Scienza e Tecnologia
Q2 SALES & H1 2023 RESULTS
→ Strong first-half performance with solid volumes and sustained high profitability
→ H1 23 sales of €9,763.0m, up +8.1% on a same day basis, driven by positive volumes and prices
→ Electrification trends contributing strongly, especially in Europe – growing c. 5x times faster than the rest of the business in H1 and representing 22% of our sales
→ H1 23 adjusted EBITA of €702.3m, implying a 7.2% adj EBITA margin up +16bps from record-high level, restated for non-recurring items from inventory price inflation on non-cable products in H1 2022 . This progression results from strong activity and good execution of our action plans
→ Recurring net income in H1 23 at €455.1m, down (3.4)%, on high base effect as 2022 earnings benefited from all-time high inflation tailwind on non-cable products
→ Positive Free Cash Flow before interest and tax of €242.3m in H1 2023 (vs €231.6m in H1 2022). Indebtedness ratio at 1.26x
→ Power Up 2025 strategic action plans now in place and delivering, resulting in higher growth, sustained high profitability and disciplined capital allocation
→ Acquisition of Wasco in the Netherlands, further enhancing Rexel's exposure to fast growing markets
→ FY 23 guidance upgraded, continued focus on our action plans to focus on growing market segments and boost profitability, in a supportive but more contrasting environment
subjected to a limited review by statutory auditors.
See definition in the Glossary section of this document Change at comparable scope of consolidation Adjusted for non-recurring copper effect
SALES
In Q2, sales were up +2.8% year-on-year on a reported basis and up +6.2% on a constant and same-day basis.
In the second quarter, Rexel posted sales of €4,835.1m, up +2.8% on a reported basis, including:
In Q2 2023, sales were up +6.2% on a constant and same-day basis (or +5.2% on a constant and actual-day basis), with growth well balanced between volumes and selling price increases on non-cable products in all geographies.
In H1 2023, Rexel posted sales of €9,763.0 million, up +7.5% on a reported basis. On a constant and same-day basis, sales were up +8.1%, including positive impacts from volumes of +3.7% and non-cable copper prices of +5.7%, offsetting the change in copper-based cable prices (i.e. (1.2)% vs. a positive impact of +3.1% in H1 2022).
The +7.5% increase in sales on a reported basis included:
Europe (50% of Group sales): +8.3% in Q2 and +10.5% in H1, on a constant and same-day basis
In the second quarter , sales in Europe increased by +1.2% on a reported basis, including:
On a constant and same-day basis, sales were up +8.3%, including a positive volume contribution of +2.4%, and a positive price effect of +5.9% (+6.6% on non-cable products offset (0.7)% on cables)
In Europe , electrification trends continue to support our growth, with our three product families (solar, EV charging infrastructure and HVAC) growing by more than +31% and representing 20% of sales and more than 60% of the same-day sales growth in the quarter (contributing for +507 bps of same-day sales growth in Europe in Q2 23)
North America (43% of Group sales): +4.4% in Q2 and +6.5% in H1 on a constant and same-day basis
In the second quarter , sales in North America were up +5.9% on a reported basis, including:
On a constant and same-day basis, sales were up +4.4%, including +4.4% from volume growth and a neutral price effect (+3.4% on non-cable products offset (3.4)% on cables).
In North America , the overall good performance was driven by our capacity to capture mega trends and to enhance backlog execution.
Asia-Pacific (7% of Group sales): +2.6% in Q2 and +2.0% in H1 on a constant and same-day basis
In the second quarter , sales in Asia-Pacific were down (4.8)% on a reported basis, including:
On a constant and same-day basis, sales were up +2.6%.
PROFITABILITY
Adjusted EBITA margin at 7.2% in H1 2023, down -72 bps compared to H1 2022, or up +16bps excluding non-recurring items that benefited H1 2022
*Including €(19)m for Corporate costs in H1 23
The +8.1% actual sales growth in H1 2023 translated into an adjusted EBITA margin of 7.2%.
