Corporate News
02.03.2016, Luxembourg

Braas Monier with revenue and earnings growth driven by increasing European tile volumes and value-accretive M&A


Strong operating performance 2015 (All numbers on a preliminary basis. Audited full year financial report to be published on 31 March 2016.)

  • Operating EBITDA, net income and ROIC increased for the third consecutive year
  • Operating Cash Flow almost doubled to EUR 121.9 million (2014: EUR 65.4 million)
  • Pro-forma net leverage of 1.7 times (Net debt / Operating EBITDA) well within the leverage target of 2.0 times or below
  • Proposed dividend to increase by 33% to EUR 0.40 per share, underpinned by solid operational and financial performance

Course set for profitable growth in 2016

  • Overall improving market development expected, based on positive lead indicators for European new build and renovation business 
  • Top Line Growth’ programme continues to aim for above-market growth and builds on the successes of the past years
  • The Company will continue to evaluate further bolt-on acquisitions, especially in markets where above average growth is expected in the short- to medium-term

Braas Monier has achieved a further significant improvement of its profitability in 2015. For the third  consecutive year, the Company increased Operating EBITDA, net income and return on invested capital (ROIC), despite a challenging market development in Asia and uneven developments in the European countries. The strong performance was driven by further recovery in market share in almost all major European markets, value-accretive bolt-on acquisitions, strict management of fixed costs, lower interest expenses and financial discipline.

‘Based on the remarkable efforts of our 7,735 employees around the globe, we have again generated strong free cash flows in 2015 and used those proceeds to further strengthen our daily operations and to invest in future growth’, Pierre-Marie De Leener, CEO and Chairman of the Board of Braas Monier Building Group summarised. ‘Organic growth projects included real product innovation such as the new tile with ‘Aerlox’ technology and ‘WrapTec’ which provide additional revenue and earnings potential from 2016 and 2017 on. With our bolt-on acquisitions, we laid another foundation for profitable future growth, enabling us to further increase the value of our Company. We have continued to deliver on our strategic milestones to achieve above-market growth together with ensuring a high operating leverage in recovering markets.’

Braas Monier with clear outperformance in uneven markets

The market development in 2015 was uneven in Europe and very difficult in Asia. Market recovery in Europe only really strongly materialised in selected countries, such as the UK, Netherlands, Poland, Sweden, Denmark and Bulgaria. In Germany, the addressable market declined in the current business year, driven by a weaker renovation business, which was not compensated by a better development in the new build segment. The French market continued to decline in 2015, especially the new build sector, however, trends improved throughout the year albeit not as fast as industry experts had originally forecasted at the end of 2014. The market environment in Italy has remained difficult in 2015 and experienced a further weakening in the residential sector. In Asia, addressable markets declined in Malaysia and particularly in China. Braas Monier believes it has achieved above-market growth in a large number of countries, which together account for more than 70% of Group revenues.

Full year revenues grew by 4%

In this challenging environment Braas Monier was able to increase its revenues by 3.8% to EUR 1,257 million, driven by above-market growth in countries such as Germany and the UK, and by value-accretive M&A. In January 2015, Braas Monier completed the acquisition of Cobert, market leader on the Iberian Peninsula for manufacturing and supplying clay and concrete roof tiles and fittings. In October 2015, the acquisition of Golden Clay Industries, the leading clay tile manufacturer in Malaysia  was closed. Those two new businesses contributed EUR 36.7 million to Group revenues in 2015.  Positive foreign exchange effects amounted to EUR 13.6 million in 2015, mainly related to the Group’s business activities in the UK and China. Excluding acquisitions and foreign exchange effects (like-for-like), revenues declined marginally by 0.4%. Tile volumes decreased by 2.9% on a like-for-like basis, driven by a strong downturn in Asia (-8.9%), while volumes in Europe were marginally up 0.2%. Average selling prices in the tile business were up by 0.8% in 2015. Revenues in the fourth quarter 2015 were up 4.9% (like-for-like 1.4%) to EUR 318.4 million from EUR 303.6 million in Q4 2015. European tile volumes improved in the fourth quarter by 4.1% on a like-for-like basis.

Operating EBITDA ahead of previous year’s level

Braas Monier has further improved its profitability in 2015. Operating EBITDA rose by 0.7% to EUR 196.8 million (2014: EUR 195.4 million), keeping the Operating EBITDA margin at a solid level of 15.7% (2014: 16.1%) despite negative volume effects. The first-time inclusion of local market leaders Cobert (Spain / Portugal) and Golden Clay Industries (Malaysia) contributed EUR 4.8 million to this increase, positive foreign exchange effects added EUR 2.3 million. Operating EBITDA in the fourth quarter increased by EUR 3.3 million or 7.0% (like-for-like 4.0%) to EUR 50.3 million (2014: EUR 47.0 million).

