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SIG Combibloc Group AG: SIG reports strong growth and cash generation in 2018 Dienstag, 26. Februar 2019 - 07:00
SIG Combibloc Group AG / Key word(s): Annual Results
SIG Combibloc Group AG: SIG reports strong growth and cash generation in
2018
26.02.2019 / 07:00
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MEDIA RELEASE
26.02.2019
SIG Combibloc Group ("SIG")
SIG reports strong growth and cash generation
Full year 2018 highlights
* Core revenue up 6.4% at constant currencies to EUR1.64bn
* Adjusted EBITDA margin increased to 27.5%
* Significant increase in adjusted net income to EUR149m (2017: EUR106m)
* Strong cash flow generation: adjusted free cash flow EUR257m (2017:
EUR202m)
* Proposed dividend of CHF 0.35 per share to be paid from capital
contribution reserves
Full year performance
In EUR million 2018 2017 % change % change
reported cc1
Total revenue 1,676 1,664 +0.7%
Core revenue2 1,644 1,590 +3.4% +6.4%
Adjusted EBITDA 462 455 +1% +8%3
Adjusted EBITDA margin 27.5% 27.3%
Adjusted net income 149 106 +41%
Adjusted earnings per share (EUR) 0.62 0.49 +27%
Adjusted free cash flow 257 202 +27%
Fourth quarter performance
In EUR million Q4 2018 Q4 2017 % change % change
reported cc1
Total revenue 503 498 +1.0%
Core revenue2 498 484 +2.8% +4.7%
Adjusted EBITDA 151 160 (6%) 0%3
Adjusted EBITDA margin 30.0% 32.2%
Adjusted net income 74 66
1 At constant currencies
2 Core revenue represents revenue to external customers and excludes (i)
sales of laminated board ("LB") to the Middle East joint venture and (ii)
sales of folding box board ("FBB") to third parties
3 Includes translation and transaction effects
Rolf Stangl, CEO of SIG, said: "In 2018 we successfully continued our growth
strategy and achieved core revenue growth of 6.4% at constant currencies,
slightly exceeding our target range of 4-6%. We saw growth across our global
footprint and are reaping the rewards of our steady expansion into markets
outside Europe, where growth in aseptic carton packaging is being driven by
mega-trends including demographics, rising disposable income and
urbanisation. The Asia Pacific region in particular delivered a strong
performance during the year, with robust growth in the liquid dairy segment
and growing demand for premium products.
"Our broad international presence continues to provide us with promising
growth opportunities. These opportunities come with exposure to currency
fluctuations, which in 2018 dampened growth in adjusted EBITDA. At constant
currencies, adjusted EBITDA increased by 8%. The adjusted EBITDA margin
increased to 27.5%, reflecting a positive business mix and ongoing cost
efficiency measures. We achieved a significant increase in adjusted free
cash flow, while continuing to expand our filler base in growth markets. The
cash generative nature of our business underpins our intended mid-term
dividend payout ratio of 50-60% of adjusted net income. For 2018, we are
proposing a Swiss franc dividend payout in 2019 equivalent to around
EUR100m."
Business Performance
Revenue
Core revenue rose by 6.4% at constant currencies (+3.4% at reported rates),
which was ahead of the target range of 4 - 6%. Growth was driven in
particular by the Asia Pacific region which, after an exceptional first
half, continued to show good momentum throughout the second half. Sales in
EMEA were lower owing to instability in some Middle Eastern markets, which
affected sales to the joint venture there, more than offsetting underlying
growth in the European business. The Americas achieved growth at constant
exchange rates despite political and economic uncertainty in Brazil in the
second half.
Total revenue increased by 0.7% at reported rates. Total revenue includes
sales of laminated board to the Middle East joint venture, which ceased in
the second quarter of the year as part of our internal supply chain
strategy, and sales of folding box board to third parties, which will be
phased out.
