Trading Update: H1 performance reflecting sales recovery and
inflation in purchasing and freight costs in Q2
Trading Update: H1 performance
reflecting sales recovery and inflation in purchasing and freight
costs in Q2
Q2 and Half Year 2021 Earnings trends
- Net revenues up +2.0% in H1 2021 versus H1 2020 thanks
to Q2 2021 performance (revenues up organically +16% in Q2 2021),
reflecting organic growth of +6.3% and negative forex
impacts;
- Sequential improvement in Q2 organic growth reflecting
favorable comparison basis, but revenues still below 2019 levels by
-7.4%;
- Adjusted EBITDA at €112.7 million in H1 2021, or
8.9% of net revenues (versus 8.6% in H1 2020) as margin recovery
was impeded by inflation in purchasing and freight costs in
Q2;
- Net profit should be breakeven in H1 2021 versus
-€64.9m in H1 2020 and net financial leverage is expected below
2.0x at the end of June. H1 full earnings will be published on July
29 2021 after market close;
- Recovery remains muted due to slow improvement in
Workplace and Hospitality. Inflation in purchasing costs and raw
material shortages accelerated recently, resulting in a negative
inflation impact now estimated at €130 million in 2021 (versus €100
million anticipated in April);
- Therefore the Group expects its 2021
adjusted EBITDA margin to be below 2020 margin. The Group confirms,
as announced in April, that it will not reach its mid-term target
(at least 12%) by 2022 and anticipates that it will be delayed by
at least one year.
Paris, July 20, 2021: Tarkett
(Euronext Paris: FR0004188670 TKTT) anticipated the release of the
Group’s net revenues and Adjusted EBITDA for the half year of
2021.
The Company uses alternative performance
indicators (not defined by IFRS) described in appendix 1 (page
5):
€ million |
H1 2021 |
H1 2020 |
Change |
Net sales |
1,261.2 |
1,237.0 |
+2.0% |
Of which organic growth |
+6.3% |
- |
Adjusted EBITDA |
112.7 |
106.3 |
+6.0% |
% net sales |
8.9% |
8.6% |
EBIT |
30.2 |
-43.6 |
_ |
% net sales |
2.4% |
-3.5% |
|
- Q2 2021highlights
Sales at €702.4 million, up +12.1% in Q2 2021
reflected an organic growth of +16.2% and negative forex impacts
mostly related to the US dollar and Swedish krona. The depreciation
of the Russian ruble also generated a negative impact. Flooring
activities recovered from the low point that Tarkett reached in Q2
2020 as a result of the pandemic and lockdowns. The recovery is
driven by a dynamic demand in residential across the Group’s key
regions and a slower recovery in commercial. The lack of investment
decision is still affecting the level of activity in workplace and
hospitality. Sports, which demonstrated a strong resilience in H1
2020, remained affected by a lower pipeline of new projects at the
beginning of the year due to the Covid-19 pandemic.
€ million |
Q2 2021 |
Q2 2020 |
Variation |
Of which organic growth |
EMEA |
224.8 |
177.9 |
+26.3% |
+25.0% |
North
America |
192.0 |
161.6 |
+18.8% |
+28.7% |
CIS,
APAC & LATAM |
142.1 |
113.1 |
+25.6% |
+26.7% |
Sports |
143.5 |
173.6 |
-17.3% |
-11.4% |
Total Group |
702.4 |
626.3 |
+12.1% |
+16.2% |
|
|
|
|
|
Adjusted EBITDA |
78.7 |
64.0 |
+23.0% |
|
% of Net Sales |
11.2% |
10.2% |
|
|
Adjusted EBITDA amounted to €78.7 million, or a
margin of 11.2% of revenues compared with €64.0 million or 10.2% of
net revenues in H1 2020. This net improvement reflected the
positive impact of the solid organic growth coupled with a good
level of cost reduction which amounted to €25.1 million, including
net productivity gains of €17.4 million and SG&A cost savings
of €7.7 million. The profitability increase was however penalized
by the inflation in raw material and freight, which accelerated in
Q2 2021 and resulted in a negative impact on the Adjusted EBITDA of
-€32.4 million in Q2 2021. This was partially mitigated by selling
price increases (+€8.6m) and a positive “lag effect” (net effect of
selling prices and currency in the CIS) of +€6m that reflects the
high level of inflation pass through in the CIS countries.
