DERICHEBOURG : Results of the first half of 2018-2019
Derichebourg confirms the resilience of its economic model
The Board meeting of May 22, 2019, chaired by Mr. Daniel Derichebourg, approved the half-year financial statements at March 31, 2019. During the meeting, the Chairman and Chief Executive Officer noted the soundness of the Group's economic model and the robustness of its results, despite slowing economic growth and an environment beset by considerable uncertainties. In this context, which reflects a decline in financial performance by all players in the recycling industry, the Group has managed to limit the negative effects thanks to substantive work done on scaling its production facilities, continued attention to unit margins and the level of inventories, and to its dense territorial network, which ensures it has a regular supply, and makes it possible to monetize specialized facilities whose profitability is better than the average in the business.
Revenue amounts to 1.38 billion
Revenue for the first half of the year amounted to €1.38 billion, a decrease by 5.7%. Revenue growth for the Multiservices business did not offset the decline in the Environmental Services business.
|(in thousand tons)||03/31/2019||03/31/2018||Change|
|(in millions of euros)||03/31/2019||03/31/2018||Change|
|Environmental Services revenue||956.7||1,060.8||-9.8%|
|Holding company revenue||0.5||0.3||53.1%|
|Total half-year revenue, Derichebourg Group||1,375.9||1,458.5||-5.7%|
Volumes of ferrous metals processed were negatively impacted by:
- a less favorable economic environment overall than last year, reflected in particular in the decline in steel production in Europe and a decline in selling prices;
- a sharp fall in steel production in Turkey (-10% as compared to the same period of the previous fiscal year due to the country's economic crisis), this country having seldom supported the world market for ferrous metals, with the exception of the month of February;
- The two-month shutdown over the winter of the Carros (06) shredder due to difficulties in removing shredding residues.
Volumes of non-ferrous metals have been maintained, notably thanks to the increased strength of the second aluminum refining unit at Prémery. Nevertheless, a deterioration of business in the automotive sector has been noticeable since last fall, which is pulling prices down. Stainless steel waste is in significant decline (-25%), waste copper has grown (+4.3%).
Revenue for Services has declined slightly (-0.4%), because revenue from waste collection activities in Italy has not been consolidated since February, following divestiture on January 30, 2019.
Revenue for each of the four segments of activity (Services, Industry, HR Sourcing Solution, Urban Areas) have seen sustained growth. Overall, growth is at 5.4%.
Recurring EBITDA , €93.4 million
Recurring EBITDA amounted to €93.4 million, down 7% compared to last year. It represents 6.8% of revenue, a similar ratio to that of last year (6.9%).
In the Environmental Services business, the lower volume of ferrous metals processed, and to a lesser extent slightly lower unit margins for non-ferrous metals, partially offset by a fall in expenses, essentially explain this €4.6 million fall.
In the Multiservices business, the apparent €1.2 million fall is explained by:
- problems with contracts in the nuclear engineering business, which is currently being shut down, and contributed negatively (-€2.6 million);
- the transition between the CICE (tax credit to improve competitiveness) and the reduction in employer contributions meant, for companies practicing deferred pay, a one-time shortfall of €1.7 million.
After restating these two effects, recurring EBITDA from the Multiservices business would be up and represent 4.2% of revenue.
An operating profit close to that of last year
Operating profit amounted to €48.1 million, close to that of last year (€49.8 million).
The Multiservices business is seeking to terminate a certain number of engineering contracts in the nuclear sector, and recognized the remaining costs to be incurred on these contracts, in an amount of €2.8 million.
Last year, non-current items recorded the cost of two transactions to end litigation in Italy in the amount of €10 million.
Consolidated net income down 16.3%
After taking into account financial expenses, corporate income tax and profit (loss) from discontinued operations, consolidated net income amounted to €31.6 million, down 16.3% in comparison to the first half of last year.
