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  LATECOERE company press release from 25/07/2018

  25/07/2018 - 18:05

BUSINESS REPORT AS AT 30 JUNE 2018


  • Revenue of €320.8 million in the first six months of 2018, mainly impacted by currency effects
  • Ongoing roll-out of the Transformation 2020 plan
  • 2018 and 2019 outlook
  • Application of IFRS 15 on 2017 comparative information
  H1    
(in € million) 2018 2017 restated1 Change (%) Change like-for-like (%)
 
Aerostructures 182.5 211.8 -13.8% -8.3%
Interconnection Systems 138.2 138.6 -0.3% 5.2%
Total revenues 320.8 350.4 -8.5% -2.9%

1 Restated for the application of IFRS15 applicable from 1 January 2018

Latécoère's revenues amounted to €320.8 million in the first half of 2018, down 8.5% compared to the same period in 2017 based on reported figures, heavily impacted by the depreciation of the US dollar. At constant exchange rates, Latécoère posted a 2.9% decrease in revenues over the first six months of 2018, consistent with forecasts for the year.

Aerostructures Division's revenues, down 8.3% at constant exchange rates (-13.8% based on reported data), mainly reflects the slowdown in production on the Embraer E1 program. The slowdowns announced in the A330 and A380 programs, seasonal A320 deliveries and the drop in contractual prices also contributed to the shift in pace in this division.

The Interconnection Systems division posted growth of 5.2% at constant exchange rates (-0.3% based on reported data). The decline in A380 invoicing and price impacts were largely offset by the contribution of new contracts signed in 2017, including the Mitsubishi Aircraft MRJ contract.


Ongoing roll-out of the Transformation 2020 plan

Since March 2018, an increasing number of parts manufactured at the Toulouse-Montredon 4.0 plant obtained quality labels and certifications. These parts for the A320, B787, E1 and E2 programs are serving production lines. Meanwhile, the manufacture of avionic rack structures for the A350 was approved at the Plovdiv plant in Bulgaria.

The ramp-up of these two production units is progressing in line with expectations.

The first section of the Toulouse-Périole site was sold at the end of June and demolition work has begun.


2018 and 2019 outlook

Based on aircraft manufacturers' forecasts and new contracts signed, Latécoère expects to post slight organic growth in full 2018 year.

As announced, the cost of the Transformation 2020 plan and start-up costs for new plants will substantially dampen 2018 Group's profitability and cash generation.

In 2019, progress in cost reduction efforts are expected to bring operating income and FCF (before capex) back in line with 2017 levels.


Application of IFRS 15 on 2017, 2018 and 2019 comparative information

Applicable as of 1 January 2018, 2017 financial statements are restated in order to be comparable with the 2018 financial statements (see table in the appendix):

  • No impact on cash flow
  • Recurring Operating income under IFRS 15 close to adjusted recurring operating income presented to date
    • Adjusted financial statements no longer presented
  • Design & Build contract development costs reclassified from Inventories to fixed assets. They are part of the serial production Cost of Sales.
  • Advances received (or pre-financing) for these development costs are recorded as liabilities under "Contract liabilities" and posted in sales when goods produced are delivered.
  • IFRS 15 no longer permits the manufacturing variance of the first financial years of production to be capitalized and deferred as part of the learning curve: cancellation of WIP “non-recurring” costs (curve), i.e. an impact on equity on the balance sheet

Next release: H1 2017 results on 5 September 2017 (before the opening of Euronext market)


About Latécoère

Latécoère is a tier 1 partner to major international aircraft manufacturers (Airbus, Embraer, Dassault, Boeing and Bombardier), in all segments of the aeronautical market (commercial, regional, corporate and military aircraft), specializing in two fields:

  • Aerostructures Industrial (61% of total revenue): fuselage sections and doors.
  • Interconnection Systems (39% of total revenue): onboard wiring, electrical harnesses and avionics bays.

At 31 December 2017, Latécoère employed 4,451 people in 10 different countries.

Latécoère, a French corporation (Société Anonyme) with capital of €188,789,804 divided into 94,394,902 shares with a par value of €2 per share, is listed on Euronext Paris - Compartment B. ISIN codes: FR0000032278 - Reuters: LAEP.PA - Bloomberg: LAT.FP


LATÉCOÈRE
Sebastien Rouge / Chief Financial Officer
Tel.: +33 (0)5 61 58 77 00
sebastien.rouge@latecoere.aero
 
 
ACTUS finance & communication
Corinne Puissant / Investor Relations
Tel.: +33 (0)1 53 67 36 77 - cpuissant@actus.fr
Anne-Catherine Bonjour / Media Relations
Tel.: +33 (0)1 53 67 36 93 - acbonjour@actus.fr



APPENDICE

Reconciliation of key indicators

(€ million)   30-Jun-17  
  Reported IFRS 15 impact Restated
Revenue 348.8 1.7 350.4
Adjusted recurring operating income 33.1 n/a n/a
Recurring operating income 15.8 17.0 32.8
Adjusted operating income 31.8 n/a n/a
Operating income 14.4 17.0 31.5
       
       
(€ million)   31-Dec-17  
  Reported IFRS 15 impact Restated
Revenue 652.5 5.0 657.5
Adjusted recurring operating income 51.1 n/a n/a
Recurring operating income 21.7 29.5 51.2
Adjusted operating income 41.1 n/a n/a
Operating income 11.7 29.5 41.2

After application of IFRS 15, restated recurring operating income (EBIT) becomes close to the adjusted recurring operating income.


