Return to organic growth in the third
quarter and improved ORfA
- Nine-month sales: €4,712m, -7.9% as reported and -6.7%
LFL*
- Third-quarter sales: €1,797m, +1.1% as reported and +4.4%
LFL*, including +9.9% on Consumer business
- Operating Result from Activity (ORfA): €324m, -20.4% as
reported and -6.5% LFL*
- Net financial debt: €1,971m, -€488m vs 30/09/2019
Expected performance for full-year 2020
- Sales down between 5% and 6% LFL, with negative currency
impacts in the range of €200m/€250m
- ORfA could fall by 25-30% including a negative currency
impact slightly above €100m
Regulatory News:
Statement of Thierry de La Tour d’Artaise,
Chairman and Chief Executive Officer of Groupe SEB
(Paris:SK):
“The health and economic situation that we are currently facing
is unprecedented, but the small domestic equipment industry once
again demonstrates its resilience. We have succeeded in limiting
the impact of the crisis on our performances thanks to the
responsiveness of our teams and a solid financial structure. We
have been posting a positive turnaround in the Consumer business.
Conversely, Professional business remains complicated, owing to the
difficulties experienced by the hotel, restaurant and café
sector.
We are confident about the future, our fundamentals are solid,
our capacity for innovation is constantly renewed and our teams are
agile.”
* LFL: like-for-like (organic); at constant exchange rates and
scope
GENERAL COMMENTS ON GROUP SALES Against the backdrop of
an unprecedented crisis, Group revenue at end-September totaled
€4,712m, down 7.9%. The decline can be broken down into an organic
decrease of 6.7%, a currency effect of -2.2% and a scope effect of
+1% (mainly the US company Storebound, for 2 months). The change in
sales comprises a third quarter back to growth (+4.4% LFL). The
difference between reported and organic growth mainly reflects the
amplified depreciation of some currencies against the euro,
including the Brazilian real, the Russian ruble, the Chinese yuan,
the Turkish lira, and the Mexican and Colombian pesos… (currency
effect of €-91m, -5.1% in the third quarter). This effect was
partially offset by price increases in the markets concerned. In
addition, for the last three months, the scope effect amounts to
+€32m or +1.8%.
The good performance in the third quarter was driven by our
Consumer business, up 10% LFL, bolstered by a globally buoyant
small domestic appliance market (reallocation of household
expenditure), a highly favorable trend for cooking products (more
“home cooking”), and e-commerce. All the major regions contributed
to the organic growth in quarterly sales.
In contrast, the Professional business, and notably Professional
Coffee, continues to be heavily impacted by the difficulties in the
hospitality and catering sector and by persistent uncertainties
that are hindering investments.
DETAIL OF REVENUE BY REGION
Revenue in €m
9 months 2019
9 months 2020
Change 2020/2019
Q3 Change 2020/2019
As reported
Like-for-like*
As reported
Like-for-like*
EMEA
Western Europe
Other countries
2,180
1,586
594
2,118
1,520
598
-2.9%
-4.2%
+0.7%
-1.4%
-4.2%
+6.1%
+8.6%
+9.4%
+6.7%
+12.2%
+9.4%
+19.2%
AMERICAS
North America
South America
630
400
230
584
417
167
-7.4%
+4.2%
-27.5%
-3.1%
-0.1%
-8.3%
+6.7%
+18.0 %
-14.8%
+10.8%
+8.6%
+15.0%
ASIA
China
Other countries
1,715
1,339
376
1,582
1,196
386
-7.7%
-10.7%
+2.7%
-6.2%
-8.9%
+3.8%
+2.0%
+0.1%
+7.6%
+6.0%
+3.9%
+12.4%
TOTAL Consumer
4,525
4,284
-5.3%
-3.4%
+6.0%
+9.9%
Professional business
589
428
-27.3%
-31.6%
-38.4%
-39.4%
GROUPE SEB
5,114
4,712
-7.9%
-6.7%
+1.1%
+4.4%
*
Like-for-like: at constant exchange rates and scope
Rounded
figures in €m
%
calculated in non-rounded figures
COMMENTS ON CONSUMER SALES BY REGION
Revenue in €m
9 months 2019
9 months 2020
Change 2020/2019
Q3 Change 2020/2019
As reported
Like-for-like*
As reported
Like-for-like*
EMEA
Western Europe
Other countries
2,180
1,586
594
2,118
1,520
598
-2.9%
-4.2%
+0.7%
-1.4%
-4.2%
+6.1%
+8.6%
+9.4%
+6.7%
+12.2%
+9.4%
+19.2%
WESTERN EUROPE
After a difficult second quarter (-8.3% LFL), the region posted
a substantial turnaround in the third quarter, with sales up 9.4%
LFL. In almost all the countries, this performance reflected
positive market momentum (particularly in cooking products, which
benefited from the strong resurgence of home cooking), continued
restocking by retailers in July, and a very good month in
September. Generally speaking, the dynamic remains largely driven
by e-commerce.
France posted double-digit sales progression in the quarter,
nurtured by most distribution channels, including our proprietary
retail network. Almost all product categories contributed to
growth, including cooking, of course, as well as home care, staging
a marked recovery.
In other Western European countries, except for Italy, where
activity resumption occurred later, business trended well overall
in the third quarter. This was notably the case in Germany, where
our revenue grew slightly in the third quarter, fueled among other
things by the good performances of WMF product lines and the
continued ramp-up in online sales. Momentum was particularly brisk
in the Nordic countries, Belgium and the Netherlands (despite
demanding 2019 comparatives resulting from loyalty programs), the
UK and Spain.
Overall sales dynamic stemmed from robust performances in
cookware and electrical cooking (pots and pans, electrical cooking,
food and beverage preparation, depending on the country), a good
season for fans (including in Northern Europe) and a rebound in
vacuum cleaners (robot and versatile).
OTHER EMEA COUNTRIES
In the third quarter, the region posted vigorous organic sales
growth of 19.2%, leading to an increase of over 6% LFL at
end-September.
The difference with the performance in euros results from the
amplified depreciation of certain currencies over the quarter,
notably the Russian ruble and Turkish lira. These effects were
offset in part by price increases.
Despite the continued precarious health situation, reflected in
localized (re)lockdowns, the small domestic equipment market was
buoyant overall and our quarterly turnover rose in most
countries.
The solid sales growth was driven both by our large markets
(Russia, Poland, Ukraine, Romania and Turkey) and the continued
rapid development in Central Asia.
Performances for the quarter and through end-September were more
contrasted in Central Europe, owing notably to demanding 2019
comparatives stemming from loyalty programs.
Overall, e-commerce was a key driver of the strong sales
momentum, be it in the form of business with click-and-mortar
customers, e-commerce specialists (pure players) or direct-to-
consumer sales.
As in the second quarter, activity was spurred by our flagship
products and new categories (cookware, grills, garment steamers,
versatile and robot vacuum cleaners, etc).
These solid performances served to strengthen our positions in
several large markets.
Revenue in €m
9 months 2019
9 months 2020
Change 2020/2019
Q3 Change 2020/2019
As reported
Like-for-like*
As reported
Like-for-like*
AMERICAS
North America
South America
630
400
230
584
417
167
-7.4%
+4.2%
-27.5%
-3.1%
-0.1%
-8.3%
+6.7%
+18.0 %
-14.8%
+10.8%
+8.6%
+15.0%
NORTH AMERICA
After a 6.6% contraction in the first half, sales returned to
growth in the third quarter. Despite unfavorable currency effect
across the region, sales gained 18% in euros, following the
integration of Storebound. On a like-for-like basis, sales
increased by 8.6%.
The pick-up in business activity in the United States has been
the main growth driver, despite the tough health context and
continuing difficulties in traditional retail. The Group benefited
from the consumer preference for cooking at home as well as from
the temporary consumption incentives granted by the US government.
Cookware sales rose strongly over the quarter for all our leading
brands -T-Fal, All Clad and Imusa - and across all retail networks,
both in e-commerce and brick-and-mortar stores. While electrical
cooking held up well, linen care continued to trend markedly
downwards. However, thanks to the expansion of its retail network
end 2019, Rowenta was able to outperform the contracting
market.
