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Ardagh Group S.A. - Second Quarter 2018 Results

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Ardagh Group S.A. - Second Quarter 2018 Results

PR Newswire

LUXEMBOURG, July 26, 2018 /PRNewswire/ -- Ardagh Group S.A. (NYSE:ARD) today announced its financial results for the second quarter ended June 30, 2018.

Highlights






June 30,
2018


June 30,
2017


Change


Change
CCY




($m except per share data)
















Revenue


2,347


2,212


6%


1%


Adjusted EBITDA 1


392


415


(6%)


(10%)


Adjusted earnings per share 1


0.51


0.54


(6%)


(12%)












Dividend per share declared 2


0.14


0.14






 

Paul Coulson, Chairman and Chief Executive, said "Second quarter results reflected good performances in three of our four divisions. This was offset by a reduction in Glass Packaging North America, where multiple initiatives to improve profitability are expected to deliver benefits on a more gradual basis than previously expected. We also completed two significant investment projects in Metal Packaging and have called a further $440 million of debt for redemption. Entering the seasonally more cash generative second half, we remain focused on further de-leveraging."

  • Revenue of $2,347 million increased by 6% and 1% on a reported and constant currency basis respectively;
  • Adjusted EBITDA of $392 million, declined by 6%, primarily driven by Glass Packaging North America;
  • Group volume/mix declined by 1% in the quarter and increased by 1% in the half year to June 30;
  • Earnings per share growth of 79% to $0.25 (2017: $0.14);
  • Adjusted earnings per share declined by 6% to $0.51 (2017: $0.54);
  • Quarterly cash dividend of $0.14 per common share, payable on August 31, 2018;
  • Investment projects at Rugby, UK and Manaus, Brazil, completed on schedule during the quarter;
  • $440 million 2021 Senior Notes called for redemption in July, $1.2 billion of cash/liquidity used to repay fixed term debt since January 2017;
  • No debt maturing before September 2022, over 90% of gross debt at fixed rates;
  • 2018 outlook: Full year Adjusted EBITDA of approximately $1.5 billion3, with Adjusted free cash flow of approximately $500 million4 and Adjusted earnings per share of $1.70$1.80.           

 

Summary Financial Information




Three months ended June 30,


Six months ended June 30,



2018


2017


2018


2017



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



















Revenue


2,347


2,212


4,571


4,172

Profit/(loss) for the period


58


33


43


(31)

Adjusted profit for the period 5


120


127


199


191

Adjusted EBITDA 5


392


415


740


733

Adjusted EBITDA margin


16.7%


18.8%


16.2%


17.6%

Earnings/(loss) per share ($)


0.25


0.14


0.18


(0.14)

Adjusted earnings per share ($) 5


0.51


0.54


0.84


0.86










Cash generated from operations


338


339


332


453

Operating cash flow 5


204


260


55


267

Adjusted free cash flow 5


43


84


(199)


(4)


































At June 30,


At December 31,







2018


2017







$m


$m

Net debt 6






8,017


7,825

Cash and available liquidity






1,279


1,598

Net debt to LTM Adjusted EBITDA






5.3x


5.2x

 

 

Financial Performance Review

Bridge of 2017 to 2018 Revenue and Adjusted EBITDA

Three months ended June 30, 2018















Metal
Packaging
Europe


Metal
Packaging
Americas


Glass
Packaging
Europe


Glass
Packaging
North
America


Group



$m


$m


$m


$m


$m

Revenue 2017


860


475


401


476


2,212

Organic


19


70


(15)


(18)


56

IFRS 15 7


(30)


(4)




(34)

FX translation


80



33



113

Revenue 2018


929


541


419


458


2,347














Metal
Packaging
Europe


Metal
Packaging
Americas


Glass
Packaging
Europe


Glass
Packaging
North
America


Group



$m


$m


$m


$m


$m

Adjusted EBITDA 2017


147


74


88


106


415

Organic


2


2


(4)


(36)


(36)

IFRS 15 7


(5)


(2)




(7)

