Resilient organic growth for Constantia Flexibles (+1.5%)
- FX headwinds experienced across the portfolio (-2.3%
consolidated)
Major milestones in Wendel’s portfolio in Q3
2021:
- IHS Towers was listed on the New York Stock Exchange on October
14, 2021
- Wendel has granted exclusivity to DuluxGroup for the sale of
Cromology, with net proceeds1 for Wendel of c.€907 million. This
valuation is c. €369 million above Wendel’s valuation in its net
asset value as of June 30, 2021, the most recent data point prior
to the sale announcement
Deployment of c. €270 million since the
beginning of the year:
- €221.7 million invested by Wendel in partnership with the
Deconinck Family to acquire Tarkett’s shares as of October 26,
2021
- Wendel Lab: $45.0 million committed in 2021 to date, reaching
€108 million in cumulative commitments
- €25 million in Wendel shares bought back in the first half of
2021
ESG recent achievements:
- Further improvement of extra-financial ratings and awards:
- Wendel has been awarded in October the French 2021 Grand Prix
de la Transparence which ranks the firm number 1 among all SBF 120
companies on the basis of the quality and transparency of all its
financial and non-financial communications practices
- Upgrade from “Low Risk” to “Negligible Risk” at
Sustainanalytics in September 2021
- Wendel won the “Diversity in management bodies” award from
L’Agefi in October
- Wendel has adopted the 10 Principles of the United Nations
Global Compact
- Financial terms of Wendel’s Revolving Credit Facility’s amended
to incorporate ESG targets
Strong financial structure:
- LTV ratio at 10.2% as of September 30, 2021
- Total liquidity of €1.4 billion as of September 30, 2021,
including €685 million of cash and a €750 million committed credit
facility (fully undrawn)
- Investment grade corporate ratings: Moody’s Baa2 with stable
outlook / S&P BBB with stable outlook
- ESG targets embedded in the financial terms of the undrawn €750
million syndicated credit
André François-Poncet, Wendel Group CEO,
said:
“Most of our companies continued to perform well
in the first nine months of 2021. Their sales exceeded 2019 levels
on an organic basis. This growth comes with challenges regarding
raw materials, logistics, and labor costs. Thus far they have
broadly demonstrated an ability to adapt to market
circumstances.
Two major events took place in October: the IPO
of IHS Towers on the New York Stock Exchange and the exclusivity
which we granted to DuluxGroup for the sale of Cromology. In both
cases, we have demonstrated our ability to support these two
companies at important times acting as a long-term investor.
Beyond these two milestones in our roadmap, we
are further intensifying our search for capital redeployment
towards higher-growth companies, directly and through the Wendel
Lab. We recently further added to our investment teams in our Paris
and NY offices, and we are well equipped with talented individuals
to pursue new investments with discipline and opportunism.”
Nine months 2021 sales of Group
companies
Nine months 2021 consolidated sales
(in
millions of euros) |
9
months 2020 |
9
months 2021 |
Δ |
Organic Δ |
Bureau Veritas |
3,348.8 |
3,664.1 |
+9.4% |
+11.9% |
Constantia Flexibles |
1,143.0 |
1,168.3 |
+2.2% |
+1.5% |
Stahl |
474.6 |
624.4 |
+31.6% |
+33.8% |
Crisis Prevention Institute (1) |
40.4 |
63.9 |
+58.3% |
+62.8% |
Consolidated sales (2) |
5,006.8 |
5,520.6 |
+10.3% |
+12.0% |
- The PPA effect corresponds to the PPA restatement impact of $
-1.8M booked in 9M 2020.
- Comparable sales for 9 months 2021 represent 5,006.8M€ vs. 2020
published sales of 5,477.6M€. The difference of 470.8M€ corresponds
to sales of Cromology, classified as asset held for sale in
accordance with IFRS 5. The contribution of this portfolio
company has been reclassified in "Net income from discontinued
operations and operations held for sale”.
Q3 2021 sales of Group companies
Q3 2021 consolidated sales
(in
millions of euros) |
Q3
2020 |
Q3
2021 |
Δ |
Organic Δ |
Bureau
Veritas |
1,148.3 |
1,245.7 |
+8.5% |
+7.5% |
Constantia Flexibles |
381.6 |
416.2 |
+9.1% |
+3.0% |
Stahl |
157.8 |
204.6 |
+29.6% |
+28.6% |
Crisis Prevention Institute (1) |
16.6 |
27.4 |
+64.9% |
+67.9% |
Consolidated sales (2) |
1,704.3 |
1,893.8 |
+11.1% |
+9.0% |
- The PPA effect corresponds to the PPA restatement impact of $
-0.3M booked in Q3 2020.
- Comparable sales for Q3 2020 represent 1,704.3M€ vs. 2020
published sales of 1,885.0M€. The difference of 180.7M€ corresponds
to sales of Cromology , classified as asset held for sale in
accordance with IFRS 5. The contribution of this portfolio
company has been reclassified in "Net income from discontinued
operations and operations held for sale”.
Sales of Group companies
Bureau Veritas – Strong organic revenue
performance in the third quarter of 2021; 2021 Full Year outlook
confirmed
(full consolidation)
Note: Bureau Veritas published its Q3 2021
trading update on October 26, 2021
Revenue in the third quarter of 2021 amounted to
€1,245.7 million, a 8.5% increase compared with Q3 2020. Organic
increase was 7.5%.
Four businesses delivered strong organic growth,
Industry +10.4%, Consumer Products +8.7%, Buildings &
Infrastructure (B&I) +8.0%, and Agri-Food & Commodities
+7.7%. The rest of the portfolio continued to grow, with Marine
& Offshore up 2.7% organically, and Certification, up 0.8%,
against tough comparables from last year’s catch-up audits.
By geography, activities in the Americas
strongly outperformed the rest of the group (25% of revenue; up
21.2% organically), led by a 17.3% increase in North America
(Buildings & Infrastructure driven) and by a 28.5% increase in
Latin America (primarily fueled by the Power and Utilities
segment). Activity in Asia Pacific (32% of revenue; up 4.4%
organically) benefited from robust growth in China as well as in
Australia. Europe (34% of revenue) delivered broadly stable organic
growth with resilient performance in France, solid growth in Italy
and the Netherlands while weaker in the UK and in Spain. Finally,
in Africa and the Middle East (9% of revenue), the business
strongly recovered (up 16.6% on an organic basis) fueled by the
commodities markets.
The scope effect was a positive 0.2%, reflecting
the five bolt-on acquisitions realized since the beginning of
2021.
Currency fluctuations had a positive impact of
0.8%, mainly due to the appreciation of the USD and pegged
currencies against the euro, which was partly offset by the
depreciation of some emerging countries’ currencies.
At the end of September 2021, the Bureau
Veritas' adjusted net financial debt slightly increased compared
with the level at June 30, 2021 due to the payment of the dividend
in July 2021. Bureau Veritas has a solid financial structure with
no maturities to refinance until 2023. At September 30, 2021,
Bureau Veritas had €1.2 billion in available cash and cash
equivalents and €600 million in undrawn committed credit lines.
2021 OUTLOOK CONFIRMED
Based on the excellent year-to-date performance,
considering tough comparables in the fourth quarter, and assuming
no severe lockdowns in its main countries of operation due to
Covid-19, Bureau Veritas still expects for the full year 2021
to:
- Achieve strong organic revenue growth;
- Improve the adjusted operating margin;
- Generate sustained strong cash flow.
For more information:
https://group.bureauveritas.com
Constantia Flexibles – Encouraging
performance in first nine months’ with reported growth of +2.2%,
driven by organic growth of +1.5%, and the acquisition of
Propak
(full consolidation)
Sales in the first nine months of 2021 totaled
€1,168.3 million, up +1.5% on an organic basis driven by a +3.8%
organic growth in the Consumer markets with a good performance in
coffee capsules and beverages. The Pharma market was affected by
lockdown-induced mild flu and cold season and destocking from
customers leading to -5.1% YTD organic decline in sales against a
strong comparison in 2020. Encouragingly the recent pharma market
order intake has been improving.
