Second quarter highlights

Key indicators:
•Second quarter volume of 1,672.2 million litres shows organic growth of 0.8% compared to the same period last year (Q2 2014: 1,659.7 litres).
•The key indicator of Refresco Gerber’s performance, gross profit margin per litre in euro cents, increased to 14.2 euro cents (Q2 2014: 14.0 euro cents), maintaining the levels of Q1.
•Increased adjusted EBITDA of €67.6 million compared to €66.6 million in the same period last year.
•Revenue – where change of input prices are passed on to customers – showed a slight decrease to €548.4 million compared to the same period last year (Q2 2015: €550.2 million).
•Adjusted for additional refinancing expenses and restructuring costs, net profit amounted to €29.0 million compared to €25.3 million in the same period last year. On an actual basis net profit amounted to €5.4 million (Q2 2014: €23.9 million).
•Adjusted EPS amounted to 35.7 euro cents compared to 31.1 euro cents in the same quarter last year.
•Refinancing fully completed as at the end of June 2015; repayment and replacement of an amount of €660.0 million in financing to a new term loan of €0 million and an undrawn €150.0 million RCF.
•With a net debt of €520.7 million at the end of June 2015, net debt ratio, based on LTM adjusted EBITDA, amounted to 2.4 compared to a ratio of 3.8 at the end of June 2014.

Key figures
(x 1 million euro unless stated otherwise)
un-audited Q2 2015 Q2 2014 HY 2015 HY 2014

Sales in litres (millions of litres) 1,672.2 1,659.7 3,049.5 3,012.6
Revenue 548.4 550.2 1,006.6 1,009.2
Gross profit margin per litre (euro cents) 14.2 14.0 14.2 13.9
Adjusted EBITDA¹ 67.6 66.6 104.7 98.3
IPO related (and other one-time costs) 0.7 0.0 20.5 0.0
Operating profit 38.4 45.5 35.1 55.4
Adjusted operating profit 47.0 45.9 63.7 57.0
Exceptional financing costs 21.9 0.0 21.9 0.0
Net profit / (loss) 5.4 23.9 (9.9) 21.9
Adjusted net profit / (loss) 29.0 25.3 31.6 25.1
EPS (euro cents) – pro forma 6.7 32.2 (12.2) 29.8
Adjusted EPS² (euro cents) – pro forma 35.7 31.1 40.6 28.8
Net debt ratio (net debt/LTM adjusted EBITDA) 2.4 3.8

1 Adjusted EBITDA is not a measure of our financial performance under IFRS. We apply adjusted EBITDA to exclude the effects of certain exceptional charges that we believe are not indicative of our underlying operating performance. Such adjustments relate primarily to substantial one-off restructurings, costs relating to acquisitions or disposals, and refinancing and IPO relating costs.
2 Adjusted EPS has been calculated based upon adjusted net profit, which excludes the costs related to the IPO, exceptional financing costs, restructuring costs and relating tax effect. The number of issued shares has been determined on 81.2 million for Q2 2015. For Q1 2015 this number was determined on a pro forma basis of 74.3 million shares. YTD 2015 the number of shares was determined on a pro forma basis of 77.9 million. For all calculations in 2014 the number of shares has been determined on a pro forma basis of 74.3 million.

“In the first half of 2015 we realized a 1.2% organic growth in volume, in line with the general market trend. Growth was mainly driven by our Co-Packing business where we realized an increase of 12.5% in volume compared to the first half of last year. This increase in Co-Packing has enabled us to maintain a strong gross profit margin per litre, the key indicator in development of our business.

The second and third quarters, based on volume, are traditionally our strongest period of the year, driven by summer weather demand. Typically the average gross profit margin per litre comes down slightly due to a shift in product mix. This year the summer weather did not come through until the end of June. With the absence of the product mix shift this has resulted in a slightly disappointing market volume development and a better gross profit margin per litre.

Revenue showed a slight decrease. Change in revenue is mostly driven by fluctuations in input prices which are passed on to customers, and is therefore not a representative indicator for the development of our business. Volumes developed positively and we maintained gross profit margin per litre at Q1 levels, resulting in a solid adjusted EBITDA for the period under review.

After the successful conclusion of our IPO last March, we were able to refinance our high yield bond related debt, lowering finance costs considerably and thereby creating headroom for the continued execution of our growth strategy. With a healthy pipeline of potential acquisition targets we are well positioned to further pursue our buy & build strategy going forward.

As mentioned, for the first half of 2015 we were able to maintain a strong gross profit margin per litre. Due to product mix effects we envisage this to come down slightly in the second half. For the full year 2015 we reconfirm our guidance, anticipating a low to mid-single digit growth of volume with gross profit margin per litre coming down marginally compared to the full last year (2014: 14.2 euro cents).”

Outlook
As mentioned previously and based on the current market outlook, we expect volume for the year to grow organically at low to mid-single digit levels compared to the full year 2014 volume (FY 2014: 6.0 billion litres). As we have seen raw material prices coming down, organic revenue growth will be slightly below organic volume growth.
We expect that, based on the current market and competitive environment, gross profit margin per litre for 2015 will come down marginally compared to the gross profit margin per litre over 2014 (€ 14.2 euro cents), due to product mix effects. These product mix effects are driven by an increase in sales of lower margin products.

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tijd 11.18
Eur 14,265 -22ct vol. 30.594