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Braas Monier with solid start into the year based on growing European tile volumes

DGAP-News: Braas Monier Building Group S.A. / Key word(s): Interim Report

2016-05-03 / 06:51
The issuer is solely responsible for the content of this announcement.

Braas Monier with solid start into the year based on growing European tile volumes

- European tile volumes increased in Q1 2016 by approx. 5% (like-for-like 3.5%)
with positive momentum in the UK, Germany and France

- Chimneys & Energy Systems with comparable like-for-like revenue growth

- Q1 2016 revenues of EUR 249.9 million marginally down 0.5% (like-for-like up 0.6%) due to negative currency effects and difficult quarter in Asia

- Operating EBITDA grew in Q1 by 5.1% to EUR 18.0 million (like-for-like 7.2%)
based on European volume growth and cost improvements

- Successful acquisition of Danish components company J.A. Plastindustri S/A

- Launch of new tile with 'Aerlox' technology, a concrete tile up to 40% lighter

- Full-year guidance confirmed, revenues expected to grow by 2-3% on a like-for-like basis with additional 2-3% growth stemming from recent M&A activities

Luxembourg, 3 May 2016. The first quarter 2016 has shown a solid start into the year for Braas Monier. The Company's European tile volumes grew by 3.5% on a like-for-like basis, continuing the positive trend that started in the second quarter of 2015. In particular Western Europe and Central, Northern & Eastern Europe contributed to this volume increase, where France and Germany started adding to the growth momentum of the UK and Poland, which was already visible in 2015. Similar growth rates were also reported by the Group's Chimneys & Energy Systems business. This positive development had only been masked by negative currency effects across the Group as well as persisting volume declines in Asia.

'In countries with growing volumes we have benefitted from our high operational leverage. In markets with a more challenging environment, we have reacted quickly and vigorously. Additional volumes together with sizeable cost improvements have led to a 7% like-for-like increase in Operating EBITDA', says Pierre-Marie De Leener, CEO and Chairman of the Board of Directors of Braas Monier Building Group.

Stable revenue development with positive momentum in Europe
At EUR 249.9 million, revenues in the first quarter 2016 were on a comparable level to Q1 2015 (EUR 251.1 million). The marginal decline of 0.5% resulted strongly from negative currency effects of EUR 8.0 million (-3.2% of revenues), stemming predominantly from a strengthening of the Euro against the South African Rand, the British Pound and the Malaysian Ringgit.

Recent acquisitions such as J.A. Plastindustri in Denmark (consolidated as of January 2016), Ceprano Coperture in Italy (consolidated as of December 2015) and Golden Clay Industries in Malaysia (consolidated as of October 2015), had a positive effect on revenues of EUR 5.2 million or 2.1%.

Like-for-like, i.e. excluding foreign exchange effects and recent acquisitions, revenues in the first three months of 2016 were up by 0.6%.This positive underlying development was driven by tile volumes in Europe, which increased by 3.5% on a like-for-like basis, the fourth consecutive quarterly growth. Volumes in Asia & Africa suffered from the economic slowdown particularly in China as well as from a high comparable basis in Malaysia, where Q1 2015 had strongly profited from pull-forward effects ahead of the VAT introduction in April 2015.

Average selling prices were almost flat in the first quarter 2016, with generally positive price developments being offset during the first three months by mix effects .

The components business showed a solid performance in the first quarter 2016 with a particularly strong development in Germany. The KPI for European components, which measures the amount of component revenues per square metre roofing tiles sold, reached EUR 2.72 per square metre in the first quarter of 2016. Negative currency effects and the first time inclusion of Ceprano Coperture impacted the KPI by approximately EUR -0.06 per square metre and EUR -0.02 per square metre, respectively. On a comparable basis the KPI thus reached the level of last year's quarter (EUR 2.80 per square metre).

Positive volume development in Europe became visible in the Chimneys & Energy Systems business as well, resulting in a revenue growth of 1.5% (like-for-like 3.8%) in this reporting segment.

Operating EBITDA growth based on high operating leverage and cost improvements
Operating EBITDA increased in the period from January to March 2016 by 5.1% (like-for-like 7.2%) to EUR 18.0 million (Q1 2015: EUR 17.1 million). The Operating EBITDA margin rose by 40 basis points to 7.2% (Q1 2015: 6.8%). Negative currency effects of EUR 0.9 million were largely offset by the Operating EBITDA contribution of EUR 0.6 million from the recently acquired businesses.
The high operating drop-through from increasing European tile volumes more than compensated the effect of declining volumes in Asia & Africa, adding to the improvements achieved in the Chimneys & Energy Systems business as well as in the Components area. Cost inflation in the first quarter was negative, driven by lower energy prices and efficiency gains.

