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Saft Groupe SA Reports 2010 First Half Sales And Earnings

PARIS, July 28, 2010 /PRNewswire-FirstCall/ -- Saft, leader in the design, development and manufacture of advanced batteries for industry and defence, announces its sales and earnings for the 6 month period ended 30 June 2010. First half sales and earnings highlights - Q2 sales of EUR

Saft Groupe SA Reports 2010 First Half Sales And Earnings

PARIS, July 28, 2010 /PRNewswire-FirstCall/ -- Saft, leader in the design, development and manufacture of advanced batteries for industry and defence, announces its sales and earnings for the 6 month period ended 30 June 2010.

    First half sales and earnings highlights

    - Q2 sales of EUR154.4m, up 8.9% at actual exchange rates and
      up 5.1% at constant exchange rates.

    - H1 2010 sales of EUR290.0m, an increase of 0.9% YoY as
      reported and a reduction of 0.4% YoY at constant exchange rates.

    - EBITDA margin of 18.7% of sales in H1 2010, at EUR54.2m,
      ahead of the initial annual guidance.

    - Net income up by 5.6% YoY to EUR22.8m.

    - Earnings Per Share of EUR0.92 in H1 2010 compared to an
      adjusted EUR1.03 in H1 2009.

                               Outlook for FY 2010

          FY 2010 sales guidance maintained but EBITDA margin guidance
                                  increased

    - Sales guidance unchanged with growth of 0 to 5% at constant exchange
      rates.

    - 2010 EBITDA margin increased from cubed 18.0% of sales to cubed
      18.5% of sales.

John Searle, Chairman of the Management Board, commented: "I am delighted to report sales growth in Q2, following a challenging 2009. Saft's markets are recovering at different speeds with some activities recording strong growth in H1, notably sales to the electronics and lighting markets.

In contrast, we do have some late cycle activities such as the industrial standby power activities, where sales in H1 were lower than 2009, but I certainly expect this activity to return to growth during H2.

Saft has delivered a strong level of profitability, ahead of 2010 guidance and 2009, due to good cost control and the benefit of the restructuring carried out in 2009, notably the merger of Divisions.

I anticipate continued sales growth in H2 and maintain our sales guidance unchanged. However, following the strong performance in H1, I am able to revise our EBITDA margin guidance upwards to at least 18.5% of sales.

Finally, with continuing strong cash flow, the company has solid finances and continues to invest in the exciting markets of the future, notably batteries for clean vehicles and renewable energy storage." Consolidated sales and results - first half 2010

    In euro million                         First half            Variations
                                                                    change
                                        2010           2009

    Sales                              290.0          287.4         (0.4)%
    Gross profit                        89.8           82.6          8.7%
    Gross profit %                     31.0%          28.7%
    EBITDA (*)                          54.2           51.5          5.2%
    EBITDA margin %                    18.7%          17.9%
    EBIT (**)                           38.8           35.7          8.7%
    EBIT margin %                      13.4%          12.4%
    Profit before income tax            27.6           27.4          0.7%
    Net income                          22.8           21.6          5.6%
    EPS (EUR per share) (***)           0.92           1.03         (10.7)%

Percentages changes are at actual exchange rates except for sales which are at constant exchange rates.

(*) EBITDA is defined as net income from operations, before depreciation, amortisation, restructuring costs and other operating income and expenses.

(**) EBIT is defined as net income from operations, before restructuring costs and other operating income and expenses.

(***) 2009 EPS has been adjusted to factor in the capital increase with maintained preferential subscription rights carried out in December

2009. 2009 non-adjusted EPS was EUR1.14.

Notes:

1. There have been no changes in the consolidation perimeter between 2009 and 2010.

2. Average exchange rate during H1 2010 was EUR1 = $1.33, in line with EUR1 = $1.33 during H1 2009.

2010 Interim Condensed Consolidated Financial Statements closed by the Saft Groupe SA Management Board have been reviewed by the Supervisory Board on July 23, 2010.

      Key figures

    - Sales were EUR290.0m in H1 2010, compared with EUR287.4m in H1 2009, an
      increase of 0.9% at actual exchange rates and a decrease of 0.4% at
      constant exchange rates.

    - Gross profit margin increased by 1.3% at 31.0% in H1 2010 compared to
      28.7% in H1 2009, mainly due to cost controls and the benefit of the
      merger initiated in 2009 between the IBG and RBS divisions.

    - At 18.7% of sales, EBITDA margin has been increased by 80 bps as
      compared to H1 2009 level. Excluding costs of EUR0.6m incurred on the
      Jacksonville project, EBITDA was EUR54.9m in H1 2010 (18.9% of sales)
      as compared with EUR51.5m (17.9% of sales) in 2009.

    - Net income during H1 was EUR22.8m, up 5.6% compared with 2009.

    - Earnings Per Share was EUR0.92 compared to adjusted EPS of EUR1.03 in
      H1 2009.

    - Due to a stronger US dollar, net debt at June 30, 2010 slightly
      increased at EUR119.2m, compared with EUR108.5m at December 31, 2009.
      Leverage ratio was 1.0 as at end of June 2010, compared with 1.09 as at
      end December 31, 2009.

    - Group cash position is EUR225.3m at June 30, 2010, showing a slight
      increase as compared to December 31, 2009, despite increased
      investments during the first half.

    - Investments in fixed assets and capitalised R&D costs for H1 2010 were
      EUR27.3m, compared with EUR9.9m in H1 2009. Investment in our Johnson
      Controls-Saft joint venture was EUR17.0m, compared with EUR21.8m in H1
      2009.

                      Second quarter sales by product line

    In euro million                                Variations in %

     Product line    Q2 2010    Q2 2009      At actual        At constant
                                          exchange rates     exchange rates
          IBG          83.6      82.8          1.0%              (2.1)%
          SBG          70.8      59.0          20.0%             15.1%
         Total        154.4      141.8         8.9%               5.1%

Sales numbers are at actual exchange rates.

The average exchange rate in Q2 2010 was EUR1 to $1.27 (compared with EUR1 to $1.36 in Q2 2009).

    There was no change in perimeter between Q2 2009 and Q2 2010.

                             Results by product line

                 6 months ended 30 June 2010      6 months ended 30 June 2009
    Product            Sales             EBITDA                       EBITDA

      line
              Sales    growth   EBITDA   margin    Sales    EBITDA    Margin
               EURm      %       EURm      %       EURm      EURm        %

    IBG       160.7    (2.0)%    27.0    16.8%     162.4     26.9      16.6%
    SBG       129.3     1.7%     29.6    22.9%     125.0     27.4      21.9%
    Other       0        0      (2.4)     n.a.       0       (2.8)     n.a.
    Total     290.0    (0.4)%    54.2    18.7%     287.4     51.5      17.9%

All at actual exchange rates, except sales growth % which is at constant exchange rates.

Industrial Battery Group (IBG)

H1 2010 saw IBG sales decrease by 1% as reported at EