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CEVA Logistics AG: Q3 results impacted by significant provisions in Italy - Plan to deepen strategic relationship with CMA CGM Dienstag, 13. November 2018 - 07:01
CEVA Logistics AG / Key word(s): 9-month figures
CEVA Logistics AG: Q3 results impacted by significant provisions in Italy -
Plan to deepen strategic relationship with CMA CGM
13-Nov-2018 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 KR
The issuer is solely responsible for the content of this announcement.
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Q3 results impacted by significant provisions in Italy -
Plan to deepen strategic relationship with CMA CGM
Baar, Switzerland, 13 November, 2018 - CEVA Logistics AG ("CEVA" or the
"Company") announced today its results for the third quarter and the first
nine months ended 30 September 2018.
- Revenue up 5% YTD in constant currency; good new business momentum
- Adjusted EBITDA of USD 55 million for Q3 and USD 198 million YTD, down USD
27 million and USD 8 million respectively in constant currency mainly due to
provisions for Italian Contract Logistics business
- Excellence & cost-saving programs intensified
- Refinancing successfully completed in August 2018
- Agreement on a significant strengthening of strategic partnership with CMA
CGM to be implemented in coming months
Key Financials for Q3 (USD Q3 Q3 Change Change YoY
million) 2018 2017 YoY constant FX
Revenue 1,810 1,782 +1.6% +4.7%
EBITDA (a) 29 69 -58.0% -55.4%
EBITDA margin 1.6% 3.9% -230 bps -220 bps
Adjusted EBITDA (b) 55 85 -35.3% -32.9%
Key Financials for 9 Months 9M 9M Change Change YoY
(USD million) 2018 2017 YoY constant FX
Revenue 5,448 5,099 +6.8% +5.0%
EBITDA (a) 148 173 -14.5% -11.9%
EBITDA margin 2.7% 3.4% -70 bps -50 bps
Adjusted EBITDA (b) 198 209 -5.3% -3.9%
(a) EBITDA excludes specific items and share-based compensation cost (SBC)
in the table and in the whole document
(b) Adjusted EBITDA includes the 50% proportional contribution of the
ANJI-CEVA joint venture and excludes specific items and share-based
compensation cost
"CEVA continues to reduce its cost base, with a strong focus on productivity
addressing underperforming activities both in FM and CL. Most of our
operations continue to perform well and our new business performance is
promising. However, in the third quarter, margins have been adversely
impacted by one-time provisions taken in Contract Logistics in Italy.
Looking ahead, we are confident that we will further improve our performance
and meet our medium-term targets. More importantly, we plan to intensify the
cooperation with our strategic partner CMA CGM which will bring additional
value for all our stakeholders," says Xavier Urbain, CEO of CEVA Logistics.
Group results
CEVA's revenue increased by 4.7% in constant currency in the third quarter
and by 5.0% in constant currency in the first nine months of 2018. Excluding
one-time provisions impacting the Italian Contract Logistics operation,
business continued to perform broadly in line with management's expectations
with an adjusted EBITDA of USD 55 million in the third quarter and USD 198
million in the first nine months of 2018. Progress was made in productivity,
cost reduction and other margin improvement initiatives.
Freight Management
Revenue in Freight Management increased by 4.9% on a reported basis and by
6.8% in constant currency in the third quarter of 2018 compared to the same
period in the prior year. Freight Management EBITDA decreased by USD 3
million at constant currency to USD 22 million in the third quarter of 2018
with better revenues offset by challenges in North America relating to the
increased cost of transportation in our Ground business due to driver
shortages, partly mitigated by improvements in the VAS (Value added
Services) operation. For the nine months of 2018, EBITDA was USD 64 million,
up USD 9 million year on year in constant currency.
Contract Logistics
Revenue in Contract Logistics increased by 2.8% in constant currency, but
decreased by 1.4% on a reported basis in the third quarter of 2018. Contract
Logistics EBITDA was USD 7 million for the three months ended 30 September
2018 compared with USD 43 million in the same quarter of 2017. Despite many
productivity improvements across many contracts and geographies, and
continued productivity gains on focus contracts, two contracts in Italy and
the bankruptcy of a local Italian partner for temporary staff have resulted
in additional unplanned costs of USD 26 million in the third quarter and USD
42 million for the first nine months. A plan is currently being executed to
address and resolve the issues in Italy. For the first nine months of 2018,
revenue in Contract Logistics increased by 3.4% in constant currency and
EBITDA was USD 84 million, down USD 29 million in constant currency
year-on-year.
Anji-CEVA (CEVA's share is 50%)
In the first nine months of 2018, revenue at Anji-CEVA amounted to USD 1,069
million, an increase of 17.6% in constant currency, compared to the prior
year. This healthy revenue increase was fuelled by strong volumes growth in
existing contracts, new contract implementations and the transfer of the
Chinese CEVA CL business in July 2017. In particular the new Non-Automotive
Division is gathering pace and winning significant new business. EBITDA for
the first nine months of 2018 was USD 99 million including a capital gain
from a fixed asset disposal of USD 28 million in Q3 2018 compared to a
capital gain of USD 12 million in Q3 2017.