These figures are affected by an exceptional
base of comparison in 2020 due to the pandemic. For the record, in
2020, Consumer sales were negatively impacted with lower activity
levels particularly in India, Mexico and South Africa, partially
offset by (i) an increased demand in European Consumer markets due
to so-called ‘pantry loading’, and (ii) particularly high pharma
sales due to increased demand in the early part of the COVID-19
pandemic. In India, the market has remained very challenging this
year in the light of a second lockdown and a very competitive
environment with significant price pressure.
The first nine months of the 2021 benefited from
the integration of Propak in June (+2.4%) but were negatively
impacted (-1.7%) by unfavorable FX, mainly from U.S. dollar,
Russian ruble and Indian rupee.
As already mentioned in the first half-year
results, Constantia Flexibles is facing an unprecedented increase
in all raw material prices. This is impacting performance in 2021
as there usually is a temporary delay between changes in raw
material prices and adjusting selling prices to customers.
Constantia and its renewed management team accelerated their
efforts towards profitability measures, including a new cost
reduction initiatives program initiated at the beginning of the
year. A dedicated taskforce set up in March has focused on price
increase negotiations with customers as to limit the impact of raw
material cost increases with good effect although there still will
be a negative time lag impact for the full year.
On June 9, 2021, Constantia closed the
acquisition of Propak, a packaging producer located in Dücze in
Turkey. The purchase price is based on an enterprise value of €120
million, representing a 6.4x multiple of 2020 actual EBITDA. Propak
is a leading player in the European packaging industry for the
snacks market operating out of one well-invested plant with
approximately 360 employees and complements Constantia Flexibles’
packaging solutions portfolio. This significant acquisition
elevates Constantia Flexibles to one of the leading players in the
European snacks market. Performance since the acquisition has been
in line with expectations with good commercial and cost synergies
identified for the future.
Good overall progress has been made by the
company in implementing its Vision 2025 strategy with a return to
organic growth and an acceleration of internal performance
improvement measures. With the aforementioned Propak acquisition,
Constantia has restarted its efforts to create value through
acquisitions in the fragmented and consolidating flexible packaging
markets. Outside of Europe, profitability of operations has been
significantly enhanced in North America and South Africa.
Stahl – Strong sales rebound confirmed,
surpassing 9 months 2019 sales levels
(Full consolidation)
Stahl’s sales totaled €624.4 million over
the first 9 months of the year, representing an increase of +31.6%
vs. €474.6 million sales over the same period in 2020. Organic
growth was +33.8% and foreign exchange rate fluctuations had a
negative impact of -2.3%.
This good activity in the first nine months of
the year exceeded the 2019 sales level over the same period by
2.1%. Leather Chemicals sales were in line with 2019 levels while
Performance Coatings reported growth of +8.2% vs 2019, driven by
increases in volumes and average prices, thanks to market rebound
and market share gains.
After a challenging 2020, Stahl continued its
recovery which started in Q3 2020 and which has accelerated since
the end of 2020. This recovery has been driven by a strong order
book and broad-based volume growth across almost all regions and
end markets, in part due to a general restocking effect. Stahl’s
order book has declined slightly during Q3 2021, but remains high
compared to pre-crisis levels, indicating that the rebound underway
since the beginning of the year is, as expected, easing.
The solid performance in sales is, however,
unsurprisingly mitigated by an unprecedented increase in raw
material prices due to tight supply markets, which is impacting
margin. This impact is expecting to continue into 2022.
Stahl’s sustainability efforts have been
rewarded in July with a Gold rating from EcoVadis, placing it
within the top 5% of companies assessed by EcoVadis. In 2020, Stahl
had been awarded a Silver award. Stahl’s 2030 target is to maintain
the EcoVadis Gold rating through continuous improvement.
