SIG Combibloc Group AG

  • WKN: A2N5NU
  • ISIN: CH0435377954
  • Land: Switzerland

Nachricht vom 25.02.2020 | 07:00

SIG Combibloc Group AG: Strong revenue growth and cash generation

EQS Group-News: SIG Combibloc Group AG / Key word(s): Annual Results
25.02.2020 / 07:00

MEDIA RELEASE

25 February 2020
SIG Combibloc Group ("SIG")

Strong revenue growth and cash generation

2019 highlights

- Core revenue up 5.2% at constant currency; up 7.5% as reported

- Adjusted EBITDA margin 27.2% (2018: 27.5%)

- Significant increase in adjusted net income to €217 million (€149 million)

- Free cash flow €267 million; proposed dividend increased to CHF 0.38 per share

- Net leverage reduced from 3.2x to 2.8x
 

Key performance indicators:1 2019

    Year
ended
31 Dec.
2019
Year
ended
31 Dec.
2018
Change

(In € million or %)
  Reported
currency
Constant
currency
Core revenue   1,766.9 1,644.3 7.5% 5.2%
Adjusted EBITDA   485.4 461.5 5.2%  
Adjusted EBITDA margin   27.2% 27.5%    
Adjusted EBITDA less net capex margin   21.0% 19.0%    
Adjusted net income   217.4 148.9    
Adjusted earnings per share (€)   0.68 0.62    
Free cash flow   266.8 68.2    
Cash conversion   77% 69%    
 

Reported measures: 2019

    Year
ended
31 Dec.
2019
Year
ended
31 Dec.
2018
Change

(In € million or %)
  Reported
currency
Constant
currency
Total revenue   1,783.9 1,676.1 6.4% 4.2%
EBITDA   479.7 395.1 21.4%  
Net income   106.9 (83.9)    

1 For additional information about alternative performance measures used by management that are not defined in IFRS, including definitions and reconciliations to measures defined in IFRS, refer to the link below: https://www.sig.biz/investors/en/performance/key-figures
 

Key performance indicators:1 Q4 2019

    Three
months
ended
31 Dec.
2019
Three
months
ended
31 Dec.
2018
Change

(In € million or %)
  Reported
currency
Constant
currency
Core revenue   531.3 497.9 6.7% 4.3%
Adjusted EBITDA   156.1 150.9 3.4%  
Adjusted EBITDA margin   29.2% 30.0%    
Adjusted net income   83.1 74.1    
 

Reported measures: Q4 2019

    Three
months
ended
31 Dec.
2019
Three
months
ended
31 Dec.
2018
Change

(In € million or %)
  Reported
currency
Constant
currency
Total revenue   535.2 503.3 6.3% 4.0%
EBITDA   158.1 100.3 57.5%  
Net income   55.2 (76.1)    

1 For additional information about alternative performance measures used by management that are not defined in IFRS, including definitions and reconciliations to measures defined in IFRS, refer to the link below: https://www.sig.biz/investors/en/performance/key-figures
 

Rolf Stangl, CEO of SIG, said: "Our top line performance in 2019 demonstrates the success of our growth strategy, which for many years has focused on building up markets outside Europe. At the same time, we are proving our ability to grow in the EMEA region through share gain in Europe and our presence in the Middle East and Africa, which in 2019 saw an improved economic environment in a number of countries.

We are maintaining best in class profitability while continuing to invest in innovation and to expand into new markets and categories. Our strong cash flow generation is enabling us to invest in the business while paying an attractive dividend and reducing net leverage. In 2019, we announced the construction of a new plant in China which will underpin growth across the Asia Pacific region. The acquisition of Visy Cartons has given us a promising footprint in Australia and New Zealand, which further increases the potential of this region for us.

Our business is sustained by key fundamentals including growing end markets driven by demographics, urbanisation and rising disposable incomes; proprietary technology and engineering know-how supporting longstanding customer relationships; and the unmatched environmental profile of our packs, which are made largely of renewable materials and are fully recyclable. In 2020, we shall continue to seize the many opportunities that our industry offers and to pursue our objective of above market growth."