Good Business Momentum
CEVA experienced continued strong momentum across all sales segments and
business lines, with new business wins up approximately 8% YTD. Significant
new contracts and extensions were won in the third quarter: in Air and Ocean
freight, CEVA won contracts with Technology and Automotive customers, in
Contract Logistics this was mostly with Automotive, Healthcare, Consumer &
Retail clients. The partnership with CMA CGM started to deliver additional
opportunities. Finally, the company is investing in its salesforce in order
to accelerate sustainable growth in strategic geographies and segments.
Repayment of Debt and Refinancing
CEVA has successfully completed its comprehensive refinancing in August
2018. Through the IPO and the refinancing, CEVA has raised approximately USD
1.2 billion in equity and approximately USD 1.4 billion in new debt
facilities. Following the deleveraging from the IPO proceeds and
refinancing, CEVA expects to reduce its finance charges by more than USD 100
million annually, subject to prevailing interest rates and currency
drawings.
Strategic Developments
The Board of Directors of CEVA announced on 25 October 2018 that it will
broaden the strategic partnership with CMA CGM. As part of this initiative,
CEVA will acquire the freight management business of CMA CGM, subject to
anti-trust approval. The two companies will generate new commercial
opportunities supported by investment in IT and digital transformation and
further increase operational efficiency to deliver a strong and sustainable
value creation for all stakeholders. Furthermore, the Board of CEVA has
agreed with CMA CGM, that CMA CGM will offer to CEVA's shareholders wishing
to exit their investment in CEVA to purchase their shares for CHF 30.00 per
share.
The Board of Directors of CEVA strongly believes that the partnership with
CMA CGM will provide an attractive value proposition to shareholders in the
mid and long term. CEVA Logistics and CMA CGM have agreed that CEVA
Logistics will remain a listed company with an arm's length business
relationship with CMA CGM.
Outlook
Although 2018 FY results will be impacted by the contract logistics issues
in Italy, CEVA is confirming its medium term targets to grow revenue above
market and to increase EBITDA margins from the 3.3% achieved in 2017 to at
least 4%; which should result in an additional approximately USD 100 million
in adjusted EBITDA, excluding any additional benefits from the much closer
cooperation with CMA CGM.
Investor call
CEVA Logistics will hold an investor call and webcast today at 15.00 CET to
present its third quarter and first nine months 2018 results. To
participate, please dial-in the following number:
Switzerland: +41 44 580 03 09
UK: +44 20 3365 3210
US: +1 (866) 349 6093
Global: +31 20 341 82 49
Webcast: https://www.kpnwebshow.nl/jq3oc3gk
Documents
CEVA Logistics Q3 2018 report and presentation are available under :
http://www.ir.cevalogistics.com/websites/ceva/English/3000/results-centre.html
The recording of the investor call will be available at the above address
after the call.
Notes to Editors:
All references to EBITDA exclude specific items and share-based compensation
cost (SBC).
For additional information please contact:
Investors:
Pierre Bénaich
SVP Investor Relations
pierre.benaich@cevalogistics.com
+41 41 547 0048
Media:
Matthias Hochuli
Group Head of Marketing and Communications
matthias.hochuli@cevalogistics.com
+41 41 547 00 52
Cathy Howe
Pilot Marketing
ch@pilotmarketing.co.uk
Tel: +44 (0)208 941 5381
CEVA - Making business flow
CEVA Logistics, a global asset-light third-party logistics company, designs
and operates industry leading supply-chain solutions for large and
medium-size national and multinational companies. Its integrated network in
Freight Management and Contract Logistics spans more than 160 countries.
Approximately 56,000 employees are dedicated to delivering effective
solutions across a variety of industry sectors where CEVA applies its
operational expertise to provide best-in-class services. CEVA generated
revenue of USD 7 billion and adjusted EBITDA of USD 280 million in 2017.
CEVA Logistics is listed on SIX Swiss Exchange under ticker symbol CEVA. For
more information, please visit www.cevalogistics.com.
Safe Harbour Statement
This news release contains specific forward-looking statements. These
forward-looking statements include, but are not limited to, discussions
regarding the proposed refinancing described above, its guidance for 2018
and beyond, discussions regarding industry outlook, CEVA's expectations
regarding the performance of its business or joint ventures, its liquidity
and capital resources, and other non-historical statements. These statements
can be identified by the use of words such as "believes" "anticipates,"
"expects," "intends," "plans," "continues," "estimates," "predicts,"
"projects," "forecasts," and similar expressions. All forward-looking
statements are based on management's current expectations and beliefs only
as of the date of this news release and, in addition to the assumptions
specifically mentioned in the above paragraphs, there are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking
statements, including the effect of local and national economic, credit and
capital market conditions, a downturn in the industries in which we operate
(including the automotive industry and the air freight business), risks
associated with CEVA's global operations, fluctuations and increases in fuel
prices, CEVA's substantial indebtedness, restrictions contained in its debt
agreements and risks that it will be unable to compete effectively. Further
information concerning CEVA and its business, including factors that
potentially could materially affect CEVA's financial results, is contained
in the annual and quarterly reports of CEVA Logistics AG (and its
predecessor CEVA Holdings LLC), available on the Company's website, which
investors are strongly encouraged to review. Should one or more of these
risks or uncertainties materialise or the consequences of such a development
worsen, or should underlying assumptions prove incorrect, actual outcomes
may vary materially from those forecasted or expected. CEVA disclaims any
intention or obligation to update publicly or revise such statements,
whether as a result of new information, future events or otherwise.
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End of ad hoc announcement
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