- H1 Net sales and Adjusted
EBITDA
€ million |
H1 2021 |
H1 2020 |
Variation |
Of whichOrganic growth |
EMEA |
445.3 |
405.6 |
+9.8% |
+8.7% |
North
America |
352.4 |
357.7 |
-1.5% |
+6.9% |
CIS,
APAC & LATAM |
254.7 |
222.9 |
+14.3% |
+20.1% |
Sports |
208.9 |
250.7 |
-16.7% |
-10.7% |
Total Net sales |
1 261.2 |
1 237.0 |
+2.0% |
+6.3% |
|
|
|
|
|
Adjusted EBITDA |
112.7 |
106.3 |
+6.0% |
|
% of Net Sales |
8.9% |
8.6% |
|
|
Group net revenues amounted to
€1,261.2 million, up +2% on a reported basis and +6.3% organically
compared to H1 2020 thanks to a favorable comparison basis (H1 2020
revenues were down -12.6% organically). After a challenging first
quarter, like-for-like revenues grew in Q2 driven by solid growth
in residential across Tarkett’s key segments and soft recovery in
commercial. Some end-user commercial segments are still penalized
by the lack of investment decision. The CIS, APAC and Latin America
segment remained very dynamic throughout the first half, while EMEA
and North America started recovering in Q2. In Sports, the level of
activity was still down compared to H1 2020 which was particularly
resilient notwithstanding the pandemic. While the number of
projects is still lower than last year, the order book is however
showing some improvement.
Adjusted EBITDA amounted to
€112.7 million in H1 2021 compared to €106.3 million in H1 2020 and
reached 8.9% of net sales compared to 8.6% in H1 2020. The
improvement was driven by volume recovery that resulted in a
positive impact on the Adjusted EBITDA of +€18.0 million in
H1 2021.
As announced previously, inflation in raw
material and freight costs intensified throughout the first half.
Purchasing costs penalized the Adjusted EBITDA by -€38.1 million
compared to H1 2020 reflecting higher oil derivatives and wood
prices and rapidly increasing freight costs. Shortages in the
supply chain were numerous and contributed to the cost increase and
resulted in a low level of inventories for the season. In response
to this inflation, Tarkett has been implementing additional selling
price increases. Sales pricing generated a positive impact of €12.0
million, offsetting around one third of purchasing costs inflation.
Salary increases amounted to -€5.2 million year-over-year,
reflecting contained wage increases of 2020 and 2021.
Tarkett remained focused on improving its cost
base and pursue its Change to Win initiatives to improve the cost
structure. In total, the Group delivered €46.9 million of cost
savings in H1 2021, out of which €27.2 million of productivity
gains and €19.7 million of SG&A cost reduction. Structural cost
savings amounted to €38 million and will be well above the initial
target of €30 million in 2021.
Exchange rates (CIS countries excluded) had a
positive effect amounting to +€0.9 million, as the impact of the
dollar depreciation versus the euro and negative exchange rates in
Sweden were fully offset at the Adjusted EBITDA level. The
net impact of currency and selling price movements in the CIS
countries also had a positive effect (lag effect of +€3.0 million)
as significant selling prices increases were deployed in the region
to offset the ruble depreciation and raw material inflation.
EBIT amounted to €30.2 million
and Adjusted EBIT to €37.9 million. The
adjustments to EBIT (details in page 5) represented €7.7
million in H1 2021, including restructuring costs of €4.9 million
due to the global SG&A cost savings program and footprint
rationalization in Europe.
- 2021 Outlook and mid-term financial
objectives
Residential has been growing in H1 across
Tarkett’s key regions and is expected to keep on growing in H2. In
Sports, the pipeline of activity started recovering in Q2 and the
order book has improved. In other commercial segments, demand
remains globally below 2019 levels, particularly in Workplace and
Hospitality. As a result, the Group expects its revenue growth to
slowdown in H2 2021 compared to Q2 2021, which benefitted from a
favorable comparison basis.
