Group SEB Reports 2018 Solid Performances

March 6, 2019

February 28, 2019, 2018 Results.

Statement by T. de La Tour d'Artaise, Chairman and CEO of Groupe SEB

"In an overall environment that was more complicated than expected, Groupe SEB delivered a good 2018 performance, with organic growth of nearly 8%, an Operating Result from Activity up 2.5% - despite negative commodity and currency effects of more than €100 million – and a Net Profit above €400m for the first time. Continued debt reduction reflected in a net debt / adjusted EBITDA ratio below 2 at endDecember, in line with the target we had set. Our main growth engines / drivers have been leveraged successfully: China, of course, where Supor continues to outperform a still promising market, Japan, South Korea, Central Europe, Ukraine and Russia. On the activity side, the dynamic was robust in Floor Care, Electrical Cooking, Food Preparation and Professional Coffee. Lastly, e-commerce was a strong contributor to the increase in sales and now accounts for nearly 25% of Group revenue. Our profitable growth strategy, which is based on the strength of our brand portfolio, solid product momentum, and a foothold in all distribution channels across the globe gives us a major competitive advantage. This strategy is implemented daily by our dedicated teams who are always ready to meet new challenges. I would like to thank them for their professionalism and commitment. This strategy is designed for the long-term through a responsible approach on the social, societal and environmental fronts which is widely recognized and creates value for everyone. 2019 has started with an environment that remains uncertain. Yet the Group is well prepared and aims in 2019 to achieve further organic sales growth and improve Operating Result from Activity.

SALES

In an economic environment that grew more difficult over the course of the year, Groupe SEB continued to develop its business activity at a brisk pace in 2018. Sales rose 5.1% to €6,812 million, notably including organic growth of 7.8% and a currency effect of -3.2%, stemming primarily from the depreciations of the Chinese yuan, Brazilian real, Turkish lira, Russian rouble and US dollar. Organic growth benefits from the Group’s global footprint, the breadth of our product offering and reflects the good trends in business in most of our markets. It also comprises non-recurring items in Brazil (recognition of a tax receivable, transporter strike in the spring, slower-than-expected ramp-up in cookware at the Itatiaia site, bankruptcy of a customer) and France (impact of the yellow vests movement in the fourth quarter), which affected the geographical regions concerned but whose net impact on Group sales and Operating Result from Activity was immaterial.

OPERATING RESULT FROM ACTIVITY (ORfA)

Operating Result from Activity (ORfA) came out at €695 million in 2018, up 2.5% vs 2017 before the non-recurring impacts of the WMF purchase price allocation. At constant scope and exchange rates, ORfA totaled €736m, up 8.5%. The FY 2018 currency effect was -€45 million, compared with -€10 million in 2017. The most negatively impacting currencies were the Turkish lira, Russian rouble, Argentinian peso and Brazilian real. The positive trend in ORfA in 2018 should also be appreciated in the light of exceptionally demanding comparatives in 2017. In this respect, it stands as a solid performance.

Organic growth of 8.5% in ORfA in 2018 can be broken down as follows: • A volume effect of +€85 million relating to the favorable trend in business; • A price-mix effect of +€80 million, made up of a continued move upmarket, price hikes (for example, in Turkey and Russia) and higher promotional activity; • A €48 million increase in the cost of sales, largely owing to the rise in commodity prices (-€57 million vs. 2017); • A €24 million increase in investments in growth drivers (innovation, operational marketing and advertising, the latter being now over 40% digital); • Higher commercial and administrative costs, by €35 million, linked to both the Consumer business – especially directly operated stores - and the Professional Coffee businesses, the accelerated development of which calls for investments, mainly in the sales force.

OPERATING PROFIT AND NET PROFIT

Groupe SEB reported operating profit of €625 million in 2018, versus €580 million in 2017. The total includes a discretionary and non-discretionary profit-sharing expense of €34 million, versus €38 million last year, as a result of lower performance in France. It also comprises other operating income and expense of -€36 million (-€44 million in 2017), including notably the end of the industrial and logistics reorganization plan in Brazil, costs linked to the integration of WMF and an additional goodwill depreciation for Maharaja Whiteline. Net financial expense came out at -€32 million in 2018, versus -€72 million in 2017. This change reflects a decrease in the fair value of the optional part of the ORNAE bonds (bonds redeemable in cash and/or in existing shares) and the recognition of positive interest income on the tax receivable in Brazil. Net profit attributable to the owners of the parent rose 11.8% to €419 million. It includes a tax expense of €131 million, corresponding to an effective tax rate of 22.1% in 2018. As a reminder, the effective rate for 2017 (19.5%) benefitted from non-recurring effects stemming from tax reform in the United States and the restitution of the tax on dividends in France. Group net profit is net of non-controlling interests of €43 million (€34 million in 2017), the increase in which is linked to Supor’s excellent performance in China.

See more of the results.

Related

Groupe Seb
Management

Groupe SEB Completes Acquisition Of Wilbur Curtis

Feb. 20, 2019
Ecully, 19 February 2019 Groupe SEB is pleased to announce it has completed the acquisition of Wilbur Curtis, after receiving all required regulatory clearances.The second largest...