Crisis Prevention Institute – Total growth of
+68.6% compared to 2020 and +17.6% versus 2019 supported by
market recovery, technology enablement and new programs (full
consolidation)
Crisis Prevention Institute recorded revenue of
$76.4 million in the first nine months of 2021, up +68.6% in
total compared to the same period in 2020 and +17.6% versus 2019,
reflecting several factors:
- Increased customer engagement and training activity supported
by reduction in travel and gathering restrictions and a heightened
stress environment
- Overall new Certified Instructors (CI) and renewal volumes
above 2019 levels
- Successful new program launches including specialty topics such
as Trauma, Autism, and Advanced Physical Skills
- Continued mix shift toward digital solutions for both new and
existing CIs, with programs retaining the required in-person
components. Virtual Learner Material sales expanded in share, with
year-to-date e-learning delivery representing 34% of total Learner
Material volumes, above the 28% and 10% levels in 2020 and
2019.
Of the +68.6% nine-month sales increase versus
the same period in 2020, +4.0% was related to a purchase accounting
adjustment to deferred revenue (impact of -$1.8 million in the
first nine months of 2020), +1.8% was due to FX movements, and +
62.8% was organic growth.
CPI’s activity has benefited from the improved
ability to gather in person as customers, notably in hospitals and
schools, move towards an increasingly normalized work environment.
As a result, CPI has leveraged an improved sales force strategy to
continue to further penetrating these core US markets as well as
expanding into new markets.
The overall heightened level of activity,
combined with effective cost management, has led to continued
deleveraging over the past few months, maintaining CPI’s leverage
level at 6.5x, well below the 10.75x Q3 covenant.
IHS Towers – Listed on New York Stock
Exchange since October 14, 2021
IHS Holding Limited ordinary shares are now
traded on the New York Stock Exchange since October 14, 2021 under
the ticker symbol “IHS”.
Wendel did not sell any shares in the offering.
As a result, Wendel owns 62,975,396 shares of IHS Holding Limited.
The shares managed by Wendel for third parties (12,374,657 shares
managed through “ATT”, not included in the preceding share count)
are planned to be allocated to the Limited Partners of ATT in the
coming weeks. Following the liquidation of ATT, Wendel will own
19.2% of the share capital of IHS Holding Limited. As part of the
IPO transaction, Wendel and all other existing shareholders have
signed a six month underwriter lock-up and have entered into a
shareholder lock-up agreement2 that staggers potential sales of
shares over a period of thirty months.
Following the IPO, Mr. Frank Dangeard has been
designated by Wendel to sit at the board of IHS which comprises 10
directors in total.
IHS Towers financial announcement will be
available on: https://www.ihstowers.com/investors.
Cromology – Wendel grants exclusivity to
DuluxGroup for the sale of Cromology
(no longer fully consolidated as per IFRS 5)
Wendel received a firm offer from DuluxGroup to
acquire 100% of the equity of Cromology (“The Company”), a European
leader in decorative paints. The Company designs, manufactures,
sells and distributes a wide range of decorative paints and
products to professionals and consumers through its presence in
eight European countries. 65% of its activity is in France, 35% in
Southern Europe and in the rest of the world.
Given the industrial and financial quality of
DuluxGroup’s proposal, Wendel has decided to enter into an
exclusivity period with DuluxGroup to finalize the transaction.
DuluxGroup proposes to acquire 100% of the
equity of the Company for an enterprise value of around €1,262
million, which represents a multiple of 13.2x LTM EBITDA3 as of
June 30, 2021. For Wendel, net proceeds4 would amount to c.€907
million. This would represent a multiple of 1.6x Wendel’s total
investment in Materis Group since 2006.
The closing of the transaction should take place
during the first half of 2022, subject to customary regulatory
approvals.
Wendel’s net asset value: €184.5 per share as
of September 30, 2021
Wendel’s Net Asset Value as of September 30,
2021 was prepared by Wendel to the best of its knowledge and on the
basis of market data available at this date and in compliance with
its methodology5.
