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Ardagh Group S.A. -- Third Quarter 2018 Results

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Ardagh Group S.A. -- Third Quarter 2018 Results

PR Newswire

LUXEMBOURG, Oct. 25, 2018 /PRNewswire/ -- Ardagh Group S.A. (NYSE:ARD) today announced its financial results for the third quarter ended September 30, 2018.



Three months ended September 30,


Change



2018


2017





($m except per share data)



Revenue


2,390


2,319


3%

Adjusted EBITDA 1


400


440


(9%)

Adjusted earnings per share 1


0.52


0.57


(9%)








Dividend per share declared 2


0.14


0.14



Paul Coulson, Chairman and Chief Executive, said "In a period marked by high levels of cost inflation, third quarter earnings reflected strong growth in Metal Packaging Americas, with all parts of that business performing very well. In Europe, we recorded good growth in glass packaging during the quarter, while our metal packaging business was adversely impacted by a weak food harvest. In Glass Packaging North America, our footprint adjustments and other initiatives to rebuild profitability continued against a challenging market backdrop. We remain focused on cash generation and de-leveraging over the final quarter and into 2019."

  • Revenue of $2,390 million increased by 3%;
  • Adjusted EBITDA of $400 million, declined by 9%;
  • Beverage can integration completed, with global volume/mix growth of 4% in the quarter;
  • Continued growth in glass container volume/mix in Europe;
  • Earnings per share of $0.03 (2017: $0.26);
  • Adjusted earnings per share of $0.52 (2017: $0.57);
  • Quarterly cash dividend of $0.14 per common share, payable on November 30, 2018;
  • 2018 outlook: Full year Adjusted EBITDA of approximately $1,450 - $1,475 million, with Adjusted free cash flow of approximately $475 million3 and Adjusted earnings per share of $1.60$1.70.       

 

Summary Financial Information















Three months ended September 30,


Nine months ended September 30,



2018


2017


2018


2017



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

Revenue


2,390


2,319


6,961


6,491

Profit for the period


7


61


50


30

Adjusted profit for the period 4


123


135


322


337

Adjusted EBITDA 4


400


440


1,140


1,173

Adjusted EBITDA margin


16.7%


19.0%


16.4%


18.1%

Earnings per share ($)


0.03


0.26


0.21


0.13

Adjusted earnings per share ($) 4


0.52


0.57


1.36


1.48










Cash generated from operations


385


498


717


951

Operating cash flow 4


300


400


355


667

Adjusted free cash flow 4


210


296


11


292
















At September 30,


At December 31,







2018


2017







$m


$m

Net debt 5






7,858


7,825

Cash and available liquidity






934


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 September 30, 2018














Metal Packaging Europe


Metal Packaging Americas


Glass Packaging Europe


Glass Packaging North America


Group



$m


$m


$m


$m


$m

Revenue 2017


943


513


417


446


2,319

Organic


28


74


6


(13)


95

IFRS 15


(19)


(2)




(21)

FX translation




(3)



(3)

Revenue 2018


952


585


420


433


2,390














Metal Packaging Europe


Metal Packaging Americas


Glass Packaging Europe


Glass Packaging North America


Group



$m


$m


$m


$m


$m

Adjusted EBITDA 2017


181


75


104


80


440

Organic


(28)


5



(13)


(36)

IFRS 15


(2)


(1)




(3)

FX translation




(1)



(1)

Adjusted EBITDA 2018


151


79


103


67


400












Adjusted EBITDA 2018 margin


15.9%


13.5%


24.5%


15.5%


16.7%

Adjusted EBITDA 2017 margin


19.2%


14.6%


24.9%


17.9%


19.0%































Nine months ended September 30, 2018





























Metal Packaging Europe


Metal Packaging Americas


Glass Packaging Europe


Glass Packaging North America


Group



$m


$m


$m


$m


$m

Revenue 2017


2,534


1,419


1,157


1,381


6,491

Organic


67


228


1


(77)


219

IFRS 15


(21)


8




(13)

FX translation


186



78



264

Revenue 2018


2,766


1,655


1,236


1,304


6,961

























Metal Packaging Europe


Metal Packaging Americas


Glass Packaging Europe


Glass Packaging North America


Group



$m


$m


$m


$m


$m

Adjusted EBITDA 2017


439


197


260


277


1,173

Organic


(24)