Outlook for the second half of the fiscal year
In the Environmental Services business, the Group notes that trade (China - USA) and geopolitical tensions have been exacerbated rather than reduced. There appears to be more downside (automotive sector, and European steel sector) than upside in economic conditions. In the short term, the high price of iron ore may serve to support that of ferrous metals. Structural difficulties related to the evacuation of shredding residue cannot be resolved in a few months, even if temporary solutions have been found. The Group will continue to prove the resilience of its business model, and its responsiveness. This situation should make it possible for the Group to strengthen its competitive position in its markets, where its leadership is already on display. An investment policy that allows for constant improvement of its online production facilities with an evolution in sorting techniques and environmental constraints will continue. This strategy, combined with a very solid financial structure and the long-term strategic vision of its family shareholders, confers the status of a structural consolidator, which will allow the company to profit from this situation in order to make strategic acquisitions when valuations in the sector become attractive again.
In the Multiservice business, revenue should grow moderately in the second half of the year, and the second half will be better than the first in terms of income. Catching up with the backlog recorded in the first half of the year is foreseeable, all things being equal.
Treasury shares cancellation
The Board of Directors also exercised the delegation granted by the Extraordinary General Meeting of February 5th 2019, and cancelled 4,481,291 treasury shares representing 2.73% of the share capital. The company's share capital now comprises 159,397,489 shares.
|In millions of euros||03/31/2019||03/31/2018||Change|
|of which Environmental Services||956.7||1,060.8||(9.8%)|
|of which Multiservices||418.7||397.4||5.4%|
|of which Environmental Services||83.9||88.5||(5.2%)|
|of which Multiservices||13.5||14.7||(8.3%)|
|Recurring operating profit||50.9||61.0||(16.6%)|
|of which Environmental Services||48.0||55.5||(13.5%)|
|of which Multiservices||8.0||9.7||(17.1%)|
|Net non-current items||(2.8)||(11.3)|
|Net financial expenses||(5.2)||(5.3)|
|Other financial items||(1.2)||0.1|
|Profit before tax||41.7||44.5||(6.3%)|
|Income from associates||0.8||0.7|
|Income from discontinued or held-for-sale activities||3.4|
|Net profit (loss) attributable to non-controlling interests||(1.1)||(0.6)|
|Net profit (loss) attributable to shareholders||30.5||37.1||(18.0%)|
|(in millions of euros)||03/31/2019||09/30/2018||Variation (%)|
|Property, plant and equipment||507.9||480.9|
|Equity interests in associates and joint ventures||17.5||17.1|
|Total non-current assets||793.7||754.6||5.2%|
|Cash and cash equivalents||131.5||145.6|
|Total current assets||589.1||616.9||(4.5%)|
|Total non-current assets and groups of assets held for sale||41.4|
|(in millions of euros)||03/31/2019||09/30/2018||Variation (%)|
|Group shareholders' equity||500.7||507.9|
|Total shareholders' equity||505.0||511.7||(1.3%)|
|Loans and financial debts||157.6||156.2|
|Provisions for pensions and similar benefits||42.8||42.6|
|Total non-current liabilities||242.1||243.4||(0.5%)|
|Loans and financial debts||82.5||84.5|
|Total current liabilities||635.8||629.9||0.9%|
|Total liabilities related to a group of assets held for sale||27.9|
Passage of net financial debt from September 30, 2018 to March 31, 2019
|Net financial debt at September 30, 2018||95.1|
|Net financial expenses||5.2|
|Corporate income taxes||(3.2)|
|Change in working capital requirement||8.6|
|Tangible and intangible capital investments||59.7|
|Disposals of companies||(8.2)|
|Net financial debt at March 31, 2019||108.5|
The Derichebourg Group is a major player working for companies and local authorities on an international scale. It offers a comprehensive and integrated range of services in two complementary business segments: environmental services (recycling, recovery, collection of household waste, urban cleaning, management of waste reception centers, etc.) and business services (cleaning, energy, interim, aeronautics, etc.). The Group is present today in 15 countries, on 3 continents, and has some 39,400 employees worldwide. In 2018, the Derichebourg Group's revenue amounted to €2.9 billion. For more information: www.derichebourg.com
ISIN code: FR0000053381 - DBG
 Recurring EBITDA = Recurring operating profit (loss) + net depreciation and amortization on tangible and intangible assets
Recurring operating profit (loss) = Operating profit (loss) +/- non-recurring items