Cibi e Bevande
Marie Brizard Wine & Spirits: 2019 half-year results
First-half 2019 results
EBITDA improvement of €13.4 million versus H1 2018
Marie Brizard Wine & Spirits (Euronext: MBWS), today announced its consolidated results for the first half of 2019. The interim accounts were approved by the Board of Directors at its meeting also held today. The limited review procedures by the auditors are ongoing.
For the first half of 2019, the Group reported net sales of €185.8 million, down 1.7% compared with the prior year . EBITDA was a loss of €7.7 million , a significant €13.4 million improvement compared with a loss of €21.1 million in the first half of 2018.
Andrew Highcock, CEO of Marie Brizard Wine & Spirits, commented as follows: “The Group's results for this first half of the year are encouraging overall and confirm the relevance of the strategic choices we have made. Profitability has improved for our operations in France thanks to the Branded Businesses. In Poland and the United States, the first effects of the strategic plan's implementation are now visible, but still insufficient. Further efforts along the same lines are therefore required. Many initiatives have already been launched and others are in preparation. The disposals of Porto Pitters and Sobieski Trade announced in July are a prime example of this. I look forward to the future with renewed confidence in our project and I remain committed to executing on our strategy, which is critical to our Group's success in the coming years.”
Condensed income statement for the six months ended 30 June 2019
Net sales totalled €185.8 million in the first half of 2019, down 1.7% compared with the prior year period. The Group's Branded Business generated net sales of €92.5 million, a 4.7% increase relative to the first half of 2018, spurred by a proactive sales and marketing strategy, with an emphasis on value over volume.
Consequently, the Group's gross profit improved in the first half of 2019 despite lower net sales, with gross margin reaching 29.4%. It thus rose 3.8 percentage points from its level in the first half of 2018.
EBITDA was a loss of €7.7 million in the first half of 2019, up €13.4 million compared with the year-earlier period, including €2.4 million related to the initial application of IFRS 16, the new lease accounting standard, at 1 January 2019. The remainder of this increase was mainly due to the improved gross profit and cost-cutting efforts.
Lastly, attributable net income in the first half of the year was a loss of €24.3 million, representing an improvement of €11.3 million.
H1 2019 EBITDA by cluster
EBITDA for the Branded Business was a loss of €3.8 million in the first half of 2019, an increase of €9.0 million, including €1.9 million related to the application of IFRS 16 from 1 January 2019. The remainder of this rise was due in particular to higher net sales and an improvement in the gross profit for these businesses.
WEMEA: first effects of the value-oriented strategy
Net sales for the WEMEA cluster totalled €53.6 million in the first half of 2019, down 8.7% compared with the year-earlier period. The cluster delivered EBITDA of €3.1 million, up €2.6 million from the same period in 2018, including €0.5 million related to the initial application of IFRS 16 at 1 January 2019.
In France, net sales totalled €44.5 million, down 11.0%. This decline was mainly due to the implementation of a value-oriented sales and marketing strategy, characterised in particular by a reduction in promotional activities in France.
Nevertheless, this strategy resulted in an improvement in EBITDA for France, which rose €1.8 million to reach €2.7 million, although still below the Group's past performance in this country.
Net sales grew 4.9% for the rest of the WEMEA cluster. This rise in sales, together with the distribution synergies across operations in Spain and Scandinavia made possible through the partnership with COFEPP, resulted in a slightly positive EBITDA of €0.4 million, an increase of €0.7 million versus the first half of 2018.
CEE: slight improvement in profitability
Net sales for the CEE cluster totalled €29.5 million in the first half of 2019, up 41.6%. Spurred by the rise in net sales, the cluster's EBITDA saw a €5.2 million improvement (including €0.4 million related to the application of IFRS 16 from 1 January 2019) and was thus negative at €6.0 million.
Poland reported a doubling of net sales in the first half of 2019, driven by the gradual ramp-up of the distribution agreements signed during the second half of 2018 as well as its sales and marketing strategy aimed at further diversification of the customer base. EBITDA generated by Poland rose €4.4 million in the first half of 2019 and was thus negative at €7.4 million. Given this persistently high negative result, further additional efforts will be required to achieve recovery.
Net sales came to €12.1 million for the remainder of this cluster, a decrease of 1.1%. This decline is due to the discontinuation of sales for certain products in Lithuania having a negative impact on the Group's profitability. EBITDA for these other CEE countries thus rose €0.8 million to €1.4 million.
Americas: EBITDA improvement due to cost-cutting measures
Net sales for the Americas cluster rose 11.1% to €8.4 million in the first half of 2019. Reductions in advertising costs and overheads delivered a €1.0 million improvement in EBITDA (including €0.1 million related to the application of IFRS 16 from 1 January 2019). However, EBITDA for the cluster remained negative at €0.6 million.