FX translation


13



7



20

Adjusted EBITDA 2018


157


74


91


70


392












Adjusted EBITDA 2018 margin


16.9%


13.7%


21.7%


15.3%


16.7%

Adjusted EBITDA 2017 margin


17.1%


15.6%


21.9%


22.3%


18.8%



Six months ended June 30, 2018














Metal
Packaging
Europe


Metal
Packaging
Americas


Glass
Packaging
Europe


Glass
Packaging
North
America


Group



$m


$m


$m


$m


$m

Revenue 2017


1,591


906


740


935


4,172

Organic


39


154


(5)


(64)


124

IFRS 15 7


(2)


10




8

FX translation


186



81



267

Revenue 2018


1,814


1,070


816


871


4,571














Metal
Packaging
Europe


Metal
Packaging
Americas


Glass
Packaging
Europe


Glass
Packaging
North
America


Group



$m


$m


$m


$m


$m

Adjusted EBITDA 2017


258


122


156


197


733

Organic


4


12


(1)


(56)


(41)

IFRS 15 7



3




3

FX translation


29



16



45

Adjusted EBITDA 2018


291


137


171


141


740












Adjusted EBITDA 2018 margin


16.0%


12.8%


21.0%


16.2%


16.2%

Adjusted EBITDA 2017 margin


16.2%


13.5%


21.1%


21.1%


17.6%

 

Group

Revenue of $2,347 million for the quarter ended June 30, 2018 represented an increase of 6% and 1% at actual and constant currency exchange rates respectively, compared with the same period last year. The increase in revenue reflected favorable currency translation effects of $113 million and the pass through of increased input costs, partly offset by a volume/mix reduction of 1%. Second quarter Adjusted EBITDA of $392 million decreased by 6% at actual exchange rates, compared with the same period last year. On a constant currency basis, Adjusted EBITDA decreased by 10%, reflecting a lower outturn in Glass Packaging North America.

Metal Packaging Europe

Revenue of $929 million, increased by 8% at actual exchange rates but decreased by 1% at constant exchange rates, in the three-month period ended June 30, 2018, compared with the same period last year. The increase reflected favorable currency translation effects of $80 million and the pass through of higher input costs, partly offset by unfavorable volume/mix effects. Adjusted EBITDA for the quarter of $157 million increased by 7% compared with the same period last year, as favorable currency translation effects of $13 million and cost savings were partly offset by higher input costs and unfavorable volume/mix effects.

Metal Packaging Americas

Revenue increased by 14% to $541 million in the second quarter of 2018, compared with the same period last year. The increase was due mainly to favorable volume/mix effects and the pass through of higher input costs. Adjusted EBITDA of $74 million was in line with the same period last year, reflecting favorable volume/mix effects and ongoing cost reductions, offset by higher input and other costs.

Glass Packaging Europe

Revenue of $419 million increased by 4% in the three-month period ended June 30, 2018, compared with the same period last year, but decreased by 3% at constant exchange rates. Favorable currency translation effects of $33 million and the pass through of higher input costs were partly offset by lower volume/mix effects, which reflected lower glass engineering sales. Adjusted EBITDA for the quarter increased by 3% to $91 million, compared with the same period last year, as a result of favorable currency translation effects of $7 million, offset by lower volume/mix effects and higher input costs.

Glass Packaging North America

Revenue decreased by 4% to $458 million in the second quarter, compared with the same period last year principally reflecting lower volumes. Adjusted EBITDA decreased by 34% to $70 million in the second quarter, compared with the same period in 2017, mainly as a result of lower volumes, higher freight costs and the cost of planned production downtime.

Financing Activity

On July 9, 2018, the Group announced the redemption in full of its $440 million 6.000% Senior Notes due 2021. The redemption date will be July 31, 2018.