 

Revenue by region: 2019

    Year
ended
31 Dec.
2019
Year
ended
31 Dec.
2018
Change

(In € million or %)
  Reported
currency
Constant
currency
EMEA   755.1 733.3 3.0% 2.8%
APAC   666.8 598.4 11.4% 6.0%
Americas   329.5 297.3 10.8% 9.7%
Group Functions   15.5 15.3    
Core revenue from transactions with external customers 1,766.9 1,644.3 7.5% 5.2%
Revenue from sales of folding box board   17.0 31.8    
Total revenue   1,783.9 1,676.1 6.4% 4.2%
 

Core revenue of €1.77bn includes the consolidation of Visy Cartons for one month. Excluding Visy, core revenue growth was 5.0% at constant currency. The robust organic growth performance was accompanied by a significant benefit from exchange rate movements, with all major currencies except for the Brazilian Real appreciating against the Euro over the year. Growth was driven mainly by Asia Pacific and the Americas, driven by favourable market fundamentals and the expansion of the filler base in recent years. In the EMEA region, sales to the Middle East increased while in Europe sales accelerated in the fourth quarter.

Revenue by region: Q4 2019

    Three    
months ended
31 Dec.
2019
Three   
months ended
31 Dec.
2018
Change

(In € million or %)
  Reported currency Constant currency
EMEA   207.3 195.1 6.3% 6.2%
APAC   211.3 194.4 8.7% 2.4%
Americas   107.9 102.0 5.7% 6.5%
Group Functions   4.8 6.4    
Core revenue from transactions with external customers 531.3 497.9 6.7% 4.3%
Revenue from sales of folding box board   3.9 5.4    
Total revenue   535.2 503.3 6.3% 4.0%
 

EBITDA and adjusted EBITDA

  Year ended
31 December 2019
Year ended
31 December 2018
 

(In € million or %)
Adjusted EBITDA margin Adjusted EBITDA Adjusted EBITDA margin Adjusted EBITDA Reported currency change
EMEA 32.1% 242.2 33.5% 245.4 (1.3%)
APAC 33.5% 228.9 30.3% 191.1 19.8%
Americas 25.5% 84.1 27.2% 81.0 3.8%
Group Functions   (69.8)   (56.0)  
Total 27.2% 485.4 27.5% 461.5 5.2%
 

Adjusted EBITDA increased by 5.2% to €485 million despite a small negative impact from the Middle East joint venture dividend, which was €3m lower than in 2018. The adjusted EBITDA margin was 27.2% (2018: 27.5%). Revenue growth and currencies made a positive contribution to adjusted EBITDA, offsetting higher SG&A costs, which include investments in growth markets and additional costs as a result of being a listed company.

EBITDA increased by 21.4% to €480 million. The increase compared with adjusted EBITDA was largely due to an unrealised gain on derivatives, compared with a loss in 2018, and to lower transaction-related costs.

Net income and adjusted net income

Adjusted net income increased to €217 million compared with €149 million in 2018. The improvement is a consequence of higher profit from operating activities and a lower net finance expense following the reduction and re-financing of debt in connection with the IPO. In addition, the adjusted effective tax rate was lower at 25.9% (2018: 32.9%).

Net income moved from a loss of €84 million in 2018 to a profit of €107 million in 2019.

Capital expenditure

Gross capital expenditure was €182 million in 2019 (2018: €214 million). Gross filler capex was lower after a period of significant filler investment in Asia Pacific following the launch of combismile. Net capital expenditure (net capex), after deduction of upfront cash for fillers received from customers, was €110 million compared with €143 million in 2018. The ratio of net capex to revenue was 6.2%, below the target range of 8-10%.

Capacity expansion

In July 2019, SIG announced an expansion of its production network in the Asia Pacific region with the construction of a second sleeves plant located at the Suzhou Industrial Park in China. The plant will benefit from operational and overhead synergies with SIG's existing facility in Suzhou and is expected to achieve world class environmental and safety performance and productivity. A total investment of €180 million will be partly lease-financed with a Chinese partner. Guidance for net capex of 8-10% of revenue in 2020 and over the mid-term is unchanged. The plant is expected to come onstream early in 2021.

Free cash flow

(In € million)   Year
ended
31 Dec.
2019
Year
ended
31 Dec.
2018
Net cash from operating activities   438.1 260.2
Dividends received from joint ventures   20.7 23.7
Acquisition of PP&E and intangible assets   (182.2) (213.9)
Payment of lease liabilities   (9.8) (1.8)
Free cash flow   266.8 68.2
 

Free cash flow increased from €68 million in 2018 to €267 million in 2019, reflecting higher profits from operating activities, lower financing costs and lower net capital expenditure, partially offset by higher working capital.

