Ardagh Group S.A. - First Quarter 2020 Results

Loading...
Loading...

LUXEMBOURG, April 23, 2020 /PRNewswire/ -- Ardagh Group S.A. ARD today announced its results for the first quarter ended March 31, 2020.

 












March 31, 2020


March 31, 2019


Change


Change CCY



($'m except per share data)





Revenue (1)


1,622


1,639


(1%)


0%

Adjusted EBITDA (1)


273


276


(1%)


0%

Adjusted EBITDA margin (1)


16.8%


16.8%


0%


0%

Earnings per share - Group


0.35


0.06





Adjusted earnings per share (1) (2)


0.31


0.35





Profit for the period - Group


83


13














Dividend per share declared (3)


0.15


0.14





Paul Coulson, Chairman and Chief Executive, said "First quarter results were in line with our expectations, with no material impact from COVID-19. The commitment and dedication of our teams during this challenging period has been outstanding, enabling all our production facilities to continue to serve the beverage and food supply chain. It is too early to assess the macroeconomic impact of the pandemic and, accordingly, we are withdrawing our 2020 financial guidance. However, our defensive end markets, proven operating model and $1.5 billion in liquidity position us to successfully manage this uncertain environment."

  • Revenue for the quarter of $1,622 million was unchanged on the prior year at constant currency, with growth of 1% in Metal Beverage Packaging offset by a 1% reduction in Glass Packaging.
  • Volume/mix for the Group was in line with the prior year, as growth of 3% in Metal Beverage Packaging was largely offset by a 2% reduction in Glass Packaging.
  • Adjusted EBITDA of $273 million was in line with the prior year and ahead of the guided $270 million.
  • Earnings per share of $0.35 (2019:$0.06), with Adjusted earnings per share decrease of 11% to $0.31 (2019: $0.35).
  • Metal Beverage Packaging shipments increased by 1%, with 3% growth in the Americas and a stable performance in Europe. Specialty can shipments increased by 6% and represented 42% of total volumes. 
  • Metal Beverage Packaging Adjusted EBITDA decreased by 3% at constant currency, with growth of 20% in Metal Beverage Packaging Americas. Metal Beverage Packaging Europe Adjusted EBITDA declined by 19%, due to a pension credit in the prior year.
  • Glass Packaging Adjusted EBITDA increased by 3% at constant currency, with growth of 7% in Europe driven by a strong operational and commercial performance. Adjusted EBITDA in North America fell 3%, as volume softness continued to moderate. 
  • Cash and committed available liquidity was $1.1 billion at March 31, 2020, and was increased to $1.5 billion after the period end. No debt maturities arising before September 2022.
  • Financial guidance: 2020 financial guidance withdrawn due to current macroeconomic uncertainty.

 

Summary Financial Information








Three months ended March 31,



2020


2019



(in $ millions, except EPS, ratios and percentages)

Revenue  (1)


1,622


1,639

Adjusted EBITDA (1)


273


276

Adjusted EBITDA margin (1)


16.8%


16.8%

Operating cash flow (1)


(285)


(73)






Profit for the period - Group


83


13

Adjusted profit for the period (1) (2)


73


83

Earnings per share - Group


0.35


0.06

Adjusted earnings per share (1) (2)


0.31


0.35


















At March 31,


At December 31,



2020


2019



$'m


$'m

Net debt (4)


5,650


5,328

Cash and available liquidity


1,090


1,278

Net debt to LTM Adjusted EBITDA (5)


4.8x


4.5x

 

 

Financial Performance Review

Bridge of 2019 to 2020 Revenue and Adjusted EBITDA

Three months ended March 31, 2020













Revenue


Metal
Beverage
Packaging
Europe


Metal
Beverage
Packaging
Americas


Glass
Packaging
Europe


Glass
Packaging
North
America


Group



$'m


$'m


$'m


$'m


$'m

Revenue 2019


392


439


392


416


1,639

Organic


3


5


2


(7)


3

FX translation


(10)



(10)



(20)