Impact of the application of IFRS 15 on economic performance measures

Until 31 December 2017, the Group reported consolidated IFRS financial statements and, in parallel, published an adjusted income statement which included as main alternative performance indicator the “adjusted recurring operating income” (strictly non-accounting in nature).

The application of IFRS 15, as of 1 January 2018, led the Group to no longer recognize extra production costs or the early phase of the contract (curve) on the balance sheet. As a reminder, these costs were expensed when decrease in production costs were actually observed.

As a consequence, adjusted recurring operating income presented until 31 December 2017 is close to recurring operating income under IFRS 15.

The Group therefore no longer considers it necessary to present adjusted financial statements.


Impact of the application of IFRS 15 on 2017 revenues by operating segment and quarter

(€ million)   Q1 2017  
  Reported IFRS 15 impact Restated
Aerostructures 102.1 0.0 102.1
Interconnection Systems 70.5 2.0 72.5
Total revenues 172.6 2.0 174.6
       
(€ million)   Q2 2017  
  Reported IFRS 15 impact Restated
Aerostructures 109.7 0.0 109.7
Interconnection Systems 66.5 -0.3 66.2
Total revenues 176.2 -0.3 175.8
       
(€ million)   Q3 2017  
  Reported IFRS 15 impact Restated
Aerostructures 92.4 0.0 92.4
Interconnection Systems 52.2 1.5 53.7
Total revenues 144.6 1.5 146.1
       
(€ million)   Q4 2017  
  Reported IFRS 15 impact Restated
Aerostructures 92.8 0.0 92.8
Interconnection Systems 66.3 1.8 68.1
Total revenues 159.1 1.8 160.9


H1 2017 income statement adjusted for IFRS 15

(€ million)   30-Jun-17  
  Reported IFRS 15 impact Restated
Revenue 348.8 1,7 350,4
Recurring EBITDA1 40.6 5.9 46.5
Recurring operating income 15,8 17,0 32,8
as % of revenue 4,5%   9,4%
Non-recurring operating income and expenses -1,3   -1,3
Operating income 14,4 17,0 31,5
Cost of net financial debt -3,8   -3,8
Other financial debt 24,1   24,1
Financial income 20,3 0,0 20,3
Income tax -13,7   -13,7
Net result for the period from continuing operations 21,1 17,0 38,1

1 Recurring EBITDA = Recurring operating income + Depreciation and amortisation of tangible and intangible assets


FY 2017 income statement adjusted for IFRS 15

(€ million)   31-Dec-17  
  Reported IFRS 15 impact Restated
Revenue 652.5 5.0 657.5
Recurring EBITDA1 65.9 12.6 78.5
Recurring operating income 21.7 29.5 51.2
as % of revenue 3.3%   7.8%
Non-recurring operating income and expenses -10.0   -10.0
Operating income 11.7 29.5 41.2
Cost of net financial debt -8.0 0.0 -8.0
Other financial debt 16.4 0.0 16.4
Financial income 8.5 0.0 8.5
Income tax -16.6 0.0 -16.6
Net result for the period from continuing operations 3.6 29.5 33.1

1 Recurring EBITDA = Recurring operating income + Depreciation and amortisation of tangible and intangible assets


Operating Segment information restated for IFRS 15 – at 30 June 2017 and 31 December 2017

(€ million)   30-Jun-17  
  Reported adjusted data Restated IFRS
data
Change
Aerostructures 17.1 18.2 1.0
Interconnection Systems 15.8 14.5 -1.3
Intersegment elim. 0.1 0.1 0.0
Recurring operating income 33.1 32.8 -0.3
       
(€ million)   31-Dec-17  
  Reported adjusted data Restated IFRS
data
Change
Aerostructures 24.7 26.3 1.6
Interconnection Systems 26.1 24.6 -1.5
Intersegment elim. 0.3 0.3 0.0
Recurring operating income 51.1 51.2 0.1


Simplified balance sheet restated for IFRS 15 at 31 December 2017

(€ million)   31-Dec-17    
  Reported Restated Change  
Intangible and tangible assets 97.2 200.4 103.2 a)
Inventories 363.3 162.1 -201.1 b)
Accounts receivable 151.1 152.9 1.7  
Tax receivable 19.4 19.4 0.0  
Financial derivative instruments 41.0 41.0 0.0  
Other assets 8.2 8.2 0.0  
Cash & Cash Equivalents 142.0 142.0 0.0  
Total assets 822.1 725.9 -96.2  
         
Equity 436.6 278.4 -158.2 c)
Loans and bank borrowings 122.2 122.2 0.0  
Refundable Advances 45.2 45.2 0.0  
Provisions & Employee benefits 39.8 41.9 2.1  
Accounts payable 151.9 151.9 0.0  
Contracts liabilities 0.0 59.9 59.9 d)
Other liabilities 26.4 26.4 0.0  
Total Equity & Liabilities 822.1 725.9 -96.2  

a) Reclassification of development costs (NRC "Non-recurring cost") from "Inventories and WIP" to "Intangible & Tangible assets"

b) Corresponds to:

  • The impact of the cancellation of WIP "Non-recurring" costs on equity relating to the curve. amounting to €144 million
  • Reclassification of WIP "Non-recurring" items relating to development costs (NRC "Non-recurring cost") of  €103.2 million
  • Reclassification of WIP "Non-recurring" items relating to payments received from customers in respect of development costs of €59.9 million
  • The impact of the revised amortisation period of NRCs amounting to €12 million.

c) Mainly corresponds to the cancellation of WIP "Non-recurring" costs relating to the curve of €144 million and the revision of the amortisation period of NRCs of €12 million

d) Corresponds to payments received from customers relating to development costs