17


(1)


(69)


(77)

IFRS 15


(2)


2




FX translation


29



15



44

Adjusted EBITDA 2018


442


216


274


208


1,140












Adjusted EBITDA 2018 margin


16.0%


13.1%


22.2%


16.0%


16.4%

Adjusted EBITDA 2017 margin


17.3%


13.9%


22.5%


20.1%


18.1%

 

Group

Revenue of $2,390 million for the quarter ended September 30, 2018 represented an increase of 3%, compared with the same period last year. The increase in revenue reflected the pass through of increased input costs and favorable volume/mix growth of 1%, partly offset by IFRS 15 effects. Third quarter Adjusted EBITDA of $400 million decreased by 9%, compared with the same period last year. Strong growth in Metal Packaging Americas and continued strength in Glass Packaging Europe were offset by lower earnings in Glass Packaging North America and Metal Packaging Europe.

Metal Packaging Europe

Revenue of $952 million increased by 1% in the three-month period ended September 30, 2018, compared with the same period last year. The increase principally reflected the pass through of higher input costs and marginally favorable volume/mix growth, partly offset by IFRS 15 effects. Adjusted EBITDA for the quarter of $151 million decreased by 17%, compared with same period last year. This decrease reflected a weak food harvest as well as increased costs compared with the third quarter of 2017, which included a pension-related credit of $10 million.

Metal Packaging Americas

Revenue increased by 14% to $585 million in the third quarter of 2018, compared with the same period last year. The increase was attributable to favorable volume/mix effects and the pass through of higher input costs. Adjusted EBITDA of $79 million increased by 5% compared with the same period last year, reflecting favorable volume/mix effects and ongoing cost reductions, partly offset by higher input costs.

Glass Packaging Europe

Revenue of $420 million increased by 1% at constant currency rates, in the three-month period ended September 30, 2018, compared with the same period last year. Revenue growth principally reflected favorable glass packaging volume/mix effects and the pass through of higher input costs, partly offset by lower glass engineering activity. Adjusted EBITDA for the quarter of $103 million was unchanged at constant exchange rates, compared with the same period last year.

Glass Packaging North America

Revenue decreased by 3% to $433 million in the third quarter, compared with the same period last year, principally reflecting lower volumes. Adjusted EBITDA decreased by 16% to $67 million in the third quarter, compared with the same period in 2017, mainly as a result of lower volume/mix effects, as well as higher freight and logistics costs and the cost of planned production downtime.

Earnings Webcast and Conference Call Details

Ardagh Group S.A. (NYSE:ARD) will hold its third quarter 2018 earnings webcast and conference call for investors at 3 p.m. BST (10 a.m. ET) on October 25, 2018. Please use the following webcast link to register for this call:

Webcast registration and access:

https://event.on24.com/wcc/r/1840498-1/CC2D10652294994A59A5E3AB65C199E6

Conference call dial in:

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

Participant pin code: 52524482#

Slides and quarterly report

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

Third 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 across 5 continents, 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 September 30, 2018


Three months ended September 30, 2017



Before







Before








exceptional


Exceptional





exceptional


Exceptional






items


Items


Total


items


Items


Total



$m


$m


$m


$m


$m


$m

Revenue


2,390




2,390


2,319




2,319

Cost of sales


(1,999)


(45)



(2,044)


(1,897)


(7)



(1,904)

Gross profit/(loss)


391


(45)



346


422


(7)



415

Sales, general and administration expenses


(101)


(2)



(103)


(94)


(12)



(106)

Intangible amortization


(66)




(66)


(65)




(65)

Operating profit/(loss)


224


(47)



177


263


(19)



244

Net finance expense


(128)


(20)



(148)


(138)




(138)

Profit/(loss) before tax


96


(67)



29


125


(19)



106

Income tax (charge)/credit


(32)


10



(22)


(48)


3



(45)

Profit/(loss) for the period


64


(57)



7


77


(16)



61
















Profit attributable to:















Equity holders







7







61

Non‑controlling interests













Profit for the period







7







61
















Earnings per share:















Basic earnings for the period attributable to equity holders






$

0.03






$

0.26
















(i) The consolidated interim income statement for the three months ended September 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 (ii)