Net Asset Value was €8,252 million or €184.5
per share as of September 30, 2021 (see detail in Appendix 1
below), as compared to €159.1 on December 31, 2020,
representing an increase of +16.0% since the start of the year.
Compared to June 30, 2021, Net Asset Value
decreased by -2.4%, principally as a result of the valuation gap
between the first trading days of IHS vs. the June 30 Net Asset
Value, which has been almost entirely offset by the Dulux Group
offer for Cromology and the performance of Bureau Veritas’ share
price.
The discount to NAV was 33.8% as of September
30, 2021.
Strong financial structure: €1.4 billion
liquidity and strong debt profile
- Loan-to-value (LTV) ratio at 10.2% as of September 30,
2021
-
Total liquidity of €1.4 billion as of September 30, 2021,
including €685 million of cash and €750 million committed
credit facility (fully undrawn)
-
Average debt maturity extended to 5.3 years following the
successful placement of a €300 million 10-year bond at 1.0%
interest on May 26, 2021. Proceeds from this offering have been
used for the early repayment, in whole of the bond maturing in
April 2023 on July 1, 2021.
-
Investment grade corporate ratings: Moody’s Baa2 with stable
outlook / S&P BBB with stable outlook
Other significant events since the beginning
of 2021
Integration of ESG targets into the financial
terms of the undrawn €750 million syndicated credit
facility
Wendel has signed an amendment to its undrawn
€750 million syndicated credit facility maturing in October 2024 in
order to integrate Environmental, Social and Governance (ESG)
criteria. Measurable aspects of the non-financial performance of
Wendel and the companies in its portfolio will henceforth be taken
into account in the calculation of the financing cost of this
syndicated credit. They are in line with certain quantitative ESG
targets the Group has set in its ESG 2023 roadmap.
The three non-financial criteria selected to be
integrated into the calculation of the syndicated credit’s
financing cost are as follows:
- ESG due diligence must systematically be carried out on new
investments directly made by Wendel, and the controlled companies
in its portfolio must implement an ESG roadmap;
- the main climate risks and carbon footprint associated with
each controlled portfolio company must be evaluated and action
plans developed;
- at least 30% of Wendel Group representatives on the boards of
directors of portfolio companies and of certain Group holdings must
be women, by end of 2023.
These criteria will be evaluated annually by an
independent third party and will as the case may be giving rise to
adjustments to the margin of the facility.
Wendel partners with the Deconinck family to
acquire shares of Tarkett and to support the growth of the
company
As part of its 2021-24 investment strategy,
Wendel has teamed up with the Deconinck family to form Tarkett
Participation, which will support Tarkett’s growth. This investment
was accompanied by an offer to acquire Tarkett shares. According to
the partnership, Wendel will hold up to 30% of Tarkett
Participation, alongside the Deconinck family. The Deconinck family
will maintain a controlling stake in the company.
On October 26, 2021, Tarkett Participation
announced that it held, directly or indirectly, 90.41% of Tarkett’s
share capital (compared with 86.27% following the close of the
simplified tender offer on July 9, 2021). Minority shareholders of
Tarkett now hold less than 10% of share capital and voting
rights.
Tarkett Participation could contemplate a
potential squeeze-out procedure, in accordance with the regulation,
but this is not on the table at this time. Tarkett Participation is
a company controlled by the Deconinck family, alongside Wendel.
As a result, Wendel has invested a total of
€221.7 million for a total stake of 25.9% of Tarkett
Participation’s capital.
Josselin de Roquemaurel, Wendel’s Executive
Vice-President and Managing Director of Wendel, joined Tarkett SA’s
Supervisory Board as Observer on July 29, 2021.
Return to shareholders and dividend
As announced on March 18, 2021, Wendel bought
back €25 million of its own shares over the first half of 2021.
Wendel will continue to buy back additional shares
opportunistically in the remainder of 2021.
