Tarkett SA · SWB:1T9
Tarkett SA — FY2013 Earnings Presentation
41 slides from Tarkett SA's earnings presentation, Feb 18, 2014
Slide 1: 2013 Financial Results
2013 Financial Results February 2014
Slide 2: Tarkett is a global leader in flooring solutions
Tarkett is a global leader in flooring solutions Tarkett is a global company providing Net sales breakdown by product 2013 integrated flooring and sports surface solutions Sports 11% Rubber & Various 7% Tarkett offers one of the broadest product Wood & Vinyl & ranges and the most diversified geograp
Slide 3: 2013 Highlights
2013 Highlights Record Net Sales: +9.8% vs. 20121, at €2,516m Continued organic growth: +3.3% vs.2012 Record Sales and Adjusted EBITDA Adjusted EBITDA2 €310m (12.3% of sales), +90bps vs.2012 Successful Tandus integration progressing as expected Net profit attributable to owners: €99.1m (+18.5%) Conf
Slide 4: 2013 Activity
2013 Activity @ Tarkett THE ULTIMATE FLOORING EXPERIENCE
Slide 5: Organic growth: +3.3% vs. 2012
Organic growth (same perimeter and exchange rates): +3.3% vs. 20121 Sports +12.0% CIS & Others NA +4.1% +3.0% EMEA -0.9% Note: 1 2012 accounts were restated following adoption of IFRS 11 – A JV previously consolidated with the proportional method is now consolidated using the Equity method (except f
Slide 6: Sales performance by segment
Sales performance Net sales Positive performance in Germany, Central Europe and Scandinavia EMEA Organic €m 2013 20121 % growth Growth Spain remains very depressed Slowdown in France Slight recovery in Italy EMEA 670 679 -1.4% -0.9% America Full-year impact of Tandus acquisition North Nort
Slide 7: Record net sales despite adverse currency effect
Record net sales despite adverse currency effect Net Sales €m 210.0 Organic Growth Of which lag effect 3.3% of selling price increases in CIS -€20.9m 74.6 1.2 2 516.4 (60.9) 2 291.5 FY 20121 Currencies Organic Growth Sales Pricing Tandus FY 2013 Note: 1 2012 accounts were restated following adoption
Slide 8: Record EBITDA margin
Record EBITDA margin Adjusted EBITDA2 Continuous efforts on productivity 2013 20121 €m EMEA Adverse currency fluctuation in Norway, UK and through exports to Australia Adj EBITDA 71 76 EMEA Depressed market conditions in Wood activity % of net sales 10.6% 11.2% Adj EBITDA 74 30 Full-year imp
Slide 9: Adjusted EBITDA 2013 vs. 2012
Adjusted EBITDA2 2013 vs. 20121 320,0 37.7 Of which lag effect of selling price 35.1 300,0 increases in CIS -€15.5m 280,0 13.0 (21.7) (2.8) 260,0 1.2 310.0 13.3 240,0 262.2 (28.0) 220,0 200,0 FY 2012 Currencies Volume/ Mix Sales pricing Purchase Industrial Wage One timers Tandus FY 2013 pricing Perf
Slide 10: Confirmed industrial performance and cost saving potential
Confirmed industrial performance and cost saving potential Track record of productivity gains A number of well identified strategic initiatives % of productivity as a % of COGS Optimise supply chain in Western Europe EMEA Restructure Wood production 3,0% Enhance Vinyl production line in France
Slide 11: Adjusted EBIT Margin: +80 bps vs. 2012
Adjusted EBIT Margin: +80 bps vs. 2012 €m 2013 20121 Net sales 2,516.4 2,291.5 Adjusted EBITDA2 310.0 262.2 % of net sales 12.3% 11.4% Depreciation (99.1) (87.1) Adjusted EBIT 210.9 175.2 2013 2012 Restructuring (5.3) (6.6) % of net sales 8.4% 7.6% Impairment charges & customers’ lists (6.1) (1.8) a
Slide 12: Net Income evolution
Net Income evolution €m 2013 20121 EBIT 180.9 153.4 % of net sales 7.2% 6.7% 1 Net financial expenses (31.4) (23.9) Comments Net interest expense (15.1) (11.1) Other financial income & expenses (16.3) (12.8) 1 Other financial expenses Commissions, bank charges and other financial Share of profit o
Slide 13: Well invested asset base to capture growth
Well invested asset base to capture growth Sustained investment efforts Key highlights Continuous and sound industrial investments Ongoing capex (€m) Ongoing capex as % of net sales A number of significant investments across all regions to develop local footprint and ensure top-line and earnings
Slide 14: Stability of Working Capital after strong improvement in 2012
Stability of Working Capital after strong improvement in 2012 Net cash flow from Operations ROCE €m 2013 €m 2013 20121 Tangible Assets 415 Operating cash flow before working Intangible Assets 537 296.4 250.0 capital changes Operating Working capital 236 Changes in working capital (16.3) 47.2 Capital