Revenue 2020


385


444


384


409


1,622


































Adjusted EBITDA


Metal
Beverage
Packaging
Europe


Metal
Beverage
Packaging
Americas


Glass
Packaging
Europe


Glass
Packaging
North
America


Group



$'m


$'m


$'m


$'m


$'m

Adjusted EBITDA 2019


69


51


85


71


276

Organic


(13)


10


6


(2)


1

FX translation


(2)



(2)



(4)

Adjusted EBITDA 2020


54


61


89


69


273












2020 margin


14.0%


13.7%


23.2%


16.9%


16.8%

2019 margin


17.6%


11.6%


21.7%


17.1%


16.8%

 

Group Performance

Revenue of $1,622 million decreased by 1% in the three-month period ended March 31, 2020, compared with the same period last year. On a constant currency basis, revenue was in line with the prior year as favourable volumes in Beverage Packaging and higher selling prices in Glass Packaging, including the pass through of increased input costs, were offset by lower volumes in Glass Packaging and the pass through of lower input costs in Beverage Packaging.

First quarter Adjusted EBITDA of $273 million decreased by 1% at actual exchange rates, compared with the same period last year. On a constant currency basis, Adjusted EBITDA was in line with prior year as lower input costs and favourable volume/mix effects were offset by higher operating and other costs, principally reflecting a prior year pension credit of approximately $15 million in Beverage Packaging Europe.

Metal Beverage Packaging Europe

Revenue decreased by $7 million, or 2%, to $385 million in the three months ended March 31, 2020, compared with $392 million in the three months ended March 31, 2019. Excluding unfavorable foreign currency translation effects of $10 million, revenue increased by $3 million principally reflecting volume/mix growth of 1%, partly offset by the pass through of lower input costs. Adjusted EBITDA decreased by $15 million, or 22%, to $54 million in the three months ended March 31, 2020, compared with $69 million in the three months ended March 31, 2019. The decrease in Adjusted EBITDA principally reflected a prior year pension credit of approximately $15 million in 2019 and unfavorable foreign currency translation effects of $2 million, partly offset by lower input costs and favorable volume/mix effects.

Metal Beverage Packaging Americas

Revenue increased by $5 million, or 1%, to $444 million in the three months ended March 31, 2020, compared with $439 million in the three months ended March 31, 2019. Revenue growth principally reflected favorable volume/mix effects of 4%, partly offset by the pass through of lower input costs. Adjusted EBITDA increased by $10 million, or 20%, to $61 million in the three months ended March 31, 2020, compared with $51 million in the three month period ended March 31, 2019. The increase was mainly driven by favorable volume/mix effects and lower input costs.

Glass Packaging Europe

Revenue decreased by $8 million, or 2%, to $384 million in the three months ended March 31, 2020, compared with $392 million in the three months ended March 31, 2019. Excluding unfavorable foreign currency translation effects of $10 million, revenue increased by $2 million primarily driven by higher selling prices and partly offset by unfavorable volume/mix effects of 2%. Adjusted EBITDA increased by $4 million, or 5%, to $89 million in the three months ended March 31, 2020, compared with $85 million in the three months ended March 31, 2019. The increase in Adjusted EBITDA reflected higher selling prices, including to recover increased input costs, as well as other operating cost savings, partly offset by unfavorable foreign currency translation effects of $2 million.

Glass Packaging North America

Revenue decreased by $7 million, or 2%, to $409 million in the three months ended March 31, 2020, compared with $416 million in the three months ended March 31, 2019. The decrease in revenue principally reflected unfavorable volume/mix effects of 2%, partly offset by the pass through of higher input costs. Adjusted EBITDA decreased by $2 million, or 3%, to $69 million in the three months ended March 31, 2020, compared with $71 million in the three months ended March 31, 2019. The decrease in Adjusted EBITDA was mainly due to unfavorable volume/mix effects and higher operating costs, partly offset by increased selling prices.

Financing Activity

On March 20, 2020, the Group entered into a new term loan credit facility for $300 million, which was drawn in full on March 23, 2020.

