First-half 2003 results. Claude Balleyguier CEO Brice de La Morandière CFO Friday, September 5, 2003

Transcription

1 First-half 2003 results Claude Balleyguier CEO Brice de La Morandière CFO Friday, September 5,

2 Contents 1 First-half 2003 results 2 Strategic plan progress and outlook 2

3 Contents First-half 2003 results 2 Strategic plan progress and outlook 3

4 H sales down 11.2% from m - 48m -7.2% Abrium - 4.2m -1.1% Core business - 4.4m + 6.2m 405m -11.2% -10.5% -1.9% +1.2% Change Org. Sales Acquis. June 2002 June

5 Organic sales down 1.9% Sales steady in the Americas: up 1.4% excluding currency translation and acquisition effects Market shares are growing Strong homeland defense sales, particularly respiratory Slowdown in Europe, sales down 7.5% (excl. Abrium) Weak macroeconomic environment Delivery of large bullet-proof vest contract delayed until second half, vs. 5.8m in H Abrium sales down 7.2% Strong growth in Southeast Asia, up 35.2% 5

6 Sales by market segment Body protection / Head protection Fall protection: 15% Gloves : 14% Clothing: 7% Footwear: 6% 42% / 58% Hearing: 12% Respiratory: 21% Eye: 25% Head protection: +4.2% Sales of respiratory protection equipment continue to grow strongly (+19.7%) Eye protection (-3.1%) and hearing protection (-2.3%) impacted by sluggish manufacturing and construction in the US. Body protection: -7.8% Weak economy in Europe Protective clothing (-24.4%): delay of delivery of bullet-proof vest contract until H Abrium: -7.2% Due to: Sluggish French economy Logistics problems encountered in 2002 Uncertainty as to terms of Abrium's divestiture Excludes currency and acquisition effects and Abrium 6

7 Operating margin H H Sales Gross profit Margin (% sales) 36.1% 37.4% SG&A Operating income (EBITA)* Margin (% sales) 11.9% 14.6% *EBITA : before amortization of revalued intangible assets follow ing the acquisition Impact of currency fluctuations on EBITA: - 9.2m, i.e. 0.8 point of operating margin Impact of Abrium's losses: - 5.5m vs. -1.8m at June 30, 2002 Impact volume/mix and inflation Learning curve costs (Slovakia): about - 2m Positive contribution of synergies program: + 4.3m 7

8 Operating margin excluding Abrium and currency and acquisition effects H excluding Abrium and currency & acquisition effects H excluding Abrium Sales Gross profit Margin (% sales) 38.7% 39.0% EBITA Margin (% sales) 15.1% 16.3% Excluding Abrium and currency translation and acquisition effects the operating margin would have amounted to 15.1%, vs. 16.3% in first-half The difference is mainly due to: Lower sales and higher production costs Learning curve costs in Slovakia Level of safety stock too high Production ramp-up slower than expected Partly offset by the synergies program 8

9 Abrium Weak sales (-7.2%) Time required to turnaround Abrium underestimated Improving the supply chain (service rate) Improving margins (sales prices, negotiation with suppliers) Corporate culture Delay in implementing the layoff plan No improvement in margins Operating expenses still too high But no change in divestiture strategy in the first half The measures required to turnaround Abrium have practically all been implemented and will begin to bear fruit by the end of 2003 The option of disposing of Abrium without waiting for the benefits of the measures implemented will be valuated in October 9

10 Net income Financial expenses: Reduced by repayment of debt Lower effective interest rate Acquisition debt renegotiated in July at more favorable terms Exceptional expenses: Abrium restructuring costs Tax rate 37.8% vs. 34% in H1 2002: Mainly the result of Abrium's fiscal loss, which prudently was not recorded as a deferred tax Net margin excl. currency translation: 3.7% H H Operating income (EBITA)* Margin (% sales) 11.9% 14.6% Amort. of intangible assets Financial expenses Non-recurring amortization Exceptional expenses Income before tax & GW Tax Tax rate 37.8% 34.0% Amortization of goodwill Income after goodwill % of sales 3.3% 4.9% Net income % of sales 3.2% 4.8% *EBITA: operating income before amortization of revalued intangible assets following acquisition 10