In EUR million 2018 2017 % change %
reported change
cc
EMEA 733 753 (2.6%) (2.4%)
APAC 598 513 16.6% 18.0%
Americas 297 320 (7.2%) 4.8%
Group Functions 15 4
Core revenue from transactions 1,644 1,590 3.4% 6.4%
with external customers
Adjusted EBITDA
At constant currencies, adjusted EBITDA increased by 8%. At reported rates,
adjusted EBITDA was 1% higher. The adjusted EBITDA margin increased to 27.5%
despite the negative impact from currencies, notably the Brazilian Real, as
well as higher raw material costs. The improvement reflects strong top line
growth, production efficiencies and lower SG&A costs following the launch of
combismile in 2017. In addition, the opening of a new regional Tech Center
in China is allowing the company to conduct R&D closer to the market at a
lower cost. Significant savings have also been achieved by locating a
Business Service Center in Romania, amongst other re-organization measures.
Adjusted net income and earnings per share
Adjusted net income increased from EUR106 million in 2017 to EUR149 million
in 2018. Adjusted earnings per share were EUR0.62 compared with EUR0.49 in
2017.
On a pro forma basis, adjusting for the reduction in interest expense post
IPO and related tax effects, net income increased from EUR198 million to
EUR213 million in 2018. Pro forma adjusted earnings per share were EUR0.66
compared with EUR0.62 in 2017.
Capital expenditure
Gross capital expenditure was EUR214 million in 2018. Net capital
expenditure (net capex), after deduction of upfront cash for fillers
received from customers, was EUR143 million compared with EUR164 million in
2017, which was a year of high filler investments.
The ratio of net capex to revenue was reduced from 9.9% in 2017 to 8.5% in
2018. The adjusted EBITDA less net capex margin increased from 17.5% in 2017
to 19.0% in 2018.
Adjusted free cash flow
Adjusted free cash flow increased from EUR202 million in 2017 to EUR257
million in 2018, reflecting an increase in net cash from operating
activities, including a positive contribution from net working capital. Cash
conversion increased from 64% in 2017 to 69% in 2018.
Adjusted free cash flow per share was EUR0.80 per share compared with
EUR0.63 in 2017.
Net debt and balance sheet
In EUR million 2018 2017 % change
Gross total debt 1,619 2,627 (38%)
Cash (unrestricted) 154 102 +52%
Net total debt 1,464 2,525 (42%)
Total net leverage ratio 3.2x 5.5x
The use of the primary proceeds from the IPO in September 2018 to pay down
debt has resulted in a significant reduction in the net leverage ratio.
Concurrently with the IPO, the company repaid its senior unsecured notes and
re-financed its senior secured loans on attractive terms.
Dividend distribution payable out of capital contribution reserves
The Board of Directors proposes a distribution out of capital contribution
reserves of CHF 0.35 per registered share in cash for the 2018 financial
year. The payment of the cash distribution is scheduled for 25 April, 2019.
2019 outlook
Rolf Stangl, CEO of SIG, said: "For 2019, we are targeting core revenue
growth of 4 - 6% at constant currencies. We also target an adjusted EBITDA
margin of 27 - 28%, taking account of a lower dividend payment by our Middle
East joint venture in view of the challenging conditions in some of its
markets. Net capital expenditure is forecast to be in the range of 8 -10% of
revenue and we expect to generate substantial free cash flow.
"In the mid-term we expect our business to continue to demonstrate its
resilience. This is underpinned by our exposure to non-discretionary
consumption of food and beverages, our ongoing expansion in growth markets
and the excellent environmental profile of our products. We maintain our
medium-term targets of core revenue growth of 4 - 6% at constant currencies
and an adjusted EBITDA margin of around 29 percent. Net capital expenditure
is expected to remain within the 8 -10% of revenue range. We plan a dividend
payout ratio of 50 - 60% of adjusted net income for years after 2018, while
reducing net leverage towards 2x."
2018 Annual Report
SIG today published its 2018 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://investor.sig.biz/en-gb/home/ and hard copies can be ordered free of
charge at: Laufengasse 18, 8212 Neuhausen am Rheinfall, Switzerland.