On April 7, 2020, the Group issued $500 million 5.250% Senior Secured Notes due 2025. Net proceeds from the issuance of the Notes were used to redeem in full the $300 million term loan credit facility on April 8, 2020 and for general corporate purposes.

On April 8, 2020, the Group issued $200 million add-on 5.250% Senior Secured Notes due 2025. Proceeds from the issuance of the Notes will be used for general corporate purposes.

COVID-19 ("COVID-19")

The outbreak of COVID-19 and measures to prevent its spread, including restrictions on travel, imposition of quarantines and prolonged closures of workplaces and other businesses, including hospitality, leisure and entertainment outlets, and the related cancellation of events, may impact our business in a number of ways. This is expected to include an adverse effect from reduced global economic activity and resulting demand for our customers' products and, therefore, the products we manufacture. It may also adversely affect our ability to operate our business, including potential disruptions to our supply chain and workforce. The COVID-19 impact on capital markets could also impact our cost of borrowing.

We expect the ultimate significance of the impact of these disruptions, including the extent of their adverse impact on our financial and operational results, will be determined by the length of time that such disruptions continue which will, in turn, depend on the duration of the COVID-19 pandemic and the impact of governmental regulations that might be imposed in response to the pandemic.

Our response to the outbreak of COVID-19 across our business operations can be summarised as follows:

Loading...
Loading...

Business Continuity: We are a leading supplier of consumer packaging solutions, comprising metal beverage cans and glass containers, primarily for the beverage and food end markets in Europe, North America and Brazil. In the markets we operate in, Ardagh is an essential provider of packaging to the beverage and food supply chain. Our people are deemed "Essential Critical Infrastructure Workers" under the guidance of the U.S. Department of Homeland Security, as are our customers. Where other governments have issued guidance, we have received equivalent designations in all other countries where we operate. As a result, all our global operations are permitted to continue to operate and did so continuously through the quarter. We will continue to manage our capacity in response to the evolution of demand.

Employee health and safety: The health and safety of our 16,000 employees and their families and communities, as well as our contractors, suppliers and customers has been our highest priority since the outbreak of the crisis. We established a Group-wide task force to ensure an effective and consistent response across our business. Regular updates have been issued and a dedicated intranet site established to facilitate effective communication of recommendations, policies and procedures. Communication with all stakeholders has been a core element in our response.

Measures continue to evolve in line with best practice and with recommendations by national health authorities and the World Health Organisation. Initiatives introduced to date have included: enhanced hygiene procedures in all locations, including increased cleaning in our production facilities; increased investment in personal protective equipment; adapting work practices and routines to ensure social distancing; establishing procedures for self-isolation; travel advisories including restrictions on all non-essential travel, prior to broader restrictions on any travel; restrictions on visitors to our production facilities or by our employees to external facilities; actively encouraging and ultimately requiring remote working for non-operational personnel, and enhancing our IT capability to facilitate increased remote working.

Strong liquidity: As a precautionary measure in response to increased macroeconomic uncertainty related to COVID-19, we have increased our cash on hand and total available liquidity, by drawing on our Global Asset Based Loan facility and by entering a new $300 million Credit Facility, as outlined in Note 11 of the Group's Consolidated Interim Financial Statements. At March 31, 2020, total available liquidity was approximately $1.1 billion, including $962 million in cash. Following the issuance of $700 million 5.250% Senior Secured Notes due 2025, of which $300 million was used to repay the Credit Facility, total liquidity was increased to a pro forma $1.5 billion, including $1.35 billion in cash.

Earnings Webcast and Conference Call Details

Ardagh Group S.A. ARD will hold its first quarter 2020 earnings webcast and conference call for investors at 3 p.m. BST (10 a.m. ET) on April 23, 2020. Please use the following webcast link to register for this call:

Webcast registration and access:

https://onlinexperiences.com/Launch/QReg/ShowUUID=2A61D5E3-364D-4FF3-929F-E4F3E33FBEC8

Conference call dial in:

United States: +1855 85 70686
International: +44 (0) 3333 000 804

Participant pin code: 72778537#

Slides and quarterly report

Supplemental slides to accompany this release are available at http://www.ardaghgroup.com/investors.