Furthermore, Storebound’s solid business momentum accelerated in
the third quarter with turnover up by more than 80%, primarily
under the Dash brand.
In Canada, our sales were down, penalized by continued listing
selection and an unfavorable base effect in SDA. Cookware revenue
trended more positively.
In Mexico, in a highly deteriorated health and economic context,
the decrease in quarterly sales resulted from high comparatives
(loyalty program in 2019).
SOUTH AMERICA
The overall environment remained very challenging in South
America, owing to the continuation of the COVID-19 health crisis
and its societal and economic consequences, particularly in Brazil
and Argentina. The third quarter also saw the amplified
depreciation of currencies (notably the Brazilian real and the
Colombian and Argentine pesos), with a strong impact on our sales
as reported.
In Brazil, after a very difficult first half, the recovery of
the small domestic equipment market initiated in June picked up
speed, buoyed by a highly favorable cooking trend. The Group’s
quarterly performances were consistent with this positive trend,
with sales increasing by over 10% in real*, fueled by volumes.
Almost all product families contributed to the solid momentum which
was driven by the vast majority of distribution channels, with
stores reopened as from June and a rapid development in online
sales.
However, the sharp depreciation of the currency could not be
offset by price hikes that have been passed on.
In Colombia, the control over the health situation and the
return to a certain normality in retail enabled us to respond to
firm demand in the third quarter. As such, our revenue rose
strongly in organic terms, including notably price increases that
have been implemented. Imusa cookware as well as electrical cooking
were the main contributors to growth, achieved in traditional
stores, our proprietary network and online.
*Including the PIS-COFIN effect (+€8m) in Q3 2019
Revenue in €m
9 months 2019
9 months 2020
Change 2020/2019
Q3 Change 2020/2019
As reported
Like-for-like*
As reported
Like-for-like*
ASIA
China
Other countries
1,715
1,339
376
1,582
1,196
386
-7.7%
-10.7%
+2.7%
-6.2%
-8.9%
+3.8%
+2.0%
+0.1%
+7.6%
+6.0%
+3.9%
+12.4%
CHINA
In China, the cookware market trended favorably in the third
quarter, fueled by the increased share of e-commerce. Conversely,
the small domestic appliance (SDA) market waned somewhat over the
summer, following the very strong dynamic driven by the promotional
events of June (Shopping festival). In both cases, it is worth
noting that the offline market continued to contract sharply.
In this context, after a second quarter posting revenue up 10%
LFL, Supor sales momentum in China was less brisk in the third
quarter, at +3.9% LFL. Nurtured by all the business activities, the
increase was fairly well balanced between cookware -fueled mainly
by woks and kitchen tools- and small domestic appliances. In
addition to the continued success of existing product lines
(notably high-speed blenders and garment steamers), Supor has also
been moving into new trendy, more western categories such as
oil-less fryers and ovens. Continued good momentum in the third
quarter stems from Supor’s accurate product dynamic, strengthened
market coverage and solid digital marketing activation, targeting
notably young generations.
Over the first nine months of the year, cookware sales remained
down, owing to the business backlog accumulated in the first half
(due to the extended shutdown of the Wuhan plant) while SDA
turnover was practically stable.
OTHER ASIAN COUNTRIES
In Asia excluding China, after a resilient first half despite
the health crisis, the third quarter materialized a steep
acceleration in business activity with sales up 12.4% LFL, fueled
by practically all the countries in the region.
In Japan, the Group’s largest market in the Asian area, the
imperative of cooking more at home generated strong demand for our
flagship products and innovations, including the Ingenio line,
Cook4me steam cookers and Lakulacooker. Besides, the reopening of
stores led to a recovery in the 43 shops of our retail
business.
In South Korea, revenue expansion was brisk in the third
quarter, thanks notably to good sell-in ahead of the Chuseok
harvest festival (October 1). The launch of new categories such as
draught beer systems and oil-less fryers, WMF products and new
listings in both e-commerce and specialists’ retailers have been
key growth drivers.