Earnings Webcast and Conference Call Details

Ardagh Group S.A. (NYSE:ARD) will hold its second quarter 2018 earnings webcast and conference call for investors at 3 p.m. BST (10 a.m. ET) on July 26, 2018. Please use the following webcast link to register for this call:

Webcast registration and access:

https://event.on24.com/wcc/r/1782939-1/3A3DC08D9A10C849337F9B0D84A50310

Conference call dial in:

United States callers: 1866 928 7517
International callers: +44 20 3139 4830

Participant pin code: 26625849#

Slides and quarterly report

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

Second quarter results for ARD Finance S.A., issuer of the Senior Secured Toggle Notes due 2023, are available at http://www.ardholdings-sa.com/.

About Ardagh Group

Ardagh is a global leader in metal and glass packaging solutions, producing packaging for most of the world's leading food, beverage and consumer brands. It operates over 100 facilities in 22 countries, employing approximately 23,000 people and has global sales of approximately $8.6 billion.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the 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, 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





Unaudited


Unaudited, re-presented (i)



Three months ended June 30, 2018


Three months ended June 30, 2017



Before







Before








exceptional


Exceptional





exceptional


Exceptional






items


Items


Total


items


Items


Total



$m


$m


$m


$m


$m


$m
















Revenue


2,347




2,347


2,212




2,212

Cost of sales


(1,968)


(17)



(1,985)


(1,795)


(9)



(1,804)

Gross profit/(loss)


379


(17)



362


417


(9)



408

Sales, general and administration expenses


(99)


(4)



(103)


(106)


(5)



(111)

Intangible amortization


(67)




(67)


(65)




(65)

Operating profit/(loss)


213


(21)



192


246


(14)



232

Net finance expense


(103)




(103)


(119)


(46)



(165)

Profit/(loss) before tax


110


(21)



89


127


(60)



67

Income tax (charge)/credit


(34)


3



(31)


(46)


12



(34)

Profit/(loss) for the period


76


(18)



58


81


(48)



33
















Profit attributable to:















Equity holders







58







33

Non‑controlling interests













Profit for the period







58







33
















Earnings per share:















Basic earnings for the period attributable to equity holders







$0.25







$0.14



(i)

The consolidated interim income statement for the three months ended June 30, 2017 has been re-presented to reflect the Group's change in presentation currency from euro to U.S. dollar on January 1, 2018.

 

 

Consolidated Interim Income Statement











Unaudited


Unaudited, re-presented (i)



Six months ended June 30, 2018


Six months ended June 30, 2017



Before







Before








exceptional


Exceptional





exceptional


Exceptional






items


Items


Total


items


Items


Total



$m


$m


$m


$m


$m


$m
















Revenue


4,571




4,571


4,172




4,172

Cost of sales


(3,840)


(65)



(3,905)


(3,426)


(9)



(3,435)

Gross profit/(loss)


731


(65)



666


746


(9)



737

Sales, general and administration expenses


(217)


(10)



(227)


(212)


(19)



(231)

Intangible amortization


(134)




(134)


(132)




(132)

Operating profit/(loss)


380


(75)



305


402


(28)



374

Net finance expense


(229)




(229)


(248)


(132)



(380)

Profit/(loss) before tax


151


(75)



76


154


(160)



(6)

Income tax (charge)/credit


(48)


15



(33)


(57)


32



(25)

Profit/(loss) for the period


103


(60)



43


97


(128)



(31)
















Profit/(loss) attributable to:















Equity holders







43







(31)

Non‑controlling interests













Profit/(loss) for the period







43







(31)
















Earnings/(loss) per share:















Basic earnings/(loss) for the period attributable to equity holders







$0.18







($0.14)



(i)

The consolidated interim income statement for the six months ended June 30, 2017 has been re-presented to reflect the Group's change in presentation currency from euro to U.S. dollar on January 1, 2018.

