CHARGEURS (EPA:CRI) - CHARGEURS - 2018 Annual results

Transparency directive : regulatory news

12/03/2019 07:05

NEW RECORD YEAR IN 2018 ROP(1) UP 10.4% TO EUR49.0 MILLION

                               PRESS RELEASE

                                                      Paris - March 12, 2019

            Ongoing success of the Game Changer strategic plan

- Consolidated annual revenue of EUR573.3 million, up 7.6% year-on-year, or
  EUR619 million including the full-year contribution of companies acquired in
  2018
- Another very sharp increase in operating performance, with double-digit
  growth in ROP(1), up 10.4% to EUR49.0 million
- Recommended 2018 dividend of EUR0.67 per share, up 12%
- Groupe Familial Fribourg raises its interest in and acquires control of
  Colombus Holding, Chargeurs' reference shareholder

2019 guidance:
- Further growth in revenue and recurring operating profit(1) and solid cash
  generation
- Continued execution of the Iconic Champions strategy

By end-2021:
- Target to top the EUR1bn profitable revenue mark confirmed, provided the
  macro-economic, geopolitical and currency environment remains constant

"Chargeurs had an record year in 2018 despite a volatile operating environment.
Thanks to the success of our Game Changer plan and our targeted acquisitions
strategy, we moved up another gear with premiumizing the product ranges of all
of our businesses, reinforced our leadership positions and created new
structural growth opportunities. These ground-breaking achievements despite an
increasingly difficult backdrop, combined with the long-term commitment of the
Groupe Familial Fribourg to our reference shareholder, Colombus Holding, mean
we are confident that we have got our profitable growth strategy right.
Consequently, we are standing by our target of topping EUR1 billion in revenue
by end-2021, one year ahead of schedule, barring any changes in the
macro-economic environment", said Michaël Fribourg, Chargeurs' Chairman and
Chief Executive Officer.

The Board of Directors of Chargeurs met on March 11, 2019 under the
chairmanship of Michaël Fribourg to approve the 2018 consolidated financial
statements. These financial statements have been audited and the Statutory
Auditors' report is in the process of being prepared.

2018 CONSOLIDATED FINANCIAL HIGHLIGHTS

                                                     Change 18/17
                                                       like-for-
                             Twelve months               like     Change
In euro millions         2018    2017    2016  reported   (2)     18/16

Revenue                 573.3   533.0   506.4   +7.6 %   +2.6 %   +13.2 %
EBITDA                   59.8    54.6    48.8   +9.5 %            +22.5 %
as a % of revenue      10.4 %  10.2 %   9.6 %
Recurring operating
profit (1)               49.0    44.4    38.9  +10.4 %            +26.0 %
as a % of revenue       8.5 %   8.3 %   7.7 %

Attributable net profit  26.6    25.2    25.0   +5.6 %             +6.4 %

(1) Before amortization of intangible assets resulting from acquisitions
(2) Based on a comparable scope of consolidation and at constant exchange rates

(1) Recurring operating profit before amortization of intangible assets
    resulting from acquisitions

Robust revenue growth in 2018 despite a demanding and volatile operating contex

Revenue for 2018 was up by a solid 7.6% compared with 2017 and by 13.2% versus
2016. Like-for-like growth was 2.6%, against a volatile economic backdrop and
with a high basis of comparison for 2017. Including the full-year contribution
of the companies acquired in 2018, the 2018 revenue figure was EUR619 million.
In 2018, the Group's operations were affected by inventory shedding at
Chargeurs Protective Films' customers, a further acceleration of our selective
sales strategy to step up the premiumization of our solutions offering across
all of our businesses, and technological upgrades at several strategic
manufacturing sites. The Group was also impacted by a 3.6% negative currency
effect, mainly arising from the Argentine peso, US dollar and New Zealand
dollar.
Growth for 2018 was buoyed by the integration of PCC Interlining into Chargeurs
PCC Fashion Technologies in the fourth quarter and by the integration of Leach
into Chargeurs Technical Substrates in the second quarter.