Nine months ended September 30, 2018


Nine months ended September 30, 2017



Before







Before








exceptional


Exceptional





exceptional


Exceptional






items


Items


Total


items


Items


Total



$m


$m


$m


$m


$m


$m

Revenue


6,961




6,961


6,491




6,491

Cost of sales


(5,839)


(110)



(5,949)


(5,323)


(16)



(5,339)

Gross profit/(loss)


1,122


(110)



1,012


1,168


(16)



1,152

Sales, general and administration expenses


(318)


(12)



(330)


(306)


(31)



(337)

Intangible amortization


(200)




(200)


(197)




(197)

Operating profit/(loss)


604


(122)



482


665


(47)



618

Net finance expense


(357)


(20)



(377)


(386)


(132)



(518)

Profit/(loss) before tax


247


(142)



105


279


(179)



100

Income tax (charge)/credit


(80)


25



(55)


(105)


35



(70)

Profit/(loss) for the period


167


(117)



50


174


(144)



30
















Profit attributable to:















Equity holders







50







30

Non‑controlling interests













Profit for the period







50







30
















Earnings per share:















Basic earnings for the period attributable to equity holders






$

0.21






$

0.13
















(ii) The consolidated interim income statement for the nine months ended September 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 September 30,


At December 31,


2018


2017


$m


$m




Re-presented (iii)

Non-current assets




Intangible assets

3,863


4,104

Property, plant and equipment

3,311


3,368

Derivative financial instruments

3


7

Deferred tax assets

209


221

Other non-current assets

24


25


7,410


7,725

Current assets




Inventories

1,268


1,353

Trade and other receivables

1,506


1,274

Contract asset

151


Derivative financial instruments

9


16

Cash and cash equivalents

409


784


3,343


3,427

TOTAL ASSETS

10,753


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

22


(21)

Retained earnings

(3,098)


(3,152)


(1,276)


(1,375)

Non-controlling interests

1


1

TOTAL EQUITY

(1,275)


(1,374)

Non-current liabilities




Borrowings

7,779


8,306

Employee benefit obligations

872


997

Derivative financial instruments

170


301

Deferred tax liabilities

551


583

Related party borrowings


Provisions

39


44


9,411


10,231

Current liabilities




Borrowings

298


2

Interest payable

107


71

Derivative financial instruments

28


2

Trade and other payables

1,930


1,988

Income tax payable

160


162

Provisions

94


70


2,617


2,295

TOTAL LIABILITIES

12,028


12,526

TOTAL EQUITY and LIABILITIES

10,753


11,152





(iii) 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
September 30,


Nine months ended
September 30,



2018


2017


2018


2017



$m


$m


$m


$m





Re-presented (iv)




Re-presented (iv)

Cash flows from operating activities









Cash generated from operations


385


498


717


951

Interest paid


(74)


(83)


(281)


(312)

Income tax paid


(18)


(21)


(65)


(65)

Net cash generated from operating activities


293


394


371


574










Cash flows from investing activities









Purchase of property, plant and equipment


(107)


(107)


(413)


(325)

Purchase of software and other intangibles


(9)


(5)


(24)


(11)

Proceeds from disposal of property, plant and equipment


1


1


5


2

Net cash used in investing activities


(115)


(111)


(432)


(334)










Cash flows from financing activities









Repayment of borrowings


(440)


(484)


(442)


(4,397)

Proceeds from borrowings


295



295


3,742

Dividends paid


(33)


(33)


(99)


(133)

Consideration (paid)/received on termination of derivative financial instruments


(44)



(44)


46

Deferred debt issue costs paid



(3)


(5)


(26)

Finance lease payments


(1)



(3)


Net (costs)/proceeds from share issuance



(3)



327

Early redemption premium paid


(7)


(10)


(7)


(91)

Net cash outflow from financing activities


(230)


(533)


(305)


(532)










Net decrease in cash and cash equivalents


(52)


(250)


(366)


(292)

Cash and cash equivalents at the beginning of the period


465


823


784


813

Exchange (losses)/gains on cash and cash equivalents


(4)


10


(9)


61

Cash and cash equivalents at the end of the period


409


583


409


582










(iv) The consolidated interim statement of cash flows for the three and nine months ended September 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 September 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


868


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


509


4.250% Senior Secured Notes 


USD


715


15-Sep-22


Bullet


715


715


4.750% Senior Notes


GBP


400


15-Jul-27


Bullet


400


522


6.000% Senior Notes


USD


1,700


15-Feb-25


Bullet


1,700


1,671


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


868


Global Asset Based Loan Facility


USD


809


07-Dec-22


Revolving


285


285


524

Finance Lease Obligations


USD/GBP/EUR






Amortizing


36


36


Other borrowings/credit lines


EUR


11


Rolling


Amortizing


11


12


1

Total borrowings / undrawn facilities












8,136


525

Deferred debt issue costs and bond premium












(59)


Net borrowings / undrawn facilities












8,077


525

Cash and cash equivalents












(409)


409

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












190


Net debt / available liquidity












7,858


934
















 

Reconciliation of profit for the period to Adjusted profit












Three months ended
September 30,


Nine months ended
September 30,



2018


2017


2018


2017



$m


$m


$m


$m

Profit for the period


7


61


50


30

Total exceptional items 6


67


19


142


179

Tax credit associated with exceptional items


(10)


(3)


(25)


(35)

Intangible amortization


66


65


200


197

Tax credit associated with intangible amortization


(15)


(19)


(45)


(56)

Loss on derivative financial instruments


8


12



22

Adjusted profit for the period


123


135


322


337










Weighted average common shares


236.3


236.3


236.3


227.3










Earnings per share ($)


0.03


0.26


0.21


0.13










Adjusted earnings per share ($)


0.52


0.57


1.36


1.48



















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












Three months ended
September 30,


Nine months ended
September 30,



2018


2017


2018


2017



$m


$m


$m


$m

Profit for the period


7


61


50


30

Income tax charge


22


45


55


70

Net finance expense


148


138


377


518

Depreciation and amortization


176


177


536


508

Exceptional operating items


47


19


122


47

Adjusted EBITDA


400


440


1,140


1,173

Movement in working capital


23


72


(327)


(166)

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


(30)


(13)


(70)


(50)

Exceptional restructuring paid


(8)


(1)


(26)


(6)

Cash generated from operations


385


498


717


951

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


30


13


70


50

Capital expenditure


(115)


(111)


(432)


(334)

Operating cash flow


300


400


355


667

Interest 7


(72)


(83)


(279)


(310)

Income tax paid


(18)


(21)


(65)


(65)

Adjusted free cash flow


210


296


11


292

_____________________________

1.

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



2.

Payable on November 30, 2018 to shareholders of record on November 16, 2018.



3.

Before short payback capex projects.



4.

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



5.

 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.



6.

Total exceptional items before tax for the three months ended September 30, 2018 of $67 million include $45 million related to the Group's capacity realignment programs comprising start-up related costs ($25 million), restructuring costs ($11 million) and property, plant and equipment impairment charges ($9 million).  These costs were incurred in Glass Packaging North America ($34 million), Glass Packaging Europe ($5 million) and Metal Packaging Europe ($6 million). Total exceptional items for the three months ended September 30, 2018 also include $2 million of integration and transaction-related costs and $20 million debt refinancing and settlement costs.




Total exceptional items before tax for the nine months ended September 30, 2018 of $142 million include $110 million related to the Group's capacity realignment programs, comprising start-up related costs ($39 million), restructuring costs ($57 million) and property, plant and equipment impairment charges ($14 million).  These costs were incurred in Glass Packaging North America ($69 million), Glass Packaging Europe ($5 million), Metal Packaging Europe ($22 million) and Metal Packaging Americas ($14 million). Total exceptional items for the nine months ended September 30, 2018 also include $12 million of integration and transaction-related costs and $20 million debt refinancing and settlement costs.



7.

Interest paid in the three and nine months ended September 30, 2018, excludes $2 million in respect of the redemption in July 2018, of the Group's $440 million 6.000% Senior Notes due 2021,  related to the interest from the date the Notes were called for redemption to the redemption date. Interest paid in the nine months ended September 30, 2017, excludes $2 million of interest paid in lieu of notice, relating to the 6.750% Senior Notes due 2021, redeemed in April 2017. 

 

 

Cision View original content:http://www.prnewswire.com/news-releases/ardagh-group-sa----third-quarter-2018-results-300737780.html

SOURCE Ardagh Group S.A.

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