2020 profitability outlook above market expectations: Adjusted EBITDA margin broadly in line with 2019 margin and leverage be...
28 Septembre 2020 - 05:45PM
2020 profitability outlook above market expectations: Adjusted
EBITDA margin broadly in line with 2019 margin and leverage below
3.0x at year end
Paris - La Défense, September 28, 2020
– Based on current trading and achievements in cost
reduction since the beginning of the third quarter 2020, Tarkett
estimates that year end results will be above market expectations.
Consequently, the Group updates its outlook for 2020.
Q3 2020 preliminary
information
Q3 revenue still trending below last year’s
level in most segments:
- Sequential improvement in EMEA versus Q2 2020 resulting in
single digit revenue decrease compared to last year and stable
revenue growth in CIS, APAC & LATAM, in particular thanks to
the recovery of residential activities;
- North America sequentially improving versus Q2 2020 but still
trading down double digit compared to last year as commercial is
improving slowly and exposure to the more dynamic residential
segment is lower than in other regions;
- As expected, Sports revenues to decline double digits. The
level and seasonality of Tarkett Sports’ activities have been
impacted globally by projects being delayed, postponed, and
cancelled due to the Covid-19 pandemic.
Q3 profitability will be preserved by solid
level of cost reduction in the quarter:
- Structural actions now estimated to generate savings above €45
million in 2020 thanks to Q3 performance (versus previous
expectation to be above €30 million);
- Improvement in raw material costs expected to exceed €15
million in H2 2020 compared to H2 2019 based on Q3 trend;
- Q3 Adjusted EBITDA margin expected above last year’s level
(12.7% of revenues in Q3 2019).
FY 2020 outlook
Significant uncertainties remain on demand level
as the pandemic remains active with new lockdowns looming in
several regions. Tarkett therefore remains cautious on year end
given the lack of visibility and expects revenue decline in H2 2020
broadly in line with H1 2020.
As a result of ongoing achievements in cost
reduction, Tarkett now anticipates its Adjusted EBITDA margin to be
broadly in line with last year’s level (2019 margin: 9.4% of
revenues) and its financial leverage1 to remain below 3.0x at end
December. The initial target of financial leverage for 2020
(between 1.6x and 2.6x) had been suspended on April 8th 2020 due to
the context.
The longer-term impact of the Covid-19 pandemic
on demand has yet to be seen. However, Tarkett is confident in the
resilience of its business model even in a more depressed
environment. Tarkett will pursue the execution of its Change to Win
strategic roadmap. The Group will continue accelerating its actions
to improve the cost base and strengthen its top line initiatives.
The Group stated upon its interim release that its mid-term
objectives are still valid. Organic growth should be above GDP
growth in key regions in 2021 and 2022. Besides, Tarkett aims at
reaching an Adjusted EBITDA margin of at least 12% by 2022. Lastly,
the Group targets a financial comprised between 1.6x and 2.6x at
each year end of 2021 and 2022.
The Group will release its Q3 earnings as
planned on October 28th, 2020 after market
close.
This press release may contain forward-looking statements. Such
forward-looking statements do not constitute forecasts regarding
results or any other performance indicator, but rather trends or
targets. These statements are by their nature subject to risks and
uncertainties as described in the Company’s annual report
registered in France with the French Autorité des Marchés
financiers available on its website (www.tarkett.com). These
statements do not reflect the future performance of the Company,
which may differ significantly. The Company does not undertake to
provide updates of these statements.
Investor Relations Contact
Tarkett – Emilie Megel –
emilie.megel@tarkett.com – Tel. : +33 (0)1 41 20 46 39
Media contactsTarkett -
Véronique Bouchard Bienaymé - communication@tarkett.com Brunswick -
tarkett@brunswickgroup.com - Tel. : +33 (0) 1 53 96 83 83Hugues
Boëton – Tel. : +33 (0)6 79 99 27 15 – Benoit Grange – Tel. :
+33 (0)6 14 45 09 26
About Tarkett
With a history of 140 years, Tarkett is a
worldwide leader in innovative flooring and sports surface
solutions, with net sales of €3 billion in 2019. Offering a wide
range of products including vinyl, linoleum, rubber, carpet, wood,
laminate, artificial turf and athletics tracks, the Group serves
customers in over 100 countries across the globe. Tarkett has
12,500 employees and 33 industrial sites, and sells 1.3 million
square meters of flooring every day, for hospitals, schools,
housing, hotels, offices, stores and sports fields. Committed to
change the game with circular economy, the Group has implemented an
eco-innovation strategy based on Cradle to Cradle® principles, with
the ultimate goal of contributing to people’s health and wellbeing,
and preserving natural capital. Tarkett is listed on Euronext Paris
(compartment B, ISIN: FR0004188670, ticker: TKTT) and is included
in the following indices: SBF 120 and CAC Mid 60.
www.tarkett.com.
Alternative performance measures definition (as per our
2019 Universal Registration Document)
- Adjusted EBITDA is the operating income before
depreciation, amortization and the following adjustments:
restructuring costs, gains or losses on disposals of significant
assets, provisions and reversals of provisions for impairment,
costs related to business combinations and legal reorganizations,
expenses related to share-based payments and other one-off expenses
considered non-recurring by their nature.
- Financial leverage is the ratio financial net
debt including leases recorded under IFRS 16 to LTM (Last Twelve
Months) Adjusted EBITDA. As per our credit documentation, the
financial leverage retained for the covenant is calculated before
IFRS16 application. The covenant attached to our bank loans is
tested at the end of each semester. It has to be below 3.5x at end
of June and below 3.0X at end December. Tarkett obtained from its
banking partners a covenant holiday for 2020. The covenant is also
attached to the Schuldschein private placements. It is only is
tested once a year and has to be below 3.0x at end December.
- Net financial debt is defined as the sum of
interest bearing loans and borrowings minus cash and cash
equivalents. Interest bearing loans and borrowings refer to any
obligation for the repayment of funds received or raised that are
subject to repayment terms and interest charges. They also include
leases recorded under IFRS 16 since the application of the new
accounting norm.
1 Financial leverage ratio is the ratio net financial debt,
including Lease liabilities, to LTM Adjusted EBITDA after IFRS16
application
- 2020_09_28_ Tarkett Trading Update_US PR
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