An excellent operating performance, driving a further acceleration in
profitable growth

Chargeurs' profitable growth accelerated again in 2018, with another solid
increase in recurring operating profit(1), which saw double-digit growth of
10.4% to EUR49.0 million, and a 20 basis-point rise in recurring operating
margin to 8.5%. These showings once again demonstrate the success of the Game
Changer performance acceleration plan, which was launched in 2017 and
reinforced in 2018 by the new Iconic Brands strategy. This new strategy is
aimed at creating high value-added brands and enabling each business to
consolidate their positions as the partner of choice for customers and
therefore enhance their product mix and ultimately step up the pace of
profitable growth.
The across-the-board strong performance delivered by the Group was achieved
despite (i) a high basis of comparison with 2017, (ii) an unfavorable currency
effect, and (iii) higher operating expenses incurred to drive growth (notably
to accelerate the premiumization of our solutions offerings).

ANALYSIS BY BUSINESS SEGMENT

Chargeurs Protective Films: record-high revenue in 2018 and preparations for
stepping up the premiumization of the solutions offering in 2019

                                                     Change 18/17
                                                       like-for-
                             Twelve months               like     Change
In euro millions         2018    2017    2016  reported   (2)     18/16

Revenue                 283.3   281.0   250.3   +0.8%    +0.0%    +13.2%
EBITDA                   39.4    40.3    33.2   -2.2%             +18.7%
as a % of revenue       13.9%   14.3%   13.3%
Recurring operating
profit (1)               33.0    34.3    28.0   -3.8%             +17.8%
as a % of revenue       11.6%   12.2%   11.2%

(1) Before amortization of intangible assets resulting from acquisitions
(2) Based on a comparable scope of consolidation and at constant exchange rates

Chargeurs Protective Films had another good year in 2018, with revenue reaching
a record EUR283.3 million, up 0.8% on 2017 - which was already an exceptional
year - despite an extremely unfavorable currency effect arising from the US
dollar. Since 2016, revenue for this segment has surged 13.2%.
After a brisk first six months, the second half of the year saw major
customers' inventories returning to more routine levels as expected as they
continued to reduce their stand-by inventories in a persistently volatile
environment.
During 2018, Chargeurs Protective Films successfully pursued its premiumization
strategy for its solutions offering, as well as its selective marketing policy
and the development of its innovative end-to-end solutions offering - Chargeurs
Protective Specialty Machines - with the aim of improving its product mix and
strengthening its pricing power. It also prepared for the launch of its new
techno-smart production line at its Sessa plant in Italy, scheduled for
mid-2019, which will allow it to augment its production capacity for premium,
high value-added products with a view to consolidating its global leadership
position.
Recurring operating profit(1) came to EUR33.0 million, reflecting - together
with the above factors - the effect of a change in consolidation scope related
to the development of the segment's new end-to-end offering - Chargeurs
Protective Specialty Machines - and productivity gains achieved thanks to the
Annual Productivity Plan. Recurring operating margin came in at over 11.5%
despite an adverse currency effect (mainly stemming from the US dollar) and the
continued outlay of growth opex. Excluding the currency effect, recurring
operating margin would have been over 12.5%.
Driven by this operational and industrial dynamic, the business is now armed to
cement its global leadership in the surface protection market in 2019 with an
increasing focus on premiumization.