Asia Pacific: lower cost base in line with the slowdown in sales
Net sales for the Asia-Pacific cluster in the first half of 2019 were down 22.1% to €1.0 million. The slight improvement in the cluster's EBITDA, up €0.3 million yet remaining negative at €0.4 million, was due to the lower cost base.
Other Businesses
Net sales for the Group's Other Businesses totalled €93.3 million in the first half of 2019, down 7.3%.
EBITDA generated by Other Businesses grew €2.0 million (including €0.5 million related to the application of IFRS 16 from 1 January 2019) to reach €0.5 million, thanks to the reduction in the contribution of certain less profitable businesses and efforts undertaken in Poland to streamline operations.
Holding company
As announced previously, cost savings effectively lowered holding company expenses in the first half of 2019, in comparison with the same period in 2018.
Balance sheet at 30 June 2019
At 30 June 2019, the Group's share of equity was €136.0 million, an increase of €32.6 million. This change was mainly the combination of i) the capital increase subscribed by COFEPP and the subsequent subscription of short-term warrants for a total amount of €58.5 million in the first half of 2019 and ii) the negative €24.3 million attributable net income in the first half of the year.
Net debt totalled €57.4 million at 30 June 2019, down €11.6 million year on year. This improvement is the result of an increase in debt related to the application of the IFRS 16 norm for €16.6 million, a decrease in short-term debt of €18.3 million and a cash improvement of €10.0 million.
Outlook
Discussions with the Group's banking partners have continued, with a view to reaching an agreement on the refinancing of the Group. As a reminder, the Group has obtained approval from its banking partners for the extension of the standstill on early repayment of the medium-term loan until 30 June 2020.
Notable achievements in the execution of the Group's strategic plan were announced during the first half of 2019. Distribution synergies have already been achieved outside France through the Group's partnership with COFEPP, others are being examined and a project for the redeployment of part of the field sales team in France is under way. In addition, two disposals were announced in July of this year.
The first of these, the disposal of the Porto Pitters brand and its associated business, was agreed on 31 July 2019 between Marie Brizard Wine & Spirits and International Drinks Limited (IDL), for the acquisition of the brand, and Quinta & Vineyard Bottlers (QVB), for production, distribution and quality control aspects. Both of these companies are entities of The Fladgate Partnership, a Portuguese group. After receiving the approval of the Autorité de la Concurrence (the French competition authority) at the end of August, this disposal was completed on 2 September 2019.
The second disposal relates to Sobieski Trade, which operates independently from the Group's other businesses in Poland. This transaction remains subject to various conditions, including the approval of the Polish competition authority.
In line with the strategic plan, efforts to adapt and improve the development of the Group's businesses will continue in the coming quarters, particularly in relation to the redefinition of the Group's international footprint, the simplification of its operating model, cost-cutting measures and collaborative projects with value creation partners.
Financial calendar
Marie Brizard Wine & Spirits will report its net sales for Q3 2019 on 7 November 2019.
Marie Brizard Wine & Spirits (MBWS) produces and sells a range of wine and spirits across four geographies: Western Europe, the Middle East and Africa; Central and Eastern Europe; the Americas; and Asia Pacific. MBWS has distinguished itself for its know-how, the range of its brands, all with long-standing traditions, and its history of innovation. From the establishment of Maison Marie Brizard in the French city of Bordeaux in 1755 to the launch of Fruits and Wine in 2010, MBWS has successfully developed and adapted its brands to make them contemporary while respecting their origins. MBWS is committed to providing value by offering its customers bold, trustworthy, flavourful and experiential brands. The company has a broad portfolio of leading brands in their respective market segments, most notably William Peel blended Scotch whisky, Sobieski vodka, Krupnik vodka, Fruits and Wine flavoured wine, Marie Brizard liqueurs and Gautier cognac. MBWS is listed on the regulated market of Euronext Paris, Compartment B (ISIN code FR0000060873, ticker MBWS) and is included in the EnterNext® PEA-PME 150 index, among others.
ANNEXES
Consolidated income statement
Consolidated balance sheet
Assets
Equity and liabilities
Consolidated cash flow statement
* Data published in respect of the 2018 financial year have not been restated to reflect the impact related to the change in accounting policy due to the implementation of IFRS 16, the new lease accounting standard, owing to the choice of the limited retrospective approach for the application of this standard (see Note 1.2 “Change in accounting policy” to the interim condensed consolidated financial statements, included in the 2019 interim financial report).
All percentage growth rates in this document are expressed in organic terms and exclude any foreign currency impact, unless stated otherwise.
EBITDA = EBIT − provisions for current assets − amortisation − retirement benefit obligations.
The Group EBITDA data and comparisons at June 30, 2019 mentioned in this press release include an IFRS 16 impact of €2.4 million
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