14.08.2018
CECONOMY AG DE0007257503
DGAP-News: CECONOMY AG: CECONOMY reports sales and earnings growth in Q3 - confirmation of full-year targets
DGAP-News: CECONOMY AG / Key word(s): Quarter Results/9-month figures
CECONOMY AG: CECONOMY reports sales and earnings growth in Q3 - confirmation
of full-year targets
14.08.2018 / 07:00
The issuer is solely responsible for the content of this announcement.
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CECONOMY reports sales and earnings growth
in Q3 - confirmation of full-year targets
// Adjusted for currency effects sales increased by 0.8 per cent [1];
significant growth in Online/Mobile and Services/Solutions
// EBITDA increased by EUR21 million to EUR26 million
// Impairment of Metro AG stake of around EUR138 million negatively impacted
the financial result and EPS in Q3
// Free cash flow to be further strengthened - net cost reduction of EUR250
million
in total over five years
Düsseldorf, 14 August 2018 - CECONOMY AG ("CECONOMY") reached further
important strategic milestones during the third quarter of the financial
year 2017/18 and is on course to achieve its full-year targets. As of end of
June, the company had compensated the earnings shortfall incurred in the
first quarter. In the third quarter, the result (EBITDA) increased to EUR26
million compared to the same period in the previous year (Q3 2016/17: EUR4
million). EBIT improved from EUR-49 million in the previous year to EUR-30
million. Sales, adjusted for currency effects and portfolio changes,
increased by 0.8 per cent from April to June. The main driver here was
strong growth in the Online/Mobile and Services/Solutions business segments.
In addition, the World Cup also had a positive effect. At the same time,
CECONOMY has consistently implemented its strategic agenda by agreeing to
acquire 15% of the Russian market leader M.video and founding the European
Retail Alliance. CECONOMY was also able to further strengthen its balance
sheet with a capital increase announced at the end of June and the
investment of freenet AG as a new major shareholder. The capital increase
has been registered in July.
To further strengthen its free cash flow, CECONOMY will continue to improve
its cost and investment structures. Especially improvements in process
optimization and automation will lead to a net cost reduction of EUR250
million in total over five years. Furthermore, CECONOMY will review its
level of investments and expand its store network even more selectively than
before.
"In the third quarter, we continued the good progress made in Q2. With plus
21 per cent in Online/Mobile and plus 26 per cent in Services/Solutions,
both key business areas demonstrated exceptional growth rates. On a
nine-months basis the group's net working capital is much better than in the
previous year. We have put all our efforts into driving forward our
strategic agenda and accelerating the measures needed to support the
operational result. We know that the fourth quarter is the key quarter to
reach our targets, but we are confident that we can reach the goals we have
set," said Pieter Haas, CEO of CECONOMY AG.
Online/Mobile and Services/Solutions as strongest sales drivers in Q3
From April to June, sales of CECONOMY, adjusted for currency and portfolio
changes, increased by 0.8 per cent. In addition to the positive effects
related to the World Cup, strong growth rates in the areas of Online/Mobile
and Services/Solutions also contributed to this development, compensating
the shift of the Easter business into the second quarter. On a reported
basis, Group sales decreased by 0.7 per cent to EUR4.60 billion (previous
year: EUR4.63 billion). In Eastern Europe, sales increased by 2.0 per cent
in the third quarter. Adjusted for currency and portfolio changes, sales
growth was 15.5 per cent. The Western & Southern Europe region, adjusted for
currency effects and portfolio changes, was on previous year's level. Spain
largely compensated for the decline in other countries in the region. Sales
in DACH fell by 1.0 per cent in the quarter, adjusted for currency effects
and portfolio changes. Positive effects from the campaigns associated with
the World Cup were not able to fully compensate for the declining sales
trend in Germany. Overall, the result in Germany was approximately on
previous year's level.
Development of
Group sales1
Sales (EUR Change in per cent of
million) (%) total sales
Q3 2016/17 Q3
2017/18
Sales 4,629 4,598 -0.7 n.a.
Online/Mobile 483 584 20.9 12.7
Services/Solutions 304 381 25.6 8.3
1 All figures for the previous year's quarter relate solely to continuing
operations, i.e. CECONOMY.
CECONOMY is continuously expanding its activities beyond the traditional
store-based business. In the third quarter, Online/Mobile business grew by
20.9 per cent compared to the previous year and achieved sales of EUR584
million. The Online/Mobile segment accounts for 12.7 per cent of total sales
(Q3 2016/17: 10.4 per cent). Nearly every second online customer took
advantage of the opportunity to pick up goods ordered online or mobile (Q3
2017/18: 40 per cent vs. 39 per cent in the previous year).
The demand for Services/Solutions has increased even more than the
Online/Mobile segment. In this area, sales rose by 25.6 per cent to EUR381
million in a year-on-year comparison. Especially telco contracts,
insurances, extended warranties and repair services drove this growth. This
is also attributable to the successful implementation of the "smart bar"
service across 821 stores and to the roll-out of at home consultation and
installation service of Deutsche Technikberatung (DTB) to all MediaMarkt and
Saturn stores in Germany.