Chargeurs PCC Fashion Technologies: an excellent operating performance, with a
300 basis-point increase in recurring operating margin

                                                     Change 18/17
                                                       like-for-
                             Twelve months               like     Change
In euro millions         2018    2017    2016  reported   (2)     18/16

Revenue                 161.1   131.2   132.0   +22.8%   +6.9%    +22.0%
EBITDA                   17.9    11.3    11.7   +58.4%            +53.0%
as a % of revenue       11.1%    8.6%    8.9%
Recurring operating
profit (1)               14.8     8.1     8.0   +82.7%            +85.0%
as a % of revenue        9.2%    6.2%    6.1%

(1) Before amortization of intangible assets resulting from acquisitions
(2) Based on a comparable scope of consolidation and at constant exchange rates

Revenue generated by Chargeurs PCC Fashion Technologies surged 22.8%, fueled by
both the rapid integration of PCC Interlining in the United States and Asia,
and its customer-centric strategy (with brisk like-for-like growth of 6.9%).
This business segment delivered an excellent operating performance, with a 300
basis-point increase in recurring operating margin to 9.2% in 2018. Drawing on
Angela Chan's in-depth experience of working with major apparel players in the
United States and Asia, Chargeurs PCC Fashion Technologies saw strong momentum
for its commercial strategy of premiumizing its offering of product and service
solutions and leveraged new synergies generated through PCC Interlining's
expertise. PCC Fashion Technologies also accelerated its geographic expansion
and significantly increased the proportion of its sales derived from the
nomination of its products, which creates long-term, profitable customer
relationships.
Buoyed by its new position as a global leader in technical textiles for the
luxury and fashion industries, Chargeurs PCC Fashion Technologies has the solid
fundamentals it needs to accelerate its value creation.

Chargeurs Technical Substrates: acceleration of growth opex to top the EUR100
million revenue mark

                                                     Change 18/17
                                                       like-for-
                             Twelve months               like     Change
In euro millions         2018    2017    2016  reported   (2)     18/16

Revenue                  30.7    25.8    24.6   +19.0%   -5.4%    +24.8%
EBITDA                    5.1     4.9     4.7    +4.1%             +8.5%
as a % of revenue       16.6%   19.0%   19.1%
Recurring operating
profit (1)                4.0     4.0     3.8    +0.0%             +5.3%
as a % of revenue       13.0%   15.5%   15.4%

(1) Before amortization of intangible assets resulting from acquisitions
(2) Based on a comparable scope of consolidation and at constant exchange rates

Chargeurs Technical Substrates reported EUR30.7 million in revenue for 2018, up
19.0% on 2017. This year-on-year growth was fueled by the strategic acquisition
of Leach - a leading UK-based specialist in large-format graphic displays -
which has enabled the segment to broaden its unrivaled solutions offering and
given it access to new niche markets. In 2018 it also accelerated its launches
of ground-breaking innovations, such as Sublimis, which was voted "product of
the year" at the SGIA Expo printing technology trade show in Las Vegas.
Additionally, Chargeurs Technical Substrates pursued its strategy of forging
strategic partnerships with key customers - which represent revenue growth
potential of up to 10% a year on a full-year basis - and signed its first
industrial partnership in innovation-intensive textiles.
Focused on executing its profitable growth strategy centered on high
value-added end-to-end solutions, Chargeurs Technical Substrates carried out
growth opex projects in 2018 to help drive its future business development,
while managing to keep its recurring operating profit(1) at EUR4.0 million.
Thanks to these futureproofing investments and the mid-January 2019 appointment
of Sampiero Lanfranchi as its Managing Director to intensify its external
growth, Chargeurs Technical Substrates is well-equipped to achieve its target
of topping EUR100 million in profitable revenue by 2021.

Chargeurs Luxury Materials: successful premiumization strategy

                                                     Change 18/17
                                                       like-for-
                             Twelve months               like     Change
In euro millions         2018    2017    2016  reported   (2)     18/16

Revenue                  98.2    95.0    99.5   +3.4%    +6.4%    -1.3%
EBITDA                    2.7     2.6     2.9   +3.8%             -6.9%
as a % of revenue        2.7%    2.7%    2.9%
Recurring operating
profit (1)                2.7     2.6     2.9   +2.1%             -8.5%
as a % of revenue        2.7%    2.7%    2.9%

(1) Before amortization of intangible assets resulting from acquisitions
(2) Based on a comparable scope of consolidation and at constant exchange rates

Chargeurs Luxury Materials - whose business involves trades of premium fibers
that are hedged by forward sale contracts - delivered a robust sales
performance in 2018, with revenue advancing 3.4% to EUR98.2 million. Business
in Europe was particularly buoyed by the signing of a new strategic commercial
contract.

In 2018, this segment accelerated the premiumization of its product range,
launching Amédée 1851, an online luxury brand specialized in scarves and
squares made of premium-grade fibers (www.amedee1851.com). It also added to its
marketing clout by incorporating the Responsible Wool Standard (RWS)
certification into its Organica Precious Fiber label, the world's leading label
for certified and traceable premium-grade fibers designed for the most
prestigious global luxury and sportswear brands. Chargeurs Luxury Materials'
recurring operating profit(1) came in 2.1% higher than in 2017, directly
reflecting the segment's strategy of premiumizing its offering of premium-grade
fibers.

ROBUST BALANCE SHEET STRUCTURE MAINTAINED AND STRONGER FINANCIAL RESOURCES

Chargeurs' robust financial position was further strengthened during the year,
with equity attributable to owners of the parent rising to EUR237.2 million at
December 31, 2018 from EUR229.9 million at the previous year-end.
At December 31, 2018 the Group was in a net debt position of EUR92.2 million
compared with an EUR8.9 million net cash position at December 31, 2017. The
year-on-year swing was mainly due to the acquisitions of Leach and PCC
Interlining in 2018, the financing set up for Chargeurs Protective Films' new
techno-smart coating line in Italy, and an increase in operating working
capital.

In addition, in order to reinforce its financial strength, in December 2018
Chargeurs signed a game-changing EUR230 million syndicated credit agreement,
with drawdown flexibility and no leverage covenant with a pool of seven leading
French and international banks - BPCE (including Natixis, CE IdF, Bred,
Palatine), CIC, HSBC, Saar LB, BNP Paribas, Bank of China and Commerzbank. As a
result of this new facility the Group will be able to continue its strategy of
optimizing its balance sheet and very long-term financial resources.

ANOTHER DIVIDEND INCREASE

In light of the Group's accelerated operating performance in 2018, the Board of
Directors will ask shareholders at the Annual Meeting on May 6, 2019 to approve
a per-share dividend of EUR0.67 for 2018 - representing a 12% increase compared
with 2017 - again with a reinvestment option.

After deducting the interim dividend of EUR0.30, paid on September 28, 2018
after the 2018 interim financial statements were approved, if the shareholders
approve the proposed dividend for 2018, the dividend balance of EUR0.37 per
share will be paid according to the following schedule:

- Ex-dividend date      May 10, 2019
- Payment date:         May 29, 2019

OUTLOOK

Backed by solid fundamentals, new financial clout, lasting shareholder
commitment and its new iconic brands and marketing strategy underpinning the
Game Changer plan, and barring any changes in the geopolitical and
macro-economic climate, Chargeurs is targeting new growth in revenue and in its
recurring operating profit(1) and robust cash generation in 2019.
Drawing on the success of its strategy in recent years, the next 12 months
should bring new impetus but also a more balanced contribution from the Group's
different business segments to its overall profitability.
As it continues with the consolidation of its acquisitions over the year and
the integration of new capacity, Chargeurs Protective Films will also continue
to focus on its strategy of premiumization. The upbeat market environment in
the first half of the year led to a record performance for Chargeurs Protective
Films in 2018. Given the very high basis for comparison, the operational
priorities and choices linked to the arrival of new strategic capacity in the
second half of 2019, and to a persistently volatile climate in certain regions,
notably Germany and China, the division, which has a satisfactory order book,
is not expected to deliver the same record results in the first six months but
will nonetheless be looking to post a very solid performance for the year that
reflects its market strength.