Acquisition of Visy Cartons

On 29 November 2019, SIG acquired Visy Cartons Pty Ltd. ("Visy Cartons") from VisyPak Operations Pty Ltd., a subsidiary of Pratt Consolidated Holdings Pty Ltd., for AU$70 million (around €43 million). Visy Cartons will become part of SIG's business in the Asia Pacific region. The acquisition is expected to generate significant synergies in the coming years, arising from supply chain optimisation and access to SIG's latest technologies and solutions.

Visy Cartons is one of the leading players in the Australian beverage carton market and there is significant scope to expand the business in New Zealand. Growth in these markets is being driven by dairies that are investing to export to China and other Asian countries, where demand for premium milk is growing rapidly.

Net debt and leverage

(In € million)   As of As of
  31 Dec. 31 Dec.
  2019 2018
Gross total debt   1,614.4 1,618.7
Cash and cash equivalents1   261.0 157.1
Net total debt   1,353.4 1,461.6
Total net leverage ratio2   2.8x 3.2x

1 Includes restricted cash
2 Net total debt divided by adjusted EBITDA
 

Strong cash flow generation in 2019 contributed to a reduction in net leverage from 3.2x at the end of 2018 to 2.8x, after financing of the Visy Cartons acquisition.

In October 2019, Moody's upgraded their corporate family rating of SIG Combibloc Group AG to Ba2 from Ba3. In December, S&P raised their outlook to Positive with an unchanged issuer rating of BB+.

The Company will assess opportunities to further improve its financing structure depending on market conditions.

Dividend

At the Annual General Meeting to be held on Tuesday 7 April 2020, the Board of Directors will propose a dividend distribution out of the capital contribution reserve of CHF 0.38 per share for the year 2019 (2018: CHF 0.35 per share).

2020 outlook

For 2020, the Company expects core revenue growth at constant currency towards the lower end of a 6-8% range, including the full year consolidation of Visy Cartons. The adjusted EBITDA margin is expected to be towards the lower end of a 27-28% range, taking into account continued investments in geographic expansion and innovation and a lower level of profitability at Visy Cartons prior to the realisation of synergies.

As construction of the new plant in China proceeds, net capital expenditure is forecast to be at the upper end of the targeted 8-10% of revenue range in 2020. Free cash flow may therefore be somewhat lower than in 2019.

The Company maintains its medium-term guidance of core revenue growth of 4-6% at constant currency and an adjusted EBITDA margin of around 29%. Net capital expenditure should remain within 8-10% of revenue. The Company plans to maintain a dividend payout ratio of 50-60% of adjusted net income while reducing net leverage towards 2x.

2019 Annual Report

SIG today published its 2019 Annual Report, which includes the Group's operating and financial results accompanied by SIG's audited consolidated and statutory annual financial statements, the Compensation Report outlining the compensation policies of the Group and the Corporate Governance Report. All publications are available for download from 07:00 CET today at https://www.sig.biz/investors/en/performance/annual-reports. Hard copies can be ordered free of charge from SIG Combibloc Group AG, Laufengasse 18, 8212 Neuhausen am Rheinfall, Switzerland.

An update to the Corporate Responsibility Report will be published on 31 March 2020.

Investor contact:

Jennifer Gough +41 52 674 6508
Director Investor Relations
SIG Combibloc Group AG
Neuhausen am Rheinfall, Switzerland
jennifer.gough@sig.biz

Media contact:

Lemongrass Communications
Andreas Hildenbrand +41 44 202 5238
andreas.hildenbrand@lemongrass.agency

About SIG
SIG is a leading systems and solutions provider for aseptic carton packaging. We work in partnership with our customers to bring food and beverage products to consumers around the world in a safe, sustainable and affordable way. Our unique technology and outstanding innovation capacity enable us to provide our customers with end-to-end solutions for differentiated products, smarter factories and connected packs, all to address the ever-changing needs of consumers.

Founded 1853, SIG is headquartered in Neuhausen, Switzerland. The skills and experience of our approximately 5,500 employees worldwide enable us to respond quickly and effectively to the needs of our customers in over 60 countries. In 2019, SIG produced more than 38 billion carton packs and generated €1.8 billion in revenue. For more information, visit www.sig.biz.

Disclaimer & cautionary statement

The information contained in this media release and in any link to our website indicated herein is not for use within any country or jurisdiction or by any persons where such use would constitute a violation of law. If this applies to you, you are not authorised to access or use any such information.