11 Capacity to generate strong cash flow: 25m vs. 1m in 2002 Temporary increase in inventories due to industrial restructuring Trade receivables as expected The 1st half of 2002 was penalized by the decoupling of Abrium Tax refund expected: + 6.5m under other liabilities Investments: acquisition of Securitex Financial: repayment of debt H H Net income Minority interests Depreciation/amortiz. expense Variation in provisions Deferred taxes Cash flow ( products & services) Inventories & work in process Trade receivables Trade payables Change in other op. assets / liab Change in working capital Cash flow from operations Capex Acquisition Sundry 5.4 Financial Currency translation difference Net cash flow

12 Balance sheet structure remains solid Debt ratios stable: Gearing: 74.0% vs. 74.1% at end 2002 Debt/EBITDA*: 2.9x vs. 2.7x at end 2002 EBITDA/financial expenses: 6.7x vs.5.4x at end 2002 Debt renegotiated: better terms and margins *Annualized EBITDA : H and H Working capital requirement: WCR stable at 114 days of sales* Annualized sales: H and H Jun Dec-02 Goodwill on acquisition Intangible assets Tangible assets L-term assets & other inves. 2 8 Current assets Cash & equivalents Total assets 1,179 1,267 Shareholders' equity Minority interests 1 2 Provisions Loans & borrowings Trade payables Other Total equity and liabilities 1,179 1,267 12

13 Contents 1 First-half 2003 results Strategic plan progress and outlook 13

14 Synergies plan benefit: 4.3m in the first half 3 plants were closed in H1 2003: Vinylon (Holland), Schas (United States) and Billesholm (Sweden) An additional 5 plants are to be closed in the second half 4 plants downsized in the first half and another 2 in the second half These closings resulted in: Measures to find new jobs for employees either with Bacou-Dalloz or elsewhere Production moved to plants in Slovakia, Mexico or outsourced Program to "globalize" Group purchasing continued to respond to increasing raw materials and shipping costs: 1.9m saved in the first half Group sourcing team set up in China 14

15 One Stop Shopping strategy One Stop Shopping available for Bacou-Dalloz customers in Europe since March 2003: Sales to distributors increasing in Europe (excluding Abrium) One Stop Shopping in the United States: Final planning phase completed, including selection of software, location of logistics platform, etc. Gradual deployment to be completed by end

16 Dynamic innovation and enhanced product range More dynamic innovation More new products to be introduced in Q In most Bacou-Dalloz market segments Product range expanded in growing markets Acquisition of Securitex in March 2003 Globalization of product offering accelerated: The objective is to more effectively market products by promoting the bestknown brands in each market segment and region 16

17 Outlook for the 2nd half of 2003 Bacou-Dalloz still confident in medium-term prospects: Increasing benefits expected from One Stop Shopping strategy in Europe Geographic expansion (Body Protection in Europe and all products in emerging countries) More dynamic innovation Ongoing implementation of the synergies plan Non-reoccurrence of various events: Bullet-proof vests Slovakia learning curve costs Adaptation to the current environment, implementation of cost-cutting measures in some plants Still prudent however as to near-term outlook: Economic horizon cloudy, similar to first half Impact of the dollar Abrium: No change in divestiture strategy 17

18 Longer-term outlook Bacou-Dalloz remains confident in its long-term outlook and has proven, in a difficult environment, its ability to: Carry out an ambitious merger Pursue its synergies program as initially planned Strengthen and develop its activity in the most promising markets, thanks to its well balanced activity, geographically and by market segments Pursue its "consolidator" strategy In addition, and thanks to its strong fundamentals and sustained potential to increase sales and improve profit margins, Bacou-Dalloz remains confident in its long-term success 18

19 19 The World Leader in Personal Protective Equipment