Agenda
12.02.2021
2021 Investor Day - Meeting to take
place in the afternoon
03.18.2022
2021 Full Year Results - Publication of
NAV as of December 31, 2021 (pre-market release)
04.28.2022
Q1 2022 Trading update - Publication of
NAV as of March 31, 2022 (pre-market release)
06.16.2022
Annual General Meeting
07.29.2022
H1 2022 results - Publication of NAV as
of June 30, 2022, and condensed Half-Year consolidated financial
statements (pre-market release).
10.28.2022
Q3 2022 Trading update - Publication of
NAV as of September 30, 2022 (pre-market release).
12.01.2022
2022 Investor Day.
About WendelWendel is one of Europe's
leading listed investment firms. The Group invests in Europe
and North America in companies which are
leaders in their field, such as Bureau
Veritas, Tarkett, Cromology, Stahl, IHS Towers,
Constantia Flexibles, and Crisis Prevention Institute. Wendel
often plays an active role as a controlling or
significant shareholder in its portfolio
companies. Wendel seeks to implement long-term
development strategies, which involve boosting growth and margins
of companies so as to enhance their leading market
positions.
Wendel is listed on Eurolist by Euronext
Paris.
Standard & Poor’s ratings: Long-term: BBB,
stable outlook – Short-term: A-2 since January 25, 2019
Moody’s ratings: Long-term: Baa2, stable outlook
– Short-term: P-2 since September 5, 2018
Wendel is the Founding Sponsor of Centre
Pompidou-Metz. In recognition of its long-term patronage of the
arts, Wendel received the distinction of “Grand Mécène de la
Culture” in 2012.
For more information: wendelgroup.com
Follow us on Twitter @WendelGroup
Appendix 1: NAV as of September 30, 2021:
€184.5 per share
(in
millions of euros) |
|
|
09/30/2021 |
Listed equity investments |
Number of shares |
Share price (1) |
5,655 |
Bureau
Veritas |
160.8
m |
€28.0 |
4,506 |
IHS
Towers |
63.0
m |
$17.1 |
928 |
Tarkett |
|
€20.2 |
221 |
Unlisted investments (2) |
3,444 |
Other
assets and liabilities of Wendel and holding companies (3) |
|
92 |
Cash
and marketable securities (4) |
|
|
685 |
Gross asset value |
|
|
9,876 |
Wendel
bond debt and accrued interest |
|
|
-1,625 |
Net
Asset Value |
|
|
8,252 |
Of
which net debt |
|
|
-939 |
Number
of shares |
|
|
44,719,119 |
Net
Asset Value per share |
|
|
€184.5 |
Average
of 20 most recent Wendel share prices |
|
€122.2 |
Premium (discount) on NAV |
|
|
-33.8% |
- Last 20 trading days average as of September 30, 2021. For IHS
Towers, stock price is based on the average between October 14 and
October 20, 2021.
- Investments in non-publicly traded companies (Cromology, Stahl,
Constantia Flexibles, Crisis Prevention Institute, Wendel Lab). As
of September 30, 2021 Cromology is valued in line with the offer
received from DuluxGroup. Aggregates retained for the calculation
exclude the impact of IFRS16.
- Of which 1,055,361 treasury shares as of September 30,
2021
- Cash position and financial assets of Wendel and holdings. As
of September 30, 2021, this comprises € 0.4 billion of cash and
cash equivalents and € 0.3 billion short term financial
investment.
Assets and liabilities denominated in currencies
other than the euro have been converted at exchange rates
prevailing on the date of the NAV calculation.
If co-investment and managements LTIP conditions
are realized, subsequent dilutive effects on Wendel’s economic
ownership are accounted for in NAV calculations. See page 360 of
the 2020 Universal Registration Document.
1 Net proceeds after financial debt, dilution to
the benefit of the Company’s minority investors, transaction costs
and other debt-like adjustments.
2Details of which are available in the
prospectus
3 Enterprise value and EBITDA exclude the impact
of IFRS 16
4 Net proceeds after financial debt, dilution to
the benefit of the Company’s minority investors, transaction costs
and other debt-like adjustments
5 See page 332 of the 2020 Universal
Registration Document for the NAV methodology.
- 2021_10_28_Q3_CP_Wendel_en
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