Chargeurs PCC Fashion Technologies and Chargeurs Technical Substrates, for
their part, will benefit from the integration of their most recent acquisitions
over a full year and from their winning market strategies, as they up their
presence around the world, target new segments, and bring new innovation with
strong and lasting growth potential to their respective markets. Chargeurs
Technical Substrates will also be looking to continue its strategy of
consolidation and to top EUR100 million in profitable revenue by 2021.

Leveraging the competitive advantages that set it apart from its competition,
the Group is confidently pursuing its strategic objective of exceeding EUR1
billion in profitable revenue by the end of 2021.

SHARE BUYBACK PROGRAM

Chargeurs' one-year share buyback program launched in September 2018 is still
in force and expires on September 6, 2019. Under this program, Chargeurs'
investment services provider is authorized to buy back Chargeurs shares
(depending on market conditions) for up to EUR12 million at maximum price of
EUR32 per share.
In 2018, the investment services provider purchased 456,044 Chargeurs shares
for an aggregate EUR8,401,399.83.

REFERENCE OWNERSHIP STRUCTURE
Chargeurs has been informed by its shareholder Colombus Holding - which was set
up in October 2015 by Michaël Fribourg and has been Chargeurs' reference
shareholder since that date - that following a reorganization of Colombus
Holding's long- term shareholding structure:
- Groupe Familial Fribourg is now Columbus Holding's controlling shareholder;
- Groupama, a French mutual insurance group, has become a shareholder of
  Colombus Holding.
- As well as reinvesting in Groupe Familial Fribourg, CM-CIC Investissement and
  BNP Paribas Développement will remain shareholders of Colombus Holding.

To achieve the reorganization, Groupe Familial Fribourg acquired the Colombus
Holding shares held by Effi Invest II, and CM-CIC Investissement and BNP
Paribas Développement contributed Colombus Holding shares to Groupe Familial
Fribourg in exchange for newly-issued Groupe Familial Fribourg shares.
The strengthening of Groupe Familial Fribourg's capital base, backed by
long-term institutional investors and the entry of a new well-known shareholder
into the capital of Colombus Holding attests to a high level of confidence in
the ability of the Chargeurs Group, a benchmark player in high value-added
niche markets, to create significant industrial and shareholder value over the
long-term.

Appendices - Definitions:
Like-for-like change (LFL) - Like-for-like growth:
Like-for-like changes in year Y compared with year Y-1 are calculated:
- by applying the average exchange rates for year Y-1 to the period concerned
  (year, half-year, quarter); and
- based on the scope of consolidation for Year Y-1.

EBITDA corresponds to recurring operating profit (as defined below) before
depreciation and amortization.

Recurring operating profit (ROP) corresponds to gross profit after distribution
costs, administrative expenses and research and development costs. It is
stated:
- before amortization of intangible assets resulting from acquisitions; and
- before other operating income and expense, which correspond to non-recurring
  items that represent material amounts, are unusual in nature and occur
  infrequently, and therefore distort assessments of the Group's underlying
  performance.

Recurring operating margin: recurring operating profit as a % of revenue.

2019 Financial Calendar

Monday, May 6, 2019
(before start of trading)           First-quarter 2019 financial information
Monday, May 6, 2019                 Annual Shareholders' Meeting
Thursday, September 12, 2019
(before the start of trading)       First-half 2019 results
Thursday, November 14, 2019
(after the close of trading)        Third-quarter 2019 financial information

ABOUT CHARGEURS

Chargeurs is a global manufacturing and services group with leading positions
in four segments: temporary surface protection, garment interlinings, technical
substrates and combed wool.

It has over 2,000 employees based in 45 countries on five continents, who serve
a diversified customer base spanning more than 90 countries.

In 2018, revenue totaled EUR573.3 million, of which more than 90% was generated
outside France.

CONTACTS - www.chargeurs.fr
Group Corporate Communications - +33 1 47 04 13 40 - comcorporate@chargeurs.fr
Group Financial Communications - +33 1 47 04 13 40 - comfin@chargeurs.fr

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