In the other countries in the region, revenue in the
third-quarter trended upwards, with strong recovery in Australia
notably thanks to extended distribution, solid performances in
Thailand and Hong Kong, and a return to growth in Singapore through
e-commerce. However, in Vietnam, third-quarter activity was
impacted by the non-renewal of a campaign with a retailer.
COMMENTS ON PROFESSIONAL BUSINESS ACTIVITY
Revenue in €m
9 months 2019
9 months 2020
Change 2020/2019
Q3 Change 2020/2019
As reported
Like-for-like*
As reported
Like-for-like*
Professional business
589
428
-27.3%
-31.6%
-38.4%
-39.4%
At end-September, revenue of the Group’s Professional business
remained substantially down, with a decline of nearly 40% LFL in
the third quarter.
In addition to a demanding base effect stemming from the
delivery of major Professional Coffee contracts last year, our
sales are being impacted above all by the COVID-19 health crisis,
whose economic consequences on the hospitality and restaurant
sector remained massive in the third quarter. The sharp and
extended decrease in business activity, along with the sector’s
direct exposure to new health measures, has led customers to adopt
extreme caution and, hence, to suspend or postpone their
investments in coffee machines. However, commercial activity
naturally continues to fuel the pipeline of future contracts and
seize all development opportunities.
In parallel, our service and maintenance business has been
holding up firmer in Europe - Germany in particular.
Hotel equipment, almost exclusively based on contracts, was hit
even harder over the quarter, but accounts for a limited share of
Professional business.
OPERATING RESULT FROM ACTIVITY
At end-September, the Group’s Operating Result from Activity
(ORfA) stood at €324m, versus €407m for the first nine months of
2019 (-20.4%). It includes a currency effect of -€63m and a scope
effect of +€6m. On a like-for-like basis, ORfA at end-September
came out at €381m.
The contraction in ORfA in the first nine months owes mainly to
the decrease in volumes, both Consumer and Professional, over the
period. The decline in gross margin has not been entirely offset by
the gains achieved in purchasing, the reduction of growth drivers
and the savings plan on G&A costs.
Yet the decline was much more limited than in the first half,
reflecting an acceleration in the steady improvement of performance
in the third quarter, in which the Group posted ORfA of €221m,
compared with €178m in 2019.
This 25% increase resulted directly from higher Consumer sales
and from unusually low investment in growth drivers (mainly
advertising and operational marketing), which will reverse in the
fourth quarter. It also includes a more detrimental currency effect
of -€39m, following the amplified depreciation of several
currencies in the last few months.
DEBT AT SEPTEMBER 30, 2020
Net debt stood at €1,971m at September 30, 2020 (of which €293m
in IFRS 16 debt). This was practically stable on end-December 2019
and down €488m on end-September 2019. It includes the acquisition
of Storebound in July.
The decrease in debt can be attributed to the solid generation
of operating cash flow, stemming largely from a decrease in working
capital requirement.
OUTLOOK
The overall environment is severely impacted by the COVID-19
crisis, and caution still applies given the resurgence of the
epidemic, which could lead to new restrictive measures, notably in
Europe.
Under the current conditions, Groupe SEB expects annual sales to
contract by around 5% to 6% on a like-for-like basis, with a
negative currency effect of €200-€250m. This year-on-year decrease
takes account, for the fourth quarter, of some normalization in
demand for the Consumer business and a Professional division that
will remain heavily impacted by the effects of the crisis on the
hospitality and catering sector.
However, resilient market and solid performances in the third
quarter lead us to be confident. After two quarters of reduced
investment in growth drivers, the Group should resume a
substantially more proactive policy in the fourth quarter.
On this basis and taking account of a negative currency effect
slightly above €100m and a positive raw material effect, 2020
Operating Result from Activity could fall by 25-30% versus
2019.
Conference call with management on October
26 at 6:00 p.m. CET
Numbers: From France: +33 (0) 1 72 72 74 03 -
PIN : 38445151## From other countries: +44 20 7194 3759 - PIN:
38445151#
Listen to the audiocast and the presentation on
our website on October 26 from 8:00 p.m.: www.groupeseb.com or
click here
GLOSSARY
On a like-for-like basis (LFL) - Organic
The amounts and growth rates at constant exchange rates and
consolidation scope in a given year compared with the previous year
are calculated:
- using the average exchange rates of the previous year for the
period in consideration (year, half-year, quarter),
- on the basis of the scope of consolidation of the previous
year.