The first quarter 2020 interim report for ARD Finance S.A., issuer of the Senior Secured Toggle Notes due 2027, will be published in due course and available at http://www.ardholdings-sa.com/.

About Ardagh Group

Ardagh Group is a global supplier of infinitely recyclable, metal and glass packaging for the world's leading brands. Ardagh operates more than 50 metal and glass production facilities in 12 countries across three continents, employing over 16,000 people with sales of $6.7bn.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Non-GAAP Financial Measures 

This press release may contain certain consolidated financial measures such as Adjusted EBITDA, working capital, operating cash flow, Adjusted free cash flow, net debt, Adjusted profit/(loss), Adjusted earnings/(loss) per share, and ratios relating thereto that are not calculated in accordance with IFRS or US GAAP. Non-GAAP financial measures may be considered in addition to GAAP financial information, but should not be used as substitutes for the corresponding GAAP measures. The non-GAAP financial measures used by Ardagh may differ from, and not be comparable to, similarly titled measures used by other companies.

 

 

Consolidated Interim Financial Statements

Consolidated Interim Income Statement for the three months ended March 31, 2020




Unaudited


Unaudited



Three months ended March 31, 2020


Three months ended March 31, 2019



Before






Before







exceptional


Exceptional




exceptional


Exceptional





items


Items


Total


items


Items


Total



$'m


$'m


$'m


$'m


$'m


$'m

Revenue


1,622



1,622


1,639



1,639

Cost of sales


(1,360)



(1,360)


(1,386)


(9)


(1,395)

Gross profit


262



262


253


(9)


244

Sales, general and administration expenses


(98)


(3)


(101)


(81)


(2)


(83)

Intangible amortization


(58)



(58)


(58)



(58)

Operating profit


106


(3)


103


114


(11)


103

Net finance expense


(34)



(34)


(132)



(132)

Share of post-tax profit/(loss) in equity accounted joint venture


1


(4)


(3)




Profit/(loss) before tax


73


(7)


66


(18)


(11)


(29)

Income tax (charge)/credit


(24)


14


(10)


6


2


8

Profit/(loss) from continuing operations


49


7


56


(12)


(9)


(21)

Profit from discontinued operation, net of tax



27


27


35


(1)


34

Profit for the period


49


34


83


23


(10)


13














Profit attributable to:













Equity holders






83






13

Non-controlling interests











Profit for the period






83






13














Earnings per share:













Basic and diluted earnings per share attributable to equity holders






$0.35






$0.06














Earnings/(loss) per share from continuing operations:













Basic and diluted earnings/(loss) per share from continuing
operations attributable to equity holders






$0.24






($0.09)

 

 

Consolidated Interim Statement of Financial Position






Unaudited


Unaudited


At March 31,


At December 31,


2020


2019


$'m


$'m





Non-current assets




Intangible assets

2,793


2,884

Property, plant and equipment

2,621


2,677

Derivative financial instruments

70


4

Deferred tax assets

223


204

Investment in material joint venture

374


375

Other non-current assets

67


68


6,148


6,212

Current assets




Inventories

1,010


964

Trade and other receivables

907


734

Contract assets

176


151

Derivative financial instruments

2


3

Cash and cash equivalents

962


614


3,057


2,466

TOTAL ASSETS

9,205


8,678

Equity attributable to owners of the parent




Issued capital

23


23

Share premium

1,292


1,292

Capital contribution

485


485

Other reserves

151


165

Retained earnings

(2,109)


(2,181)


(158)


(216)

Non-controlling interests

1


1

TOTAL EQUITY

(157)


(215)