Net Income strongly increased by 39%

With a net income for the period of EUR 55.1 million, Braas Monier achieved an increase of 38.6% over the already solid profit level of 2014 (EUR 39.8 million). This strong rise is particularly owed to several positive one-time effects in 2015, relating to non-cash gains in the financial result, insurance claims, M&A and plant relocations as well as to the absence of adverse P&L effects in the financial result, stemming from costs and fees in relation to the IPO in June 2014. Accordingly, the net income per share (profit for the period divided by the number of shares outstanding of 39,166,667 as at 31 December 2015) rose from EUR 1.02 to EUR 1.41.

Operating Cash Flow almost doubled

Braas Monier generated an operating cash flow of EUR 121.9 million, almost a doubling of the EUR 65.4 million achieved in 2014. Besides the improved profitability and the aforementioned factors, higher sustaining capex and cash tax payments in 2015 were more than compensated for by additional proceeds from receivable factoring, fewer outflows from legacy provisions, mainly related to the completed operational restructuring undertaken in 2012/2013 and the absence of costs attached to the refinancing of the then existing debt in April 2014.

Net leverage well within stated target range, equity position strengthened

The leverage ratio, defined as net debt to Operating EBITDA, was kept at a comfortable level of 1.7 times, well within the stated target range of 2.0 times or below on a pro-forma basis. Today, the financial liabilities of the Group mainly consist of a Senior Secured Floating Rate Note of EUR 315 million and the remaining Term Loan B amounting to EUR 200 million. Both instruments mature in 2020. Further financial flexibility is provided by a Revolving Credit Facility of EUR 100 million, which was completely undrawn at year-end. The strong operational performance, substantial free cash flow generation and our financial discipline have led to a rating upgrade from S&P at the end of 2015, which may enhance our possibility to refinance in the current business year. As a result of the high net profit achieved in 2015, total equity rose from EUR 92.9 million at 31 December 2014 to EUR 147.0 million at 31 December 2015. The equity ratio thus increased from 6.3% in 2014 to 9.7% in 2015.

Dividend to rise by 33% to EUR 0.40 per share 

The strength of Braas Monier’s operating and financial performance in 2015 has enabled the Company to propose a significant dividend increase of 33% to EUR 0.40 per share to its shareholders. It is this strength in performance, despite many markets being on or close to historical lows, that gives us confidence in our continued ability to offer long-term attractive growth opportunities to our shareholders. 

Operating segments with a mixed development in 2015

The building markets across Europe as well as in Asia and South Africa showed an uneven development in 2015, visibly reflected in the revenue and Operating EBITDA trends of the individual reporting segments.

On the back of dynamic growth in the UK and the Netherlands, Western Europe achieved a strong revenue increase of 5.5%, which is also reflected in the above-average earnings increase. The Operating EBITDA grew by 11.7% with an EBITDA margin of 15.1% (+90 basis points compared to 2014).

Revenue development in Germany was slightly positive while higher growth rates were achieved in Poland and parts of Scandinavia. This underlying growth was sufficient to compensate for strongly negative exchange rate effects, particularly stemming from the depreciation of the Russian Rouble. Overall, revenues in the Central, Northern & Eastern Europe increased by 0.5% on a reported basis and by 1.9% like-for-like, i.e. excluding currency effects. On a like-for-like basis Operating EBITDA increased by 0.8%. Including changes in the  foreign exchange  rates, the reported Operating EBITDA of EUR 72.2 million was in line with previous year.

Revenues in Southern Europe grew by 16.8%, driven by the first-time inclusion of Cobert. Operating EBITDA increased by EUR 2.9 million or 9.2% to EUR 36.8 million. Cobert contributed EUR 4.2 million to this improvement. Due to the challenging economic situation in Italy, the like-for-like development was less favourable with -1.7% in revenues and -2.9% in Operating EBITDA.

In Asia & Africa, negative market developments in Malaysia and China in particular, led to strong volume reductions and a decline in revenues of 3.9%. The negative volume effect was also visible in Operating EBITDA which fell by 11.6% in 2015.

At Chimneys & Energy Systems, with its geographical focus on Central and Eastern Europe, revenues fell 1.5% short of the previous year’s level. Currency movements have not materially impacted the operating development. Operating EBITDA declined likewise by 7.1%. Business performance improved towards the end of the year with a broadly stable revenue and earnings development in the fourth quarter.