Restated for non-recurring items from inventory price inflation on non-cable products, net of higher performance-linked bonuses in 2022, adjusted EBITA margin was up 16 bps. As detailed below, this improvement reflects robust activity coupled with our more efficient organization and action plans, which more than offset overall opex inflation:
To see the graph, please open the pdf file by clicking on the link at the end of the press release.
Restated for the 87bps non-recurring items that had a positive impact in H1 22, the +16bps progression in H1 23 notably included:
By geography:
As a result, adjusted EBITA stood at €702.3 million, down (1.7)% in H1 2023 and reported EBITA stood at €695.5 million (including a negative one-off copper effect of €(6.8) million), down (1.9)% year-on-year.
Focusing on the bridge from EBITDA to Reported EBITA:
NET INCOME
Net income of €428.4 million in H1 2023 and r ecurring net incom e of €455.1 million
Operating income in the half-year stood at €660.0 million, down from €683.6 million in H1 2022.
Net financial expenses in the half-year amounted to €(75.7) million (vs. €(51.9) million in H1 2022), and can be broken down as follows:
Income tax in the half-year represented a charge of €(155.9) million (vs. €(171.9) million in H1 2022).
Net income in the half-year was €428.4 million (vs. €459.8 million in H1 2022).
Recurring net income amounted to €455.1 million in H1 2023, down (3.4)% compared to H1 2022, on a difficult base effect as 2022 earnings benefited from a record-high inflation tailwind on non-cable products (Appendix 3).
FINANCIAL STRUCTURE
Free cash-flow before interest and tax of €242.3 million in H1 2023
Indebtedness ratio of 1.26x at June 30, 2023
In the half-year, free cash flow before interest and tax was an inflow of €242.3 million (vs. €231.6 million in H1 2022). It included:
Below FCF before interest and tax, the cash flow statement took into account:
At June 30, 2023:
In June 2022, we unveiled our Power up 2025 strategy during a Capital Markets Day in Zurich. Our record 2022 results and our achievements in H1 23 put us well on track to achieve the 2022-2025 four-year objectives. That includes our financial targets as well as our business ambitions and capital allocation.
Following a strong start to the year, we are upgrading our full-year guidance.
We now anticipate for 2023, at comparable scope of consolidation and exchange rates:
Excluding ( i ) amortization of PPA and (ii) the non-recurring effect related to changes in copper-based cable prices.
FCF Before interest and tax/ EBITDAaL
NB: The estimated impacts per quarter of ( i ) calendar effects by geography, (ii) changes in the consolidation scope and (iii) currency fluctuations (based on assumptions of average rates over the rest of the year for the Group's main currencies) are detailed in appendix 6
October 20, 2023 Third-quarter 2023 sales
February 15, 2024 FY 2023 results
First-half 2023 financial report is available on the Group's website (www.rexel.com).
A slideshow of the second-quarter sales and half-year 2023 results publication is also available on the Group's website.
Rexel, worldwide expert in the multichannel professional distribution of products and services for the energy world, addresses three main markets: residential, commercial, and industrial. The Group supports its residential, commercial, and industrial customers by providing a tailored and scalable range of products and services in energy management for construction, renovation, production, and maintenance. Rexel operates through a network of more than 1,900 branches in 21 countries, with more than 26,000 employees. The Group's sales were €18.7 billion in 2022.
Rexel is listed on the Eurolist market of Euronext Paris (compartment A, ticker RXL, ISIN code FR0010451203). It is included in the following indices: CAC Next 20, SBF 120, CAC Large 60, CAC 40 ESG, CAC SBT 1.5 NR, CAC AllTrade, CAC AllShares, FTSE EuroMid, and STOXX600. Rexel is also part of the following SRI indices: FTSE4Good, Dow Jones Sustainability Index Europe, Euronext Vigeo Europe 120 and Eurozone 120, STOXX® Global ESG Environmental Leaders, and S&P Global Sustainability Yearbook 2022, in recognition of its performance in terms of Corporate Social Responsibility (CSR).