Slide 15: A conservative capital structure coupled with a strong liquidity position
A conservative capital structure coupled with a strong liquidity position Net financial debt and leverage ratio evolution Key highlights Net debt was impacted by distribution of €125m special dividend paid While making strategic investments over the period, prior to IPO, offset in part by €38m net
Slide 16: Improved liquidity and debt maturity
Improved liquidity and debt maturity Key highlights €m Utilization Credit Lines Strong liquidity with €642m of undrawn credit lines as of 31 Dec 2013 and total committed lines of 1,168m Dec 2013 Dec Dec 2013 Dec New €450m 5-year term loan (2018) arranged by 7 banks, proceeds 20121 20121 to be us
Slide 17: Financial objectives – Mid-term guidance
Financial objectives – Mid-term guidance Net sales from 2012-2016 organic sales CAGR continues to outperform aggregate GDP growth in the regions organic growth where we are present Additional sales Objective of c. €300m additional sales by 2016 coming from value-accretive acquisitions from acqui
Slide 18: Potential acquisition – Gamrat Flooring
Potential acquisition – Gamrat Flooring Main Transaction Rationale Leading player in Commercial resilient Marketing & sales synergies in resilient Flooring in Central and Eastern Europe flooring for Commercial applications in Central and Eastern Europe Polish company headquartered in Jaslo (So
Slide 19: Conclusion
Conclusion al @ Tarkett THE ULTIMATE FLOORING EXPERIENCE
Slide 20: Take Aways
Take Aways 2013 Results Record Sales & Adjusted EBITDA results in 2013 Organic Sustained organic growth and successful integration Growth of Tandus Guidance Mid-term guidance confirmed Dividend Dividend1 payment: €0.62 per share M&A Focused M&A strategy – Gamrat in progress Note: 1 Dividen
Slide 21: The Tarkett value proposition
The Tarkett value proposition Tarkett’s key competitive strengths… creating value for our shareholders 1 Global market leadership Global leader with strategic 2 Attractive geographic footprint exposure to profitable growth 3 Balanced geographic and end-market exposure High margin resilience thro
Slide 22: Tarkett's 2014 priorities for profitable growth strategy
Tarkett’s 2014 priorities for profitable growth strategy Seize growth potential on a global scale Expand through innovation After a 2013 record year Tarkett keeps its dynamics for Deliver further sustainable and profitable growth operational optimisation in 2014 Pursue M&A growth potential and i
Slide 23: Q&A session
2013 Financial Results Q&A session February 2014
Slide 24: Appendices
@ Tarkett THE ULTIMATE FLOORING EXPERIENCE Appendices
Slide 25: Attractive exposure to recovering markets and emerging markets
Attractive exposure to recovering markets complemented by a leading exposure to emerging markets EMEA 29%1 of 2013 net sales Strong presence in Vinyl & Linoleum and Wood & Laminate Limited exposure to Southern Europe (<2.5% of total 2013 net sales), with historical stronghold in Northern European co
Slide 26: True "glo-cal" competitive advantage
True “glo-cal” competitive advantage “GLO-CAL” COMPETITIVE ADVANTAGE Price competitiveness Well-adapted design High level of service Global scale leverage Local strengths Purchasing negotiation power Regional design centres anticipating local trends Research & innovation global synergies Opt
Slide 27: The "glo-cal" advantage applies particularly well in Russia & CIS
The “glo-cal” competitive advantage applies everywhere in Tarkett’s business, and particularly well in Russia & CIS The sustainability of Tarkett’s position in the CIS region is supported by… Local presence for more than 10 years with strong local team Best brand awareness and customer proximity i
Slide 28: Quick reaction to the devaluation of emerging-market currencies
Quick reaction to the devaluation of emerging-market currencies Variation since 31 – Dec - 2013 RUB -6.3% Price increase: +5.0%, effective April 1, 2014 UAH Price increase +10%, effective February 24, 2014 -6.0% KZT Prices fixed in EUR, effective February 17, 2014 -16% 2013 Financial Results 27 Appe
Slide 29: Expand through innovation
Expand through innovation Eco-innovation Modularity & Design Technology & Performance Phthalate-free Low VOC emissions LVT iSelect New MET fibre (Optimum) New generation of VOC emissions of Invest and innovate in Flooring Solutions Own inhouse fibre production vinyl flooring with Tarkett’s products
Slide 30: Excellent track record of profitable growth and margin resilience
Excellent track record of profitable growth and margin resilience Net sales –€m Adjusted EBITDA –€m Adjusted EBITDA margin 298 310 2 497 2,516 262 35 208 222 2 292 206 191 2 088 12,2% 11,6% 9,2% 11,4% 11,9% 12,3% 1 919 1 708 2009A 2010A 2011A 2012R 2012PF 2013A Proven margin stability throughout the
Slide 31: The most balanced geographic exposure in the industry
The most balanced geographic exposure in the industry Balanced geographic 70%+ 85%+ exposure North America exposure European Union exposure 5% 6% 10% 5% 15% 15% 35% 14% CIS & 20% Others 30% % 2013 net sales Other 29% Europe 90% EMEA 95% 80% 85% North America 70% 55% 36% North America 5% 1 2 3 4 1 Ta
Slide 32: Balanced exposures providing resilience to industry cycles
Balanced exposures providing resilience to industry cycles One of the broadest Attractive end-markets exposure Uniquely balanced product portfolios geographic exposure in the flooring industry Balanced Resilience New Sports construction North America 11% Vinyl & ~20% CIS & Others Rubber & Linoleum R
Slide 33: Tarkett's competitive strengths
Tarkett has secured a unique advantage with its critical size and unique strong local presence RESIDENTIAL COMMERCIAL END-USERS END-USERS Key success factors Wide range of designs Products in line with strict tracking customer trends and norms and technical regulations, taste, requiring marketin
Slide 34: A global leader with one of the broadest product offerings
A global leader with one of the broadest product offerings... Vinyl & Wood & Turf & Product Ranking based on latest sales data Ceramics Linoleum Laminate Carpet Tracks Rubber categories 5 4 5 3 2 2 1 1 5 1 Source: Company information and esti
Slide 35: A market with very specific regional segmentation
A market with very specific regional segmentation… Total flooring market: 12.2bn sqm Breakdown of volume demand by product (2012A) Ceramics Commercial Residential Carpet ¹ Residential Carpet Carpet 7% 22% Vinyl, Commercial Carpet Linoleum & Rubber ADDRESSED Vinyl, Linoleum & Rubber 8% SEGMENTS Wood
Slide 36: Shareholder composition
Shareholder composition As at Dec 31, 2013 Tarkett Management Tarkett GDL and employees 0,38% 1,90% KKR international Flooring 21,50% Société Investissement Deconinck 50,10% Institutional investors & individuals 26,12% 2013 Financial Results 35 Appendices - Feb 18, 2014
Slide 37: Tarkett has a best-in class governance structure
Tarkett has a best-in class governance structure Supervisory Board Shareholder agreement President: Didier Deconinck Shareholder agreement between KKR and the Deconinck family to remain in place post-IPO for a term of 4 years Vice President: Jacques Garaїalde (KKR) (or until one party holds le
Slide 38: Consolidated income statement
Consolidated income statement Income statement €m 2013 20121 Net sales 2,516.4 2,291.5 Cost of sales (1,892.8) (1,765.8) Gross profit 623.7 525.7 Other operating income 8.9 7.6 Selling and distribution expenses (248.8) (213.5) Research and development expenses (25.8) (19.8) General and administrativ
Slide 39: Consolidated cash flow statement
Consolidated cash flow statement Cash flow statement €m 2013 20121 Net profit before tax 148.2 127.5 Adjustments 148.2 122.5 Operating profit before working capital 296.4 250.0 changes Effects of changes in assets and liabilities (16.3) 47.2 Cash generated from operations 280.2 297.2 A Other operati
Slide 40: Consolidated balance sheet
Consolidated balance sheet Balance sheet €m 2013 A 20121 Assets Goodwill 425.6 449.1 Intangible assets 110.9 98.4 Property, plant and equipment 415.4 428.7 Financial assets 27.5 29.3 Deferred tax assets 92.7 96.2 Other non-current assets 0.2 Non-current assets 1,072.3 1,101.7 Inventories 318.6 333.3
Slide 41: Disclaimer
Disclaimer The information contained in this presentation has not been independently verified and no representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained here