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Vallourec reports first quarter 2019 results

Vallourec reports first quarter 2019 results

Boulogne-Billancourt (France), May 16th 2019 – Vallourec, a world leader in premium tubular solutions, today announces its results for the first quarter of 2019. The consolidated financial information was presented by Vallourec’s Management Board to its Supervisory Board on May 15th 2019.

  • Revenue of €1,025 million, up 19% year-on-year (+17% at constant exchange rates)
     
  • EBITDA ([1]) at €67 million versus (€5) million in Q1 2018
     
  • Reduced free cash flow consumption to (€159) million, €95 million less than in Q1 2018, reflecting:
    • Improved operating cash flow at (€29) million compared to (€83) million in Q1 2018
    • Reduced net working capital outflow at 117 days of sales versus 121 in Q1 2018
       
  • Net debt at €2,125 million (after reclassification of €58 million to lease debt under IFRS 16 (1))
 

/EIN News/ --

  • Confirmed outlook for 2019
 

  Based on current economic and market trends ([2]), the Group:

  

  • Confirms its anticipation of a continued recovery in the Oil and Gas activity primarily driven by international markets
     
  • Reiterates its targets for 2019, namely:
     
    • Strong increase in EBITDA, supported by market trends, additional savings as well as ongoing deployment from the Group’s new competitive manufacturing routes
       
    • Continuous improvement in working capital requirement, beyond usual seasonal movements (peak outflow in H1) with a diminishing number of days of working capital requirement on both quarterly average and end of year
       
    • Capex around €180 million, consistent with the needs of its renewed industrial footprint
       
  • Based on current market trends and on the objectives outlined above, the Group would respect its banking covenant at the end of the year.
  

 

        
       
       

Key figures

Q1 2019 Q1 2018 Change YoY In millions of euros Q4 2018
571 515 11% Sales volume (k tons) 694
1,025 862 19% Revenue 1,116
67 (5) €72m EBITDA (3) 89
6.5% (0.6%) +7.1 p.p. As % of revenue 8.0%
(90) (170) €80m Net income (loss), Group share (103)
(159) (254) €95m Free cash-flow 76
         
         
31-Mar 2019
Post IFRS 16
Change versus 1-Jan 2019 In millions of euros 1-Jan 2019
post IFRS 16
31-Dec 2018
2,125 €126m Net debt(3) 1,999 2,058

      (3) IFRS 16 Q1 2019: detailed impacts on EBITDA, net debt, lease debt and free cash flow are described in consolidated results analysis (page 4), financial position (page 5) and in appendices on pages 11, 12, 13 & 14.
      NB: Net debt of €2,058 million at the end of December 2018 includes €59 million of financial lease debt

Commenting on these results, Philippe Crouzet, Chairman of the Management Board, said:

“In the first quarter, Vallourec delivered again a robust year-on-year increase in its financial performance. The strong growth in EBITDA was notably driven by the recovery of our activity in the EA-MEA regions, our largest Oil & Gas markets, where bookings doubled in 2018.

Furthermore, cash-flow performance improved markedly as free cash flow consumption decreased by almost €100 million year-on-year, as a result of both the EBITDA increase and a reduced operating working capital requirement outflow.

For the rest of the year, we confirm our expectation for a continued market recovery in the O&G market, albeit with varying profiles in our key regional areas. While the North American market has slowed down in the first part of the year, we are very confident in the solidity of the market recovery in EA-MEA which will strongly contribute to our results improvement in 2019, leveraging on the renewed competitiveness of our Brazilian and Chinese routes.

We are also looking forward to the restart of exploration activity in Brazil, where we enjoy strong positions. This is expected as from next year as a result of drilling commitments taken by oil companies following the successful bidding rounds over the last two years.

We are progressing, notably in Germany, on the delivery of at least €200 million additional cost savings that we recently announced and we confirm that a significant part is achievable as soon as 2019.

Based on this outlook and on current macroeconomic and market trends, we confirm our targets for 2019, with, in particular, a strong increase in EBITDA, an improvement in working capital requirement in number of days on both quarterly average and end of year, and the respect of our banking covenant at the end of 2019.”

  

I - CONSOLIDATED REVENUE BY MARKET

 In millions of euros Q1 2019 Q1 2018 Change
 YoY
Change YoY at constant exchange rates Q4 2018
Oil & Gas, Petrochemicals 739 584 27% 23% 821
Industry & Other 236 180 31% 34% 235
Power Generation 50 98 -48% -48% 60
Total 1,025 862 19% 17% 1,116

Over the first quarter of 2019, Vallourec recorded revenue of €1,025 million, up 19% compared with the first quarter of 2018 (+ 17% at constant exchange rates) with a positive volume impact of 11% mainly driven by EA-MEA Oil & Gas markets, and a positive price/mix effect of 6% mainly resulting from higher OCTG prices in North America. In Industry & Other, higher revenue was recorded in South America.

Compared with Q4 2018, Q1 2019 Group revenue was down 8% with lower volumes in Oil and Gas EA-MEA due to deliveries seasonality, partly offset by slightly higher revenue from North America (Oil & Gas) and from South America (Industry & Other).

Oil & Gas, Petrochemicals (72% of consolidated revenue)

Oil & Gas revenue reached €672 million in Q1 2019, a strong €181m increase or +37% year-on-year (+33% at constant exchange rates).

  • In EA-MEA, Oil & Gas revenue increased significantly year-on-year, driven by a strong growth in OCTG sales, further to bookings recorded over 2018.
     
  • In North America, Oil & Gas revenue increased year-on-year, driven primarily by the price increase effective from Q3 2018.
     
  • In South America, Oil & Gas revenue was slightly down year-on-year.

             

Petrochemicals revenue was €67 million in Q1 2019, down 28% year-on-year (-31% at constant exchange rates) notably due to lower sales in North America and reallocation to higher margin products in Middle East Asia.

Industry & Other (23% of consolidated revenue)

Industry & Other revenue amounted to €236 million in Q1 2019, up 31% year-on-year (+34% at constant exchange rates):

  • In Europe, Industry revenue and volumes were almost flat year on year
  • In Brazil, Industry & Other revenue was up, particularly driven by the mine operations.

Power Generation (5% of consolidated revenue)

Power Generation revenue amounted to €50 million in Q1 2019, down 48% year-on-year. This decrease is due, as previously indicated, to a decline in global demand for coal-fired conventional power plants.  

As a reminder, the Group has initiated a divestiture plan of the assets dedicated to coal-fired conventional power plants.

  

II - Q1 2019 CONSOLIDATED RESULTS ANALYSIS

In Q1 2019, EBITDA reached €67 million, improving by €72 million year on year including:

  • Industrial margin of €168 million, up €65 million compared with Q1 2018 (up 4.5p.p.), reflecting (i) higher volumes, (ii) favorable price/mix in O&G (iii) positive forex effect and (iv) savings as a result from the Transformation plan, these elements largely offsetting higher raw materials costs
     
  • Sales, general and administrative costs (SG&A) down 8% at €93 million, representing 9% of revenue compared with 12% in Q1 2018, and reflecting tight cost control.
     
  • EBITDA includes a positive €8 million IFRS 16 impact and a €6 million net increase in provisions.

Excluding changes in provisions and IFRS 16 impact, Q1 2019 EBITDA amounted to €65 million, to be compared with (€13) million in Q1 2018 and €62 million in Q4 2018.

Operating result improved by +€111 million to a loss of (€19) million, compared to a loss of (€130) million in Q1 2018, as a result of higher EBITDA, lower “asset disposal, restructuring and other” charges and no impairment charges. As a reminder, in Q1 2018, these non-recurring elements amounting to (€46) million were essentially related to restructuring measures undertaken in Europe.
“Amortization and other depreciation” include a (€7) million IFRS 16 impact (depreciation of right-of-use).
            

Financial result was negative at (€61) million, compared to (€43) million in Q1 2018, mainly due to (i) higher interest charges as a result of the €400 million senior notes issued in April 2018 (ii) foreign exchange result from hedging of commercial operations and (iii) a (€3) million IFRS 16 impact (interest expenses on lease debt).

Income tax amounted to (€8) million mainly related to Brazil, compared to no tax in Q1 2018.

This resulted in a net loss, Group share of (€90) million, compared to (€170) million in Q1 2018.

III - CASH FLOW & FINANCIAL POSITION

Cash flow from operating activities
In Q1 2019, cash flow from operating activities reached (€29) million compared to (€83) million in Q1 2018, an improvement of €54 million.

Operating working capital requirement
Operating working capital requirement increased by €113 million, versus an increase of €152 million in Q1 218. This better performance was achieved, beyond the usual seasonal increase from Q4 to Q1, thanks to a year-on-year improvement in days of sales: in line with our objectives, net working capital requirement was reduced to 117 days of sales, compared to 121 in Q1 2018.

Capex
Capital expenditure was almost stable at (€17) million, compared to (€19) million in Q1 2018.

Free cash flow
As a result, in Q1 2019, the Group generated a negative free cash flow of (€159) million, corresponding to an improvement of €95 million compared with (€254) million in Q1 2018.

Net debt and liquidity
As at March 31st 2019, net debt stood at €2,125 million, compared with €1,999 million on January 1st 2019. €59 million were reclassified from net debt to lease debt on January 1st 2019, applying IFRS 16 (cf table on page 13).  

As at March 31st 2019, lease debt stood at €137 million including the IFRS 16 (i) reclassification of €58 million previously accounted as net debt and (ii) recognition of €79 million previously reported as operational lease in the “off balance sheet” items.

On February 19th 2019, Sumitomo Corporation contributed in cash to a capital increase of Vallourec Star, a Vallourec's subsidiary in the United States, pro rata its holding percentage (19.47%), for an amount of €51 million.

The Company continues to benefit from a sound liquidity position. Cash as at March 31st 2019 amounted to €1,072 million, and €1,532 million of its €2,128 million committed bank facilities were unused.
At the same date, long term debt amounted to €1,747 million and short-term debt to €1,450 million, including €400 million of private bonds, €102 million of commercial paper and €596 million drawn from the €2,128 million committed banking facilities. Half of the amount drawn from these facilities (€299 million) has been repaid in April.
As a reminder, on February 19th 2019, €600 million bank facilities maturing originally in 2020 were extended to February 2021.

As at March 31st 2019, the banking covenant ratio, as defined in the banking contracts (4) and tested once a year on December 31st, was estimated at 78%. IFRS 16 implementation has no impact on the banking covenant ratio.

 

IV – TRANSFORMATION PLAN

New initiatives, announced in February 2019 and targeting at least €200 million additional gross savings by 2020, are under deployment.

Notably in Q1, the headcount in Germany was reduced by 135 out of the 600 total headcount reduction targeted by 2020, in the frame of the extensive savings action plan which has been launched.

V – MAIN MARKET TRENDS

In 2019, assuming current macro-economic and market conditions, Vallourec anticipates continued market recovery in the O&G market albeit with varying profiles in our key regional areas.

Oil & Gas

  • In EA-MEA, the Group should strongly benefit from the increase in activity for Oil & Gas projects, as well as the further deployment of its competitive new routes with in particular a strong backlog in North Sea, South East Asia, Middle East and Africa.
  • In North America, following the market slowdown observed in the first part of the year, the second semester could benefit from a positive impact of the recent rebound in WTI prices, potentially counterbalanced by the increased cash discipline from operators.
  • In Brazil, drilling activity is expected to remain broadly stable throughout the year.

             
Industry & Other
      ·In Europe, a decreasing demand associated with some pressure on prices is currently experienced, in particular in Germany.
      ·In Brazil, the improved economic outlook should benefit the Industry market. Outlook for the mine is positive, and an extension of its capacity is under study.

Raw materials & currencies
      ·Scrap costs have stabilized following their strong increase in H1 2018.

      ·The unfavorable currency impact experienced in 2018 should not replicate in 2019, assuming stable currency levels.

VI - OUTLOOK 2019

Based on current economic and market trends (5), the Group:

                         

  • Confirms its anticipation of a continued recovery in the Oil and Gas activity primarily driven by international markets
     
  • Reiterates its targets for 2019, namely:
    • Strong increase in EBITDA, supported by market trends, additional savings as well as ongoing deployment from the Group’s new competitive manufacturing routes
       
    • Continuous improvement in working capital requirement, beyond usual seasonal movements (peak outflow in H1) with a diminishing number of days of working capital requirement on both quarterly average and end of year
       
    • Capex around €180 million, consistent with the needs of its renewed industrial footprint
       
  • Based on current market trends and on the objectives outlined above, the Group would respect its banking covenant at the end of the year.

           

Information and Forward-Looking Statements

This press release contains forward-looking statements. These statements include financial forecasts and estimates as well as assumptions on which they are based, statements related to projects, objectives and expectations concerning future operations, products and services or future performance. Although Vallourec’s management believes that these forward-looking statements are reasonable, Vallourec cannot guarantee their accuracy or completeness and these forward-looking statements are subject to numerous risks and uncertainties that are difficult to foresee and generally beyond Vallourec’s control, which may mean that the actual results and developments may differ significantly from those expressed, induced or forecasted in the statements. These risks include those developed or identified in the public documents filed by Vallourec with the AMF, including those listed in the “Risk Factors” section of the Registration Document filed with the AMF on March 29th 2019.

Presentation of Q1 2019 results

Analyst conference call / audio webcast at 6:30 pm (Paris time) to be held in English.
             


 

About Vallourec

Vallourec is a world leader in premium tubular solutions for the energy markets and for demanding industrial applications such as oil & gas wells in harsh environments, new generation power plants, challenging architectural projects, and high-performance mechanical equipment. Vallourec’s pioneering spirit and cutting edge R&D open new technological frontiers. With close to 19,000 dedicated and passionate employees in more than 20 countries, Vallourec works hand-in-hand with its customers to offer more than just tubes: Vallourec delivers innovative, safe, competitive and smart tubular solutions, to make every project possible.

Listed on Euronext in Paris (ISIN code: FR0000120354, Ticker VK) and eligible for the Deferred Settlement System (SRD), Vallourec is included in the following indices: SBF 120 and Next 150.

In the United States, Vallourec has established a sponsored Level 1 American Depositary Receipt (ADR) program (ISIN code: US92023R2094, Ticker: VLOWY). Parity between ADR and a Vallourec ordinary share has been set at 5:1.

Calendar

   
May 23rd 2019
July 24th 2019
Annual Shareholders’ Meeting
Release of second quarter and first half 2019 results

For further information, please contact:

Investor relations
Jean-Marc Agabriel
Tel: +33 (0)1 49 09 39 77
Investor.relations@vallourec.com
Press relations
Mathieu Carré
Tél : +33 (0)1 41 03 78 71/ +33 (0)6 89 95 53 30
mathieu.carre@vallourec.com
 

Individual shareholders
Toll Free Number (from France): 0 800 505 110
actionnaires@vallourec.com

 
 

 

                                              
                                                                                                                                                                  


 

Appendices

Documents accompanying this release:

  • Sales volume
  • Forex
  • Revenue by geographic region
  • Revenue by market
  • Summary consolidated income statement
  • Summary consolidated balance sheet
  • Lease debt IFRS 16
  • Banking covenant
  • Free cash flow
  • Cash flow statement
  • Definitions of non-GAAP financial data

Sales volume

In thousands of tons 2019 2018 Change YoY
       
Q1 571 515 11%
Q2   572  
Q3   583  
Q4   694  
       
Total 571 2,364  

 

Forex

Average exchange rate Q1 2019 Q1 2018
EUR / USD 1.14 1.23
EUR / BRL 4.28 3.99
USD / BRL 3.77 3.25


 

Revenue by geographic region

In millions of euros Q1 As % of Q1 As % of Change
  2019 revenues 2018 revenues YoY
           
Europe 153 15% 137 16% 12%
North America 338 33% 279 32% 21%
South America 167 16% 140 16% 19%
Asia & Middle East 247 24% 264 31% -6%
Rest of World 120 12% 42 5% 186%
           
Total 1,025 100% 862 100% 19%

Revenue by market

In millions of euros Q1 As % of Q1 As % of Change Q4
  2019 revenue 2018 revenue YoY 2018
             
Oil & Gas 672 66% 491 57% 37% 737
Petrochemicals 67 6% 93 11% -28% 84
Oil & Gas, Petrochemicals 739 72% 584 68% 27% 821
             
Mechanicals 113 11% 93 11% 22% 146
Automotive 31 3% 38 4% -18% 34
Construction & Other 92 9% 49 6% 88% 55
Industry & Other 236 23% 180 21% 31% 235
             
Power Generation 50 5% 98 11% -48% 60
             
Total 1,025 100%  862 100% 19% 1,116

Summary consolidated income statement
 

Q1 2019 Q1 2018 Change In millions of euros Q4 2018
    YoY    
1,025 862 19% REVENUE 1,116
(857) (759) 13% Cost of sales* (910)
168 103 63% Industrial margin 206
16.4% 11.9% +4.5p.p. (as % of revenue) 18.5%
(93) (101) -8% SG&A costs* (106)
(8) (7) na Other income (expense), net (11)
67 (5) €72m EBITDA (6) 89
6.5% -0.6% +7.1p.p. EBITDA as % of revenue 8.0%
(66) (70) -5% Depreciation of industrial assets (69)
(15) (9) na Amortization and other depreciation (7) (8)
- (13) na Impairment of assets (38)
(5) (33) na Asset disposals, restructuring and other (17)
(19) (130) €111m OPERATING INCOME (LOSS) (43)
(61) (43) 42% Financial income (loss) (8) (55)
(80) (173) €93m PRE-TAX INCOME (LOSS) (98)
(8) - na Income tax (3)
(1) - na Share in net income (loss) of associates -
(89) (173) €84m NET INCOME (LOSS) FOR THE CONSOLIDATED ENTITY (101)
(1) 3 na Non-controlling interests 2
(90) (170) €80m NET INCOME (LOSS), GROUP SHARE (103)
(0.2) (0.4) €0.2 EARNINGS PER SHARE (in €) (0.2)