 

 

Consolidated Interim Statement of Financial Position







Unaudited


Audited


At June 30,


At December 31,


2018


2017


$m


$m




Re-presented (ii)

Non-current assets




Intangible assets

3,928


4,104

Property, plant and equipment

3,336


3,368

Derivative financial instruments

4


7

Deferred tax assets

202


221

Other non-current assets

24


25


7,494


7,725

Current assets




Inventories

1,340


1,353

Trade and other receivables

1,636


1,274

Contract asset

171


Derivative financial instruments

16


16

Cash and cash equivalents

465


784


3,628


3,427

TOTAL ASSETS

11,122


11,152

Equity attributable to owners of the parent




Issued capital

23


23

Share premium

1,292


1,290

Capital contribution

485


485

Other reserves

1


(21)

Retained earnings

(3,088)


(3,152)


(1,287)


(1,375)

Non-controlling interests

1


1

TOTAL EQUITY

(1,286)


(1,374)

Non-current liabilities




Borrowings

8,240


8,306

Employee benefit obligations

887


997

Derivative financial instruments

173


301

Deferred tax liabilities

561


583

Related party borrowings


Provisions

41


44


9,902


10,231

Current liabilities




Borrowings

5


2

Interest payable

81


71

Derivative financial instruments

68


2

Trade and other payables

2,128


1,988

Income tax payable

128


162

Provisions

96


70


2,506


2,295

TOTAL LIABILITIES

12,408


12,526

TOTAL EQUITY and LIABILITIES

11,122


11,152



(ii)

The consolidated statement of financial position at December 31, 2017 has been re-presented to reflect the Group's change in presentation currency from euro to U.S. dollar on January 1, 2018.

 

 

Consolidated Interim Statement of Cash Flows





Unaudited


Unaudited



Three months ended June 30,


Six months ended June 30,



2018


2017


2018


2017



$m


$m


$m


$m





Re-presented (iii)




Re-presented (iii)

Cash flows from operating activities









Cash generated from operations


338


339


332


453

Interest paid


(139)


(148)


(207)


(229)

Income tax paid


(22)


(30)


(47)


(44)

Net cash generated from operating activities


177


161


78


180










Cash flows from investing activities









Purchase of property, plant and equipment


(143)


(105)


(306)


(218)

Purchase of software and other intangibles


(10)


(3)


(15)


(6)

Proceeds from disposal of property, plant and equipment


2


1


4


1

Net cash used in investing activities


(151)


(107)


(317)


(223)










Cash flows from financing activities









Dividends paid


(33)


(33)


(66)


(100)

Finance lease payments


(1)



(2)


Repayment of borrowings


(1)


(917)


(2)


(3,913)

Deferred debt issue costs paid


(4)


(5)


(5)


(23)

Proceeds from borrowings



501



3,742

Net (costs)/proceeds from share issuance



(3)



330

Early redemption premium paid



(24)



(81)

Proceeds from the termination of derivative financial
instruments



46



46

Net cash (outflow)/inflow from financing activities


(39)


(435)


(75)


1










Net decrease in cash and cash equivalents


(13)


(381)


(314)


(42)

Cash and cash equivalents at the beginning of the period


493


1,157


784


813

Exchange (losses)/gains on cash and cash equivalents


(15)


47


(5)


52

Cash and cash equivalents at the end of the period


465


823


465


823



(iii)

The consolidated interim statement of cashflows for the three and six months ended June 30, 2017 has been re-presented to reflect the Group's change in presentation currency from euro to U.S. dollar on January 1, 2018.

 

 

Financial assets and liabilities


At June 30, 2018, 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


$m


$m





currency






currency









m






m





2.750% Senior Secured Notes


EUR


750


15-Mar-24


Bullet


750


874


4.625% Senior Secured Notes


USD


1,000


15-May-23


Bullet


1,000


1,000


4.125% Senior Secured Notes


EUR


440


15-May-23


Bullet


440


513


4.250% Senior Secured Notes


USD


715


15-Sep-22


Bullet


715


715


4.750% Senior Notes


GBP 


400


15-Jul-27


Bullet


400


526


6.000% Senior Notes


USD


1,700


15-Feb-25


Bullet


1,700


1,676


7.250% Senior Notes


USD


1,650


15-May-24


Bullet


1,650


1,650


6.750% Senior Notes


EUR


750


15-May-24


Bullet


750


874


6.000% Senior Notes 8


USD


440


30-Jun-21


Bullet


440


440


Global Asset Based Loan Facility


USD


813


07-Dec-22


Revolving




813

Finance Lease Obligations


USD/GBP/EUR






Amortizing


38


38


Other borrowings/credit lines


EUR


3


Rolling


Amortizing


2


2


1

Total borrowings / undrawn facilities












8,308


814

Deferred debt issue costs and bond
premium












(63)