Revenues in Central Products & Services, which mainly resulted from components centrally produced and sold to other segments, were down 1.2% in 2015 . As this segment only includes part of the components business while the majority of components sales were accounted for in the other reporting segments, these numbers did not fully reflect the overall positive development of the components business which, on Group level, grew by 1.7% in the business year under review. The KPI for European Components, which measures the amount of component revenues (excluding the components-only brand Klöber) per square metre roofing tiles sold, increased on a comparable basis in 2015 from EUR 2.37 per square metre by 3.0% to EUR 2.44 per square metre. The positive Operating EBITDA contribution of the components business within this reporting segment was not sufficient to fully compensate for holding and R&D costs that were also accounted for in this segment. The Operating EBITDA reduced by EUR 2.2 million to EUR -5.2 million in 2015.

Further volume growth in 2016 expected on the basis of positive lead indicators in Europe

Besides continuing growth in the UK, also a number of other, smaller markets showed positive trends in 2015, especially the Netherlands, Poland and parts of Scandinavia. Others, such as France and Italy, have not yet recovered and declined further. In the German market, the shortage of building land and a lack of incentives for energy efficient renovation dampened the market performance in 2015.

Lead indicators for the European new build and renovation business, such as building permits or consumer confidence, are generally positive for the majority of countries. Research institutes expect correspondingly the construction activity in Europe to further pick up in the current business year. For Asia, the expectations are less positive, particularly in regards to the Chinese market.

Braas Monier is positive overall with regard to the residential market development in 2016 for its businesses and expects volume growth in the key markets it is active in, barring any extraneous events driven by major geopolitical instability.

Further market growth is expected for the UK and a number of other European countries, such as Spain, the Netherlands, Poland and selected south-eastern European markets. The German market is expected to be stable with positive momentum on the new build side dampened by a less favourable development of the renovation market. Based on positive lead indicators, the French market is expected to return to slight growth during 2016 and the Italian market should at least stabilise. The Chinese market will most likely show a further contraction with Malaysia stabilising. The components business is expected to show an improvement in performance supported by rising national and international building standards, especially in regards to energy efficiency and safety. With regard to the Chimney & Energy Systems business, expectations are for a similar development to the roofing business in the respective markets.

Braas Monier will continue to strive for above-market growth. Management is confident to achieve this goal in the coming years through the Group-wide ‘Top Line Growth’ programme, focussing on customer oriented sales and marketing initiatives, value-adding services, the development of innovative products and solutions, such as ‘WrapTec’ and the recently launched tile with ‘Aerlox’ technology,  and further opportunistic bolt-on acquisitions.

‘In 2016, we will continue to invest in profitable growth. Our product innovations have the potential to further enrich our product mix and we continue to actively search for and evaluate further potential M&A targets to strengthen our operations, consolidate markets and thereby profit further from a future market recovery,’ explains  Pierre-Marie De Leener.

Based on these assumptions, Braas Monier expects like-for-like revenues to increase by 2% to 3%, driven by growth in European tile volumes.  Average selling prices are expected to increase slightly to cover increasing input costs. On top, the first-time inclusion in full of acquisitions in Malaysia, Denmark and Italy is expected to provide another 2% to 3% of revenue growth and approximately 4% in Operating EBITDA growth.

From a cost perspective, management expects slight increases in input costs (raw materials and wage inflation). The currently low energy prices should have the potential to ease some variable cost inflation if they were to stay at these levels throughout the year. Average selling price increases together with efficiency improvements, mainly in the production area, are expected to offset variable and fixed cost inflation. Revenue growth together with the high operating leverage of Braas Monier and an on going focus on strict cost control at all levels will further drive growth in the Company’s profits.

Sustainable capex is expected to be at a level of around EUR 65 million, including capex in acquired companies. In addition, approximately EUR 5 million will be invested in future growth projects in 2016. 

The strong cash flows generated by the operating business will continue to allow the Group to achieve consistent and ambitious growth, both organically and through acquisitions, with an unerring focus on return on invested capital while being ever mindful of the Group’s net debt ratio and its dividend policy.


About Braas Monier

Braas Monier Building Group is a leading manufacturer and supplier of pitched roof products in Europe, parts of Asia and South Africa. The Group covers all steps of the manufacturing process, offering a comprehensive range of concrete and clay tiles for pitched roofs and is one of the few suppliers to also manufacture and sell complementary roofing components designed to cover various functional aspects of pitched roof construction. The portfolio also includes ceramic and steel chimneys and energy system solutions. Braas Monier had operations in 37 countries and 118 production facilities and employed around 7,735 people as at 31 December 2015. The Company is headquartered in Luxembourg.


Contact

Achim Schreck
Director Group Communications / Investor Relations
Braas Monier Building Group

phone +49 6171 61 28 59
e-mail: achim.schreck@monier.com


Press documents

160302_Braas_Monier_prelim_2015_results_press_release.pdf