In this context of progressive recovery, Tarkett
is pursuing its Change to Win strategic roadmap to foster
sustainable growth and gain market shares. The Group is also
maintaining a strong focus on improving its cost structure and
pursuing its cost reduction initiatives, including actions on its
industrial footprint and on the SG&A cost base. Tarkett expects
to generate at least €50 million of structural cost reduction in
2021 (€30 million expected in February 2021).
Raw material prices and freight costs further
increased in Q2 2021, and Tarkett now expects inflation impact to
be around €130 million in 2021 (versus €100 million anticipated at
the end of April). Tarkett is proactively managing its selling
prices to mitigate this inflation and has already planned
additional selling price increases in flooring in H2.
Given this inflationary context and the slow
recovery of some commercial segments, Tarkett confirms that the
2022 Adjusted EBITDA margin objective of at least 12% will be
achieved later than initially anticipated. The Group now
anticipates it will be delayed by at least one year, at the soonest
in 2023.
The Group, however, plans to increase its
capital spending compared to the constrained level of 2020.
Notwithstanding higher working capital requirements, the Group
anticipates to generate positive free cash flow in 2021. With net
financial leverage expected below 2.0x at the end of June, Tarkett
is already operating within its target for the end of the year (net
debt to Adjusted EBITDA after IFRS 16 application between 1.6x and
2.6x at each year-end).
This press release may contain forward-looking
statements. Such forward-looking statements do not constitute
forecasts regarding results or any other performance indicator, but
rather trends or targets. These statements are by their nature
subject to risks and uncertainties as described in the Company’s
annual report registered in France with the French Autorité des
Marchés financiers available on its website (www.tarkett.com).
These statements do not reflect the future performance of the
Company, which may differ significantly. The Company does not
undertake to provide updates of these statements.
Financial calendar
- July 29, 2021: Q2 and H1 2021 financial results - press release
after close of trading on the Paris market and conference call the
following morning
Investor Relations
ContactTarkett – Emilie Megel –
emilie.megel@tarkett.com
Media contactsTarkett -
Véronique Bouchard Bienaymé - communication@tarkett.com Brunswick -
tarkett@brunswickgroup.com - Tel.: +33 (0) 1 53 96 83 83
About Tarkett
With a history of 140 years, Tarkett is a
worldwide leader in innovative flooring and sports surface
solutions, with net sales of € 2.6 billion in 2020. Offering a wide
range of products including vinyl, linoleum, rubber, carpet, wood,
laminate, artificial turf and athletics tracks, the Group serves
customers in over 100 countries across the globe. Tarkett has more
than 12,000 employees and 33 industrial sites, and sells 1.3
million square meters of flooring every day, for hospitals,
schools, housing, hotels, offices, stores and sports fields.
Committed to change the game with circular economy and to reducing
its carbon footprint, the Group has implemented an eco-innovation
strategy based on Cradle to Cradle® principles, fully aligned with
its Tarkett Human-Conscious Design™ approach. Tarkett is listed on
Euronext Paris (compartment B, ISIN: FR0004188670, ticker: TKTT).
www.tarkett.com
Appendices
1. Reconciliation table for alternative performance
indicators (not defined by IFRS)
- Organic growth measures the change in net
sales as compared with the same period in the previous year, at
constant scope of consolidation and exchange rates. The exchange
rate effect is calculated by applying the previous year’s exchange
rates to sales for the current year and calculating the difference
as compared with sales for the current year. It also includes the
impact of price adjustments in CIS countries intended to offset
movements in local currencies against the euro. In H1 2021, a €3.0
million positive adjustment in selling prices was excluded from
organic growth and included in currency effects.
- Scope effects reflect:
- current-year sales for entities not included in the scope of
consolidation in the same period in the previous year, up to the
anniversary date of their consolidation;
- the reduction in sales relating to discontinued operations that
are not included in the scope of consolidation for the current year
but were included in sales for the same period in the previous
year, up to the anniversary date of their disposal.
€ million |
Net Sales H1 2021 |
Net Sales H1 2020 |
% Change |
o/w exchange rate effect |
o/w scope effect |
o/w organic change |
|
|
Total Group – Q1 |
558.8 |
610.7 |
-8.5% |
-4.7% |
- |
-3.8% |
|
Total Group – Q2 |
702.4 |
626.3 |
+12.1% |
-4.0% |
- |
+16.2% |
|
Total Group - H1 |
1,261.2 |
1,237.0 |
+2.0% |
-4.3% |
- |
+6.3% |
|
- Adjusted EBITDA is the operating income before
depreciation, amortization and the following adjustments:
restructuring costs, gains or losses on disposals of significant
assets, provisions and reversals of provisions for impairment,
costs related to business combinations and legal reorganizations,
expenses related to share-based payments and other one-off expenses
considered non-recurring by their nature.
€ million |
Adjusted EBITDA H1 2021 |
Adjusted EBITDA H1 2020 |
% margin 2021 |
% margin 2020 |
|
|
Total Group – Q1 |
34.0 |
42.4 |
+6.1% |
+6.9% |
|
Total Group – Q2 |
78.7 |
64.0 |
+11.2% |
+10.2% |
|
Total Group – H1 |
112.7 |
106.3 |
+8.9% |
+8.6% |
|
€ million |
Of which adjustments |
H1 2021 |
Restructuring |
Gains / losses on assets sales / impairment |
Business combination |
Share-based payments |
Other |
H1 2021 adjusted |
Result from operating activities (EBIT) |
30.2 |
5.9 |
(2.0) |
0.0 |
1.7 |
2.0 |
37.9 |
Depreciation and amortization |
74.9 |
- |
0.1 |
- |
- |
- |
74.9 |
Others |
(0.2) |
- |
- |
- |
- |
- |
(0.2) |
EBITDA |
104.9 |
5.9 |
(1.9) |
0.0 |
1.7 |
2.0 |
112.7 |
2. Bridges (€ million) Q2 and H1
2021
Net sales by segment
H1 2020 |
1,237.0 |
+/- EMEA |
35.2 |
+/- North America |
24.7 |
+/- CIS, APAC & LATAM |
44.8 |
+/- Sports |
(26.8) |
H1 2021 LfL |
1,314.9 |
+/- Currencies |
(44.3) |
+/- Selling price lag effect in CIS |
(9.4) |
H1 2021 |
1,261.2 |
Q2 2020 |
626.3 |
+/- EMEA |
44.4 |
+/- North America |
46.4 |
+/- CIS, APAC & LATAM |
30.3 |
+/- Sports |
(19.8) |
Q2 2021 LfL (1) |
727.6 |
+/- Currencies |
(24.7) |
+/- Selling price lag effect in CIS |
(0.5) |
Q2 2021 |
702.4 |
Adjusted EBITDA by nature
H1 2020 |
106.3 |
+/- Volume / Mix |
18.0 |
+/- Sales Pricing |
12.0 |
+/- Raw Material & Freight |
(38.1) |
+/- Salary Increase |
(5.2) |
+/- Productivity |
27.2 |
+/- SG&A |
19.7 |
+/- Covid action |
(25.1) |
+/- One-offs & Others |
(6.0) |
+/- Selling price lag effect in CIS |
3.0 |
+/- Currencies |
0.9 |
H1 2021 |
112.7 |
Q2 2020 |
64.0 |
+/- Volume / Mix |
37.9 |
+/- Sales Pricing |
8.6 |
+/- Raw Material & Freight |
(32.4) |
+/- Salary Increase |
(2.6) |
+/- Productivity |
17.4 |
+/- SG&A |
7.7 |
+/- Covid actions |
(27.3) |
+/- One-offs & Others |
(1.3) |
+/- Selling price lag effect in CIS |
6.0 |
+/- Currencies |
0.7 |
Q2 2021 |
78.7 |
- Like-for-Like : organic growth (see definition in appendix
1)
- Tarkett_H1 2021 Trading Update_ENG
Tarkett (EU:TKTT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Tarkett (EU:TKTT)
Historical Stock Chart
From Apr 2023 to Apr 2024