For more information, visit www.rexel.com/en.
FINANCIAL ANALYSTS / INVESTORS
PRESS
REPORTED EBITA (Earnings Before Interest, Taxes and Amortization) is defined as operating income before amortization of intangible assets recognized upon purchase price allocation and before other income and other expenses.
ADJUSTED EBITA is defined as Reported EBITA excluding the estimated non-recurring net impact from changes in copper-based cable prices.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is defined as operating income before depreciation and amortization and before other income and other expenses.
EBITDAaL is defined as EBITDA after deduction of lease payment following the adoption of IFRS16.
RECURRING NET INCOME is defined as net income restated for non-recurring copper effect, other expenses and income, non-recurring financial expenses, net of tax effect associated with the above items.
FREE CASH FLOW is defined as cash from operating activities minus net capital expenditure.
NET DEBT is defined as financial debt less cash and cash equivalents. Net debt includes debt hedge derivatives.
For appendix, please open the pdf file by clicking on the link at the end of the press release.
The Group is exposed to fluctuations in copper prices in connection with its distribution of cable products. Cables accounted for approximately 19% of the Group's sales and copper accounts for approximately 60% of the composition of cables. This exposure is indirect since cable prices also reflect copper suppliers' commercial policies and the competitive environment in the Group's markets. Changes in copper prices have an estimated so-called "recurring" effect and an estimated so called "non-recurring" effect on the Group's performance assessed as part of the monthly internal reporting process of the Rexel Group:
i ) the recurring effect related to the change in copper-based cable prices corresponds to the change in value of the copper part included in the sales price of cables from one period to another. This effect mainly relates to the Group's sales; ii) the non-recurring effect related to the change in copper-based cable prices corresponds to the effect of copper price variations on the sales price of cables between the time they are purchased and the time they are sold, until all such inventory has been sold (direct effect on gross profit). Practically, the non-recurring effect on gross profit is determined by comparing the historical purchase price for copper-based cable and the supplier price effective at the date of the sale of the cables by the Rexel Group. Additionally, the non-recurring effect on EBITA corresponds to the non-recurring effect on gross profit, which may be offset, when appropriate, by the non-recurring portion of changes in the distribution and administrative expenses.
The impact of these two effects is assessed for as much of the Group's total cable sales as possible, over each period. Group procedures require that entities that do not have the information systems capable of such exhaustive calculations to estimate these effects based on a sample representing at least 70% of the sales in the period. The results are then extrapolated to all cables sold during the period for that entity. Considering the sales covered. the Rexel Group considers such estimates of the impact of the two effects to be reasonable.
This document may contain statements of future expectations and other forward-looking statements. By their nature, they are subject to numerous risks and uncertainties, including those described in the Universal Registration Document registered with the French Autorité des Marchés Financiers (AMF) on March 9, 2023 under number D.23-0078. These forward-looking statements are not guarantees of Rexel's future performance, Rexel's actual results of operations, financial condition and liquidity as well as development of the industry in which Rexel operates may differ materially from those made in or suggested by the forward-looking statements contained in this release. The forward-looking statements contained in this communication speak only as of the date of this communication and Rexel does not undertake, unless required by law or regulation, to update any of the forward-looking statements after this date to conform such statements to actual results to reflect the occurrence of anticipated results or otherwise.
The market and industry data and forecasts included in this document were obtained from internal surveys, estimates, experts and studies, where appropriate, as well as external market research, publicly available information and industry publications. Rexel, its affiliates, directors, officers, advisors and employees have not independently verified the accuracy of any such market and industry data and forecasts and make no representations or warranties in relation thereto. Such data and forecasts are included herein for information purposes only.
This document includes only summary information and must be read in conjunction with Rexel's Universal Registration Document registered with the AMF on March 9, 2023 under number D.23-0078, as well as the financial statements and consolidated result and activity report for the 2022 fiscal year which may be obtained from Rexel's website (www.rexel.com).
Attachment
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