Annual General Meeting and Agenda Items
The ordinary annual shareholders' meeting of SIG ("Annual General Meeting")
will take place:
* Date: Thursday, 11 April 2019
* Time: 14:30 (CEST)
* Location: BBC Arena, Schweizersbildstrasse 10, 8207 Schaffhausen,
Switzerland
The Board of Directors of SIG proposes that the agenda for the Annual
General Meeting shall include, among other items:
* Proposal for a distribution to shareholders out of capital contribution
reserves of CHF 0.35 per registered share in cash for the 2018 financial
year
* Approval of the compensation of the Board of Directors and the Group
Executive Board and consultative vote on the 2018 Compensation Report
* Proposal for re-election of the Chairman and all other members of the
Board of Directors of SIG for a term until the end of the next Annual
General Meeting, except for David Mansell who will not stand for
re-election to the Board of Directors of SIG at the Annual General
Meeting.
The full invitation for the Annual General Meeting, including all agenda
items, is expected to be published on 19 March in the SHAB (Schweizerisches
Handelsamtsblatt) and on the website of SIG at:
https://investor.sig.biz/en-gb/home/
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 5,000 employees worldwide enable us to
respond quickly and effectively to the needs of our customers in over 60
countries. In 2018, SIG produced more than 35 billion carton packs and
generated EUR1.7 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).
Factors that could cause actual results to differ materially from the
forward-looking statements are included without limitations into 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 non-IFRS financial measures,
including core revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted
net income, adjusted earnings per share, pro forma earnings per share, net
capital expenditures, adjusted free cash flow, adjusted free cash flow per
share and cash conversion that in each case are not recognised under
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 measures stated above may not be comparable to other
similarly titled measures of other companies and are not measurements under
IFRS, as issued by the IASB 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 non-IFRS measures and ratios included in this
media release. Refer to the attached "Financial review" for SIG's
definitions of the above non-IFRS measures.
Summary financial information
Performance measures
The table below presents an overview of our performance in 2018 and 2017.
Additional details about the performance measures used by management,
including definitions, are provided in the 2018 Annual Report.
Change
(In EUR million or %) 2018 2017 Reported Constant
currency currency
Revenue 1,676.1 1,664.1 0.7% 3.7%
Core revenue 1,644.3 1,590.3 3.4% 6.4%
Adjusted EBITDA 461.5 455.1 1.4%
Adjusted EBITDA margin 27.5% 27.3% 19pts
Adjusted EBITDA less net 19.0% 17.5% 151pts
capex margin
Adjusted net income 148.9 105.8 40.7%
Pro forma adjusted net 212.5 197.8 7.4%
income
Free cash flow 68.2 56.6 20.5%
Adjusted free cash flow 257.1 201.7 27.5%
Pro forma free cash flow 212.4 157.0 35.3%
Cash conversion 69.0% 63.9% 505pts
Net capex 143.2 164.2 (12.8)%
Net capex as a % of 8.5% 9.9% (132)pts
revenue
Post-tax ROCE 20.6% 20.2% 41pts
Summary consolidated statement of profit and loss and other comprehensive
income
(In EUR million) Year Year
ended ended
31 Dec. 31 Dec.
2018 2017
Revenue 1,676.1 1,664.1
Cost of sales (1,300.3) (1,275.7)
Gross profit 375.8 388.4
Other income 8.5 11.7
Selling, marketing and distribution expenses (64.1) (68.7)
General and administrative expenses (155.8) (176.6)
Other expenses (49.9) (5.6)
Share of profit of joint ventures 8.9 18.8
Profit from operating activities 123.4 168.0
Finance income 67.3 10.2
Finance expenses (273.7) (248.9)
Net finance expense (206.4) (238.7)
Loss before income tax (83.0) (70.7)
Income tax expense (0.9) (26.2)
Loss for the period (83.9) (96.9)
Total comprehensive income (146.6) (64.2)
Summary consolidated statement of financial position
As of As of
31 Dec. 31 Dec.
(In EUR million) 2018 2017
Cash and cash equivalents 157.1 103.9
Property, plant and equipment 1,068.8 1,015.4
Total assets 4,482.6 4,571.7
Loans and other borrowings 1,591.4 2,556.6
Total liabilities 2,587.1 3,534.9
Total equity 1,895.5 1,036.8