Due to the swing in the non-operating result of EUR 8.5 million, EBIT of EUR -7.8 million in the first quarter 2016 fell short of previous year's levels (EUR -0.8 million). The net financial result amounted to EUR -10.8 million in the first three month of 2016 and was therefore largely unchanged compared to the first quarter 2015 (EUR -10.0 million). Lower interest payments were more than offset by a negative delta of exchange gains and losses and valuation effects relating to embedded derivatives of, in total, EUR 1.6 million.

Applying a consolidated effective tax rate for the Group of 32.4% (Q1 2015: 32.2%), the net income for the period amounted to EUR -12.6 million (Q1 2015: EUR -7.3 million). Divided by the number of shares outstanding at 31 March 2016 (39,166,667), the net income per share for the first quarter 2016 amounted to EUR -0.32 (Q1 2015: EUR -0.19).

Seasonally typical cash flows with slight improvement of financial leverage
Net cash from operating activities was reported with EUR -84.4 million (Q1 2015: EUR -78.9 million). The decreasing cash development reflects the typical seasonal pattern of the business with cash outflows mainly related to the built-up of working capital. Working capital needs during the first quarter 2016 amounted to EUR 83.1 million, an increase over the first quarter 2015 of EUR 2.3 million.

Adjusted free cash flow in the first quarter 2016 amounted to EUR -94.0 million, before one-time effects of EUR 21.3 million, which foremost related to the acquisition of J.A. Plastindustri (EUR 19.7 million). Other adjustments included changes in the management, post-merger integration costs and strategic growth projects such as 'WrapTec' and 'Aerlox'. In the first quarter 2015, we generated an adjusted free cash flow of EUR -87.7 million before one-time effects of EUR 30.9 million (including EUR 25.3 million net for the acquisition of Cobert and dispositions).

Net debt at the end of Q1 2016 stood at EUR 452.7 million, maintaining the level of Q1 2015 (EUR 454.3 million). Pension liabilities, accrued interest, capitalised fees and liabilities related to earn-out clauses are not part of the Company's Net debt definition. Operating EBITDA of the last twelve months reached EUR 197.6 million in Q1 2016. Hence, Net debt to Operating EBITDA (LTM) improved from 2.4 times in March 2015 to 2.3 times in March 2016. Operating EBITDA (LTM) in relation to net interest expense improved to 7.1 times at the end of the quarter (5.7 times at year-end Q1 2015).

Successful execution of M&A strategy
In January 2016, Braas Monier acquired J.A. Plastindustri S/A, a Danish roofing components company. J.A. Plastindustri's product range covers components for roofing materials such as tiles, metal, fibre cement and asphalt shingles. It focuses on sanitary and roof space ventilation, skylights and complementary accessories such as flashings, end pieces and special vents. As a pure Original Equipment Manufacturer, J.A. Plastindustri has more than 40 years of experience in the production of customised roofing accessories, providing premium product quality and offering a high degree of flexibility. Main business geographies are Northern Europe including the UK and Eastern Europe.

Launch of new concrete tile with 'Aerlox' technology
Based on our extensive experience, know-how and long-term R&D efforts, Braas Monier has achieved an innovation, which it expects to be highly attractive to the markets: 'Aerlox', a concrete tile, up to 40% lighter than a traditional one, but with comparable technical properties such as high strength, long-term aesthetics and frost resistance. Roofers strongly benefit from the lower weight of the tile as they have to carry and move significantly less weight per day. Working with the new tile with 'Aerlox' technology will thus be less tiring over the day, enabling the roofer to lay the tiles faster. In regions with a low population density, transportation distances are often relatively high regarding the smaller overall volumes. The lower weight of the new tile increases the economically feasible transport radius as well as the attractiveness of those markets, where other building materials than roof tiles have been prevalent.

Other building materials such as metal and fibre cement are typically used on houses with a light building and roof structure, thus being unable to carry the weight of standard tiles. Also here the light tile with 'Aerlox' technology enables Braas Monier to enter additional market segments that had been out of reach for tile makers in the past.

Positive outlook for 2016 confirmed
Braas Monier expects like-for-like revenues to increase in 2016 by 2-3%, 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 2-3% of revenue growth and approximately 4% in Operating EBITDA growth.

'With the acquisition of J.A. Plastindustri, we have continued to add further growth potential to our Company, especially in the attractive components business. It has been our fifth bolt-on acquisition since January 2015, demonstrating our ability to execute on our value-accretive M&A strategy. Real product innovations, such as the new concrete tile with 'Aerlox' technology, enable us to further differentiate from the competition in our efforts to achieve above-market growth via our 'Top Line Growth' programme. The solid start into the year, our sound operational performance and further organic and anorganic growth potential make us confident to reach our revenue and earnings targets set for 2016 and to maintain our strong cash flow profile', summarised Pierre-Marie De Leener, CEO of Braas Monier Building Group.

Key financial figures

For the full Interim Management Statement and further information on the Group, please visit our website at > Investor Relations > Financial Statements & Presentations.

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.

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

Tel: +49 6171 61 28 59

2016-05-03 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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