This calculation is made primarily for sales and Operating
Result from Activity.
Adjusted EBITDA Adjusted EBITDA is equal to Operating
Result from Activity minus discretionary and non-discretionary
profit-sharing, to which are added operating depreciation and
amortization.
Operating Result from Activity (ORfA) Operating Result
from Activity (ORfA) is Groupe SEB’s main performance indicator. It
corresponds to sales minus operating costs, i.e. the cost of sales,
innovation expenditure (R&D, strategic marketing and design),
advertising, operational marketing as well as commercial and
administrative costs. ORfA does not include discretionary and
non-discretionary profit-sharing or other non-recurring operating
income and expense.
Free cash flow Free cash flow corresponds to the “net
cash from operating activities” item in the consolidated cash flow
statement, adjusted from non-recurring transactions with an impact
on the Group’s net debt (for example, cash outflows related to
restructuring) and after taking account of recurring investments
(CAPEX).
Net debt This term refers to all recurring and
non-recurring financial debt minus cash and cash equivalents, as
well as derivative instruments linked to Group financing. It also
includes financial debt from application of the IFRS 16 standard
“Leases” in addition to short-term investments with no risk of a
substantial change in value but with maturities of over three
months.
Loyalty program (LP) These programs, led by distribution
retailers, consist in offering promotional offers on a product
category to loyal consumers who have made a series of purchases
within a short period of time. These promotional programs allow
distributors to boost footfall in their stores and our consumers to
access our products at preferential prices.
SDA Small Domestic Appliances: Kitchen Electrics, Home
and Personal care
PCM Professional Coffee Machines
This press release may contain certain forward-looking
statements regarding Groupe SEB’s activity, results and financial
situation. These forecasts are based on assumptions which seem
reasonable at this stage, but which depend on external factors
including trends in commodity prices, exchange rates, the economic
environment, demand in the Group’s large markets and the impact of
new product launches by competitors. As a result of these
uncertainties, Groupe SEB cannot be held liable for potential
variance on its current forecasts, which result from unexpected
events or unforeseeable developments. The factors which could
considerably influence Groupe SEB’s economic and financial result
are presented in the Annual Financial Report and Universal
Registration Document filed with the Autorité des Marchés
Financiers, the French financial markets authority.
Next key dates - 2021
January 21 | after market closes
Provisional 2020 sales
February 21 | before market opens
2020 sales and results
April 22 | after market closes
Q1 2021 sales and financial data
May 20 | 3:00 pm (Paris time)
Annual General Meeting
July 23 | before market opens
H1 2021 sales and results
October 26 | after market closes
9-month 2021 sales and financial
data
Find us on www.groupeseb.com
World reference in small domestic equipment, Groupe SEB operates
with a unique portfolio of 30 top brands including Tefal, Seb,
Rowenta, Moulinex, Krups, Lagostina, All-Clad, WMF, Emsa, Supor,
marketed through multi-format retailing. Selling more than 360
million products a year, it deploys a long-term strategy focused on
innovation, international development, competitiveness and client
service. Present in over 150 countries, Groupe SEB generated sales
of €7.3 billion in 2019 and has more than 34,000 employees
worldwide.
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version on businesswire.com: https://www.businesswire.com/news/home/20201026005756/en/
Investor/Analyst Relations Groupe SEB Financial
Communication and IR Dept
Isabelle Posth Raphaël Hoffstetter
comfin@groupeseb.com Tel: + 33 (0) 4 72 18 16 04
Media Relations Groupe SEB Corporate
Communication Dept
Cathy Pianon Anissa Djaadi
com@groupeseb.com Tél. + 33 (0) 6 33 13 02 00 Tél.
+ 33 (0) 6 88 20 90 88
Image Sept Caroline Simon Claire Doligez
Isabelle Dunoyer de Segonzac caroline.simon@image7.fr
cdoligez@image7.fr isegonzac@image7.fr Phone: + 33
(0) 1 53 70 74 70
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