IFRS 16 impacts on P&L include:
(6) Removal of operational lease expenses from EBITDA:            +€8m
(7) Depreciation of right-of-use:                                                  -€7m
(8) Interest expenses on lease debt:                                              -€3m

na = not applicable
(*) Before depreciation and amortization


 

Summary consolidated balance sheet

               
Assets 31-Mar 1-Jan 31-Dec Liabilities 31-Mar 1-Jan 31-Dec
2019 2019 2018 2019 2019 2018
  post
IFRS 16
post
IFRS 16
pre
IFRS 16
  post
IFRS 16
post
IFRS 16
pre
IFRS 16
               
        Equity, Group share (9) 1,757 1,802 1,802
        Non-controlling interests 522 462 462
Net intangible assets 69 71 71 Total equity 2,279 2,264 2,264
Goodwill 365 358 358 Shareholder loan 30 29 29
Net property, plant and equipment 2,753 2,777 2,691 Bank loans and other borrowings (A) 1,747 1,746 1,797
Biological assets 63 60 60 Non current lease debt (D) 110 115 -
Associates 133 134 134 Employee benefits 214 214 214
Other non-current assets 152 156 156 Deferred tax liabilities 17 15 15
Deferred tax assets 259 250 250 Provisions and other long-term liabilities 68 50 50
Total non-current assets 3,794 3,806 3,720 Total non-current liabilities 2,156 2,140 2,076
               
        Provisions 124 136 136
Inventories and work-in-progress 1,197 1,135 1,135 Overdrafts and other short-term borrowings (B) 1,450 993 1,001
Trade and other receivables 714 599 599 Current lease debt (E) 27 30 -
Derivatives - assets 4 3 3 Trade payables 595 582 582
Other current assets 243 216 216 Derivatives - liabilities 42 32 32
Cash and cash equivalents (C) 1,072 740 740 Tax and other current liabilities 321 293 293
Total current assets 3,230 2,693 2,693 Total current liabilities 2,559 2,066 2,044
               
TOTAL ASSETS 7,024 6,499 6,413 TOTAL EQUITY AND LIABILITIES 7,024 6,499 6,413
 

 

 
             
Net debt (A+B-C) 2,125 1,999 2,058 (10) (9) Net income (loss), Group share (90)   (502)

(10) Net debt of €2,058 million at end of December 2018 includes €59 million of financial lease debt

               
Lease debt (D+E) 137 145 (*)        

(*) Cf detailed explanation in Lease debt IFRS 16 page 13


 

Lease debt IFRS 16

31-Mar 2019
post IFRS 16
Change versus 1-Jan 2019 In millions of euros 1-Jan 2019
post IFRS 16
31-Dec 2018
58 -€1m Financial lease debt (11) 59 59
79 -€7m Operational lease (12) 86 -
137 -€8m Total lease debt (IFRS 16) (13) 145 -

(11) Included in Net debt prior to IFRS 16; reclassified to lease debt on January 1st 2019
(12) Operational lease reported in off balance sheet items prior to IFRS 16; recognized as lease debt on January 1st 2019
(13) - New lines items (current & non-current lease debts) identified in the balance sheet under IFRS 16.
     - At March 31st, 2019, lease debt of €137 million is split into:   Non Current Lease Debt : €110 million
 Current Lease Debt           €  27 million

Banking covenant

As defined in the banking agreements, the “banking covenant” ratio is the ratio of the Group’s consolidated net debt including the shareholder loan in Brazil and the “financial lease debt” which was recorded in net debt on December 31st, 2018 (excluding “operational lease”) to the Group’s equity, restated for reserves of changes in fair value of financial instruments and foreign currency translation reserve. This indebtedness ratio is tested once a year on December 31st, and must be below a limit of 100% on this date.

Figures in million euros 31-Mar 2019 31-Dec 2018
Net debt (14) 2,125 2,058
Financial lease debt (included in net debt on Dec 31st 2018) 58 -
Shareholder loan 30 29
Net debt restated (a) 2,213 2,087
Group Equity 2,279 2,264
Foreign currency translation reserve 559 624
Reserves - changes in fair value of financial instruments 16 8
Group equity restated (b) 2,854 2,896
Banking covenant ratio = (a) / (b) 78% 72%

(14) Net debt at December 31st, 2018 includes €59 million of financial lease debt

Free cash flow

In millions of euros Q1 Q1 Change Q4
  2019 2018 2018
Cash flow from operating activities (A) (29) (83) €54 m (13)
Change in operating WCR (B)
[+ decrease, (increase)]
(113) (152) €39 m 154
Gross capital expenditure (C) (17) (19) €2 m (65)
Free cash flow *
(A)+(B)+(C)
(159) (254) €95 m 76

*IFRS 16 impact: €5 million (EBITDA impact of €8 million minus interests on lease debt of €3 million)

Cash flow statement

Q1 Q1 In millions of euros Q4
2019 2018   2018
(29) (83) Cash flow from operating activities (13)
(113) (152) Change in operating WCR
[+ decrease, (increase)]
154
(142) (235) Net cash flow from operating activities 141
(17) (19) Gross capital expenditure (65)
33 13 Asset disposals & other items (15) (37)
(126) (241) Change in net debt
[+ decrease, (increase)]
39
2,125 1,783 Financial net debt (end of period) (16) 2,058

(15) On February 19th 2019, Sumitomo Corporation contributed in cash to a capital increase of Vallourec Star, a Vallourec's subsidiary in the United States, pro rata its holding percentage (19.47%), for an amount of €51 million

(16) - Financial lease debt (€58m as at March 31st 2019) previously included in the net debt is now recognized under lease debt (IFRS 16).

     - Net debt of €1,999 million at January 1st, 2019

Definitions of non-GAAP financial data

Banking covenant: as defined in the banking agreements, the “banking covenant” ratio is the ratio of the Group’s consolidated net debt including the shareholder loan in Brazil and the “financial lease debt” which was recorded in net debt on December 31st, 2018 (excluding “operational lease”) to the Group’s equity, restated for reserves of changes in fair value of financial instruments and foreign currency translation reserve. This indebtedness ratio is tested once a year on December 31st, and must be below a limit of 100% on this date.

Data at constant exchange rates: the data presented « at constant exchange rates » is calculated by eliminating the translation effect into euros for the revenue of the Group’s entities whose functional currency is not the euro. The translation effect is eliminated by applying Year N-1 exchange rates to Year N revenue of the contemplated entities.

Free cash flow: Free cash-flow (FCF) is defined as cash flow from operating activities minus gross capital expenditure and plus/minus change in operating working capital requirement.

Gross capital expenditure: gross capital expenditure is defined as the sum of cash outflows for acquisitions of property, plant and equipment and intangible assets and cash outflows for acquisitions of biological assets.

Industrial margin: the industrial margin is defined as the difference between revenue and cost of sales (i.e. after allocation of industrial variable costs and industrial fixed costs), before depreciation.

Lease debt, starting January 1st, 2019, is defined as the present value of unavoidable future lease payments 

Net debt: consolidated net debt is defined as Bank loans and other borrowings plus Overdrafts and other short-term borrowings minus Cash and cash equivalents. Starting January 1st, 2019 net debt excludes lease debt.

Net working capital requirement: defined as working capital requirement net of provisions for inventories and trade receivables; net working capital requirement days are computed on an annualized quarterly sales basis.

Operating working capital requirement: includes working capital requirement as well as other receivables and payables.

Working capital requirement: defined as trade receivables plus inventories minus trade payables (excluding provisions).




 

([1]) Detailed impacts of IFRS 16 on EBITDA, net debt, lease debt, and free cash flow are described in consolidated results analysis (page 4), financial position (page 5) and in appendices on pages 11,12,13 & 14
([2]) Cf paragraph Information and Forward-Looking Statements

(4) Banking covenant: As defined in the banking agreements, the “banking covenant” ratio is the ratio of the Group’s consolidated net debt including the shareholder loan in Brazil and the “financial lease debt” which was recorded in net debt on December 31st, 2018 (excluding “operational lease”) to the Group’s equity, restated for reserves of changes in fair value of financial instruments and foreign currency translation reserve. This indebtedness ratio is tested once a year on December 31st, and must be below a limit of 100% on this date.

(5) Cf paragraph Information and Forward-Looking Statements


 

 

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