Earnings shortfall fully compensated
Excluding the contribution from Fnac Darty S.A., an EBITDA of EUR416 million
was generated during the first nine months, which is on previous year's
level (9M 2016/17: EUR417 million). From April to June, CECONOMY achieved an
EBITDA of EUR26 million - an improvement of EUR22 million compared to the
same quarter of the previous year (excluding Fnac Darty). Non-recurring
items, such as a legal change in the accounting valuation of gift card
liabilities in Germany, contributed to this improvement. The result was also
supported by the continued successful restructuring of the Italian
operations. The additional cost savings of EUR30 million announced for the
current financial year were also largely implemented. At 20.2 per cent, the
gross margin was largely stable compared to the same quarter of the previous
year (-0.1 percentage points). Nevertheless, EBIT also rose by EUR19 million
in the third quarter to EUR-30 million. In the first nine months, change in
Net Working Capital improved by EUR61 million compared to the prior year.
During the third quarter, CECONOMY was able to fully compensate the
shortfall of the first six months.
Further impairment of Metro AG stake weighs on earnings per share
The net financial result decreased by EUR142 million to EUR-154 million in
the third quarter. This is almost entirely attributable to the negative
development of the share price of Metro AG. This led to a further impairment
of our approximately 10 per cent stake to EUR10.59 per ordinary share and
EUR11.95 per preference share. The impairment impacted the net financial
result by approximately EUR138 million. Earnings per share (EPS) decreased
to EUR-0.32 from
EUR-0.09 in the previous year. In total, EUR268 million was written down on
the Metro investment during the financial year in accordance with the IFRS
accounting guidelines. The impairment will not affect the targets for the
financial year 2017/18.
Development of Group earnings 1, 2
EUR million Q3 2016/17 Q3 2017/18 Change
Gross profit 943 930 -13
Gross margin (%) 20.4 % 20.2 % -0.1%p.
EBITDA 4 26 21
EBITDA excl. Fnac Darty 4 26 22
EBITDA margin excl. Fnac Darty 0.1 % 0.6 % 0.5%p.
EBIT -49 -30 19
EBIT excl. Fnac Darty -49 -29 20
EBIT margin excl. Fnac Darty -1.1 % -0.6 % 0.4%p.
EPS (EUR) -0.09 -0.32 -0.23
1 All figures for the previous year's quarter relate solely to continuing
operations, i.e. CECONOMY.
2 All figures from Q3 2016/17 before special items, except sales and gross
profit, all figures from Q3 2017/18 as reported.
Targets for financial year 2017/18 confirmed
For financial year 2017/18 CECONOMY expects a slight increase in total sales
compared to the previous year. Correspondingly, the company expects a slight
improvement in net working capital compared with the previous year. Both in
terms of EBITDA and EBIT, CECONOMY expects an increase in the low to
mid-single-digit percentage range without taking into account the earnings
contributions from the investment in Fnac Darty S.A. The comparative figures
in the financial year 2016/17 have been adjusted for special items.
Furthermore, the outlook is adjusted for currency effects and before
portfolio changes.
The heterogeneous development of the segments regarding sales and earnings
in the first nine months will continue through the full financial year
2017/18.
With the signing of the agreement regarding the full disposal of the Russian
MediaMarkt business and the subsequent classification as discontinued
operations, the basis for 2016/17 and the outlook of CECONOMY AG in the
current financial year 2017/18 were adjusted. The outlook for CECONOMY AG is
thus based on continuing operations. In addition, EBITDA and EBIT for
2017/18 include our share of the profit or loss for the period for Fnac
Darty S.A. Based on the published results, we will recognise a contribution
to earnings in the financial year 2017/18 of around EUR20 million.
About CECONOMY
CECONOMY AG empowers live in the digital world. It is the leading European
platform for companies, concepts and brands in the field of consumer
electronics. The companies in the current CECONOMY portfolio have billions
of consumer contacts per year and provide products, services and solutions
that make life in the digital world easy and enjoyable, creating value for
consumers and shareholders alike.
Press contacts
Andrea Koepfer Simone Fuchs
+49 (151) 1511 5314 +49 (151) 1511 4790
[email protected] [email protected]
[1] NOTE: BUSINESS FIGURES REPRESENT THE CONTINUING OPERATIONS OF CECONOMY,
EXCLUDING THE RUSSIAN MEDIAMARKT BUSINESS, WHICH HAS BEEN CLASSIFIED AS
DISCONTINUED OPERATIONS SINCE THE DATE OF THE ANNOUNCEMENT OF THE DISPOSAL.
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14.08.2018 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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Language: English
Company: CECONOMY AG
Benrather Straße 18-20
40213 Düsseldorf
Germany
Phone: +49 (0)211 5408-7223
Fax: +49 (0)211 5408-7005
E-mail: [email protected]
Internet: www.ceconomy.de
ISIN: DE0007257503, DE0007257537, Weitere:
www.ceconomy.de/de/investor-relations/
WKN: 725750, 725753, Weitere:
www.ceconomy.de/de/investor-relations/
Indices: MDAX
Listed: Regulated Market in Dusseldorf, Frankfurt (Prime
Standard); Regulated Unofficial Market in Berlin, Hamburg,
Hanover, Munich, Stuttgart, Tradegate Exchange
End of News DGAP News Service
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