This media release may contain "forward-looking statements" that are based on our current expectations, assumptions, estimates and projections about us and our industry. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "may", "will", "should", "continue", "believe", "anticipate", "expect", "estimate", "intend", "project", "plan", "will likely continue", "will likely result", or words or phrases with similar meaning. Undue reliance should not be placed on such statements because, by their nature, forward-looking statements involve risks and uncertainties, including, without limitation, economic, competitive, governmental and technological factors outside of the control of SIG Combibloc Group AG ("SIG", the "Company" or the "Group"), that may cause SIG's business, strategy or actual results to differ materially from the forward-looking statements (or from past results). For any factors that could cause actual results to differ materially from the forward-looking statements contained in this media release, please see our offering memorandum for the IPO. SIG undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or circumstances or otherwise. It should further be noted that past performance is not a guide to future performance. Please also note that interim results are not necessarily indicative of the full-year results. Persons requiring advice should consult an independent adviser.

Some financial information in this media release has been rounded and, as a result, the figures shown as totals in this presentation may vary slightly from the exact arithmetic aggregation of the figures that precede them.

The attached information is not an offer to sell or a solicitation of an offer to purchase any security in the United States or elsewhere and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which, or to any person to whom such an offer, solicitation or sale would be unlawful. No securities may be offered or sold within the United States or to U.S. persons absent registration or an applicable exemption from registration requirements. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from any issuer of such securities and that will contain detailed information about us.

In this media release, we utilise certain alternative performance measures, including but not limited to core revenue, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA margin less net capex margin, net capex, adjusted net income, free cash flow, cash conversion and net leverage ratio that in each case are not defined in International Financial Reporting Standards ("IFRS"). These measures are presented as we believe that they and similar measures are widely used in the markets in which we operate as a means of evaluating a company's operating performance and financing structure. Our definition of and method of calculating the alternative performance measures stated above may not be comparable to other similarly titled measures of other companies and are not measurements under IFRS or other generally accepted accounting principles, are not measures of financial condition, liquidity or profitability and should not be considered as an alternative to profit from operations for the period or operating cash flows determined in accordance with IFRS, nor should they be considered as substitutes for the information contained in our consolidated financial statements. You are cautioned not to place undue reliance on any alternative performance measures and ratios not defined in IFRS included in this media release. Refer to the consolidated financial statements in the 2019 Annual Report for SIG's definitions of alternative performance measures not defined in IFRS and reconciliations to measures defined in IFRS. For alternative performance measures that are not included in the 2019 Annual Report but only in this media release, definitions of such measures are included in this media release where the measures are presented.

 

The following table reconciles profit or loss to EBITDA and adjusted EBITDA.

(In € million)       Year
ended
31 Dec.
2019
Year
ended
31 Dec.
2018
Profit / (loss) for the period       106.9 (83.9)
Net finance expense       44.6 206.4
Income tax expense       41.1 0.9
Depreciation and amortisation       287.1 271.7
EBITDA   479.7 395.1
Adjustments to EBITDA:          
Replacement of share of profit or loss of joint ventures with
cash dividends received from joint ventures
  5.3 14.8
Restructuring costs, net of reversals       1.8 4.3
Unrealised (gain) / loss on derivatives       (10.1) 23.1
Transaction- and acquisition-related costs       4.3 19.7
Other       4.4 4.5
Adjusted EBITDA   485.4 461.5
 

The table below is a summary of the reconciliation of profit or loss for the period to adjusted net income.

(In € million)     Year
ended
31 Dec.
2019
Year
ended
31 Dec.
2018
Profit / (loss) for the period       106.9 (83.9)
Non-cash foreign exchange impact of non-functional currency loans
and realised foreign exchange impact due to refinancing
  (1.2) (58.8)
Amortisation of transaction costs       2.8 11.0
Net change in fair value of derivatives       1.5 7.4
Net effect of early redemption of notes       - 82.5
Net effect of early repayment of term loans       - 56.3
PPA depreciation and amortisation       136.5 140.1
Adjustments to EBITDA       5.7 66.4
Tax effect on above items       (34.8) (72.1)
Adjusted net income       217.4 148.9
 

 

 


Additional features:

Document: http://n.eqs.com/c/fncls.ssp?u=HBGAHFLAXR
Document title: SIG_FYR19_final_English


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