Net borrowings / undrawn facilities












8,245


814

Cash and cash equivalents












(465)


465

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












237


Net debt / available liquidity












8,017


1,279

 

 

Reconciliation of profit/(loss) for the period to Adjusted profit




Three months ended June 30,


Six months ended June 30,



2018


2017


2018


2017



$m


$m


$m


$m

Profit/(loss) for the period


58


33


43


(31)

Total exceptional items 9


21


60


75


160

Tax credit associated with exceptional items


(3)


(12)


(15)


(32)

Intangible amortization


67


64


134


131

Tax credit associated with intangible amortization


(15)


(18)


(30)


(37)

Gain on derivative financial instruments


(8)



(8)


Adjusted profit for the period


120


127


199


191










Weighted average common shares


236.3


236.3


236.3


222.8










Earnings/(loss) per share ($)


0.25


0.14


0.18


(0.14)










Adjusted earnings per share ($)


0.51


0.54


0.84


0.86

 

 

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




Three months ended June 30,


Six months ended June 30,



2018


2017


2018


2017



$m


$m


$m


$m

Profit/(loss) for the period


58


33


43


(31)

Income tax charge


31


34


33


25

Net finance expense


103


165


229


380

Depreciation and amortization


179


169


360


331

Exceptional operating items


21


14


75


28

Adjusted EBITDA


392


415


740


733

Movement in working capital


(24)


(46)


(350)


(238)

Acquisition-related, IPO, start-up and other exceptional costs paid


(17)


(28)


(40)


(37)

Exceptional restructuring paid


(13)


(2)


(18)


(5)

Cash generated from operations


338


339


332


453

Acquisition-related, IPO, start-up and other exceptional costs paid


17


28


40


37

Capital expenditure


(151)


(107)


(317)


(223)

Operating cash flow


204


260


55


267

Interest


(139)


(146)


(207)


(227)

Income tax


(22)


(30)


(47)


(44)

Adjusted free cash flow


43


84


(199)


(4)

 


 

1. A reconciliation to the most comparable GAAP measures can be found at the back of this release.

2. Payable on August 31, 2018 to shareholders of record on August 17, 2018.

3. After a currency translation headwind of approximately $50 million, compared with previous guidance.

4. Before short payback capex projects.

5. A reconciliation to the most comparable GAAP measures can be found at the back of this release.

6. 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.

7. Revenue and Adjusted EBITDA for the three months ended June 30, 2018, includes the impact of the adoption of IFRS 15, of ($34) million and ($7) million respectively. There is no material impact for the six months ended June 30, 2018.

8. On July 9, 2018, the Group announced the redemption in full of its $440 million 6.000% Senior Notes due 2021. The redemption date will be July 31, 2018.

9. Total exceptional items for the three months ended June 30, 2018 of $21 million include $12 million restructuring charges in Metal Packaging Europe and Metal Packaging Americas, $5 million start-up costs in Metal Packaging Americas and Glass Packaging North America and $4 million costs directly attributable to the integration of the Beverage Can Business and other transaction related costs.

Total exceptional items for the six months ended June 30, 2018 of $75 million include $46 million restructuring charges in Metal Packaging Europe, Metal Packaging Americas and Glass Packaging North America, $14 million start-up costs in Metal Packaging Americas and Glass Packaging North America and $5 million asset impairment charges in Metal Packaging Americas. Exceptional items also include $10 million costs directly attributable to the integration of the Beverage Can Business and other transaction related costs.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/ardagh-group-sa--second-quarter-2018-results-300687016.html

SOURCE Ardagh Group S.A.

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