Non-current liabilities




Borrowings

5,775


5,524

Lease obligations

284


291

Employee benefit obligations

730


716

Derivative financial instruments

10


44

Deferred tax liabilities

342


344

Provisions

29


29


7,170


6,948

Current liabilities




Borrowings

535


22

Lease obligations

75


73

Interest payable

41


60

Derivative financial instruments

44


17

Trade and other payables

1,345


1,628

Income tax payable

106


97

Provisions

46


48


2,192


1,945

TOTAL LIABILITIES

9,362


8,893

TOTAL EQUITY and LIABILITIES

9,205


8,678

 

 

Consolidated Interim Statement of Cash Flows








Unaudited



Three months ended March 31, 



2020


2019



$'m


$'m

Cash flows from operating activities





Cash (used in) / generated from continuing operations


(191)


90

Interest paid


(84)


(80)

Income tax paid


(12)


(15)

Net cash used in operating activities - continuing operations


(287)


(5)

Net cash used in operating activities - discontinued operation (6)



(2)

Net cash used in operating activities


(287)


(7)






Cash flows from investing activities





Purchase of property, plant and equipment


(124)


(149)

Purchase of software and other intangibles


(2)


(5)

Investing cash flows used in continuing operations


(126)


(154)

Investing cash flows used in discontinued operation



(40)

Net cash used in investing activities


(126)


(194)






Cash flows from financing activities





Proceeds from borrowings


832


169

Repayment of borrowings


(18)


(2)

Lease payments


(22)


(18)

Deferred debt issue costs paid


(5)


(2)

Dividends paid



(33)

Consideration paid on extinguishment of derivative financial instruments



(14)

Financing cash flows from continuing operations


787


100

Financing cash flows from discontinued operation



(2)

Net cash inflow from financing activities


787


98






Net increase/(decrease) in cash and cash equivalents


374


(103)

Cash and cash equivalents at the beginning of the year


614


530

Foreign exchange losses on cash and cash equivalents


(26)


(11)

Cash and cash equivalents at the end of the year


962


416

 

 

Financial assets and liabilities


At March 31, 2020, the Group's net debt and available liquidity was as follows:




















Maximum


Final 













amount


maturity


Facility






Undrawn

Facility


Currency


drawable


date


 type


Amount drawn


amount





Local






Local









currency






currency


$'m


$'m





m






m





2.750% Senior Secured Notes


EUR


741


15-Mar-24


Bullet


741


812


4.250% Senior Secured Notes 


USD


695


15-Sep-22


Bullet


695


695


2.125% Senior Secured Notes


EUR


439


15-Aug-26


Bullet


439


481


4.125% Senior Secured Notes


USD


500


15-Aug-26


Bullet


500


500


4.750% Senior Notes


GBP


400


15-Jul-27


Bullet


400


494


6.000% Senior Notes


USD


1,700


15-Feb-25


Bullet


1,700


1,725


5.250% Senior Notes


USD


800


15-Aug-27


Bullet


800


800


Term Loan Credit Facility


USD


300


21-Mar-22


Bullet


300


300


Global Asset Based Loan Facility


USD


659


07-Dec-22


Revolving


532


532


127

Lease obligations


Various




Amortizing



359


Other borrowings/credit lines


EUR/USD



Rolling


Amortizing



3


1

Total borrowings / undrawn facilities












6,701


128

Deferred debt issue costs and
bond premium












(32)


Net borrowings / undrawn facilities












6,669


128

Cash and cash equivalents












(962)


962

Derivative financial instruments
used to hedge foreign currency
and interest rate risk












(57)


Net debt / available liquidity












5,650


1,090

 

 

Reconciliation of Group profit for the period to Adjusted profit








Three months ended March 31,



2020


2019



$'m


$'m

Profit for the period - Group


83


13

Total exceptional items (7)


(20)


13

Tax credits associated with exceptional items (7)


(14)


(3)

Intangible amortization


58


65

Tax credit associated with intangible amortization


(14)


(14)

(Gain)/loss on derivative financial instruments and non-recurring Trivium
transaction related foreign currency impact in net finance expense


(20)


9

Adjusted profit for the period (2)


73


83






Weighted average common shares


236.36


236.35






Earnings per share


0.35


0.06






Adjusted earnings per share (2)


0.31


0.35

 

 

Reconciliation of profit/(loss) for the period to Adjusted EBITDA, cash (used in)/generated
from operations, operating cash flow and Adjusted free cash flow








Three months ended March 31,



2020


2019



$'m


$'m

Profit/(loss) from continuing operations


56


(21)

Income tax charge / (credit)


10


(8)

Net finance expense


34


132

Depreciation and amortization


167


162

Exceptional operating items


3


11

Share of post-tax loss in equity accounted joint venture


3


Adjusted EBITDA from continuing operations


273


276

Movement in working capital


(409)


(177)

Transaction-related, start-up and other exceptional costs paid


(54)


(7)

Exceptional restructuring paid


(1)


(2)

Cash (used in)/generated from continuing operations


(191)


90

Transaction-related, start-up and other exceptional costs paid


54


7

Capital expenditure (8)


(126)


(154)

Lease payments


(22)


(16)

Operating cash flow from continuing operations


(285)


(73)

Operating cash flow from discontinued operation



(43)

Operating cashflow - Group (9)


(285)


(116)

Interest paid


(84)


(81)

Income tax paid


(12)


(16)

Adjusted free cash flow - Group (9)


(381)


(213)

 

(1). Continuing Operations results unless stated otherwise. A reconciliation to the most comparable GAAP measures can be found in the Bridge of 2019 to 2020 Revenue and Adjusted EBITDA and reconciliations at the back of this release.


(2). Adjusted earnings per share and Adjusted profit for the period for the current period include the results for the three months ended March 31, 2020 in relation to the Group's share of post-tax result of the equity accounted joint venture, Trivium Packaging B.V.. Adjusted earnings per share and Adjusted profit for the period for the comparative period, which are unchanged from those previously reported, include the results for the three months ended March 31, 2019 in relation to the divested Food & Specialty business which have been presented as a Discontinued Operation in accordance with IFRS 5.


(3). Payable on June 17, 2020 to shareholders of record on June 3, 2020.


(4). Net debt is comprised of net borrowings and derivative financial instruments used to hedge foreign currency and interest rate risk, net of cash and cash equivalents. Net borrowings includes IFRS 16 leases.


(5). Net debt to LTM Adjusted EBITDA, at December 31, 2019, reflects the LTM Adjusted EBITDA for Continuing Operations.


(6). Operating cash flows for discontinued operation for the three months ended March 31, 2019, include interest and income tax payments of $1 million and $1 million respectively.


(7).Total exceptional items before tax for the three months ended March 31, 2020 of $34 million net credit includes $27 million credit arising from the remeasurement of the estimated consideration for the disposal of the Food & Specialty Metal Packaging business, following advancement of the completion accounts process and $14 million tax credits mainly relating to recent U.S. tax reform, partly offset by $3 million in transaction related and other costs and $4 million from the share of exceptional items in the Trivium joint venture.


Total exceptional items for the three months ended March 31, 2019 of $10 million include $9 million related to the Group's capacity realignment programs, including restructuring costs ($6 million), property, plant and equipment impairment charges ($2 million) and start-up related costs ($1 million), $2 million in transaction-related costs and $1 million of exceptional items from the discontinued operation, net of tax, partly offset by $2 million from tax credits related to impairment in Glass Packaging North America.


(8). Capital expenditure for the three months ended March 31, 2020, includes $41 million relating to business growth investment initiatives.


(9). Operating cash flow – Group and Adjusted Free cash flow – Group results for the three months ended March 31, 2019 reflect that the Group divested the Food & Specialty business as of October 31, 2019. As a result, the operating cash flow that was previously presented as part of the Group's operating cash flow in prior periods is now presented as the Discontinued Operation.

 

SOURCE Ardagh Group S.A.

Loading...
Loading...
Posted In: EarningsPress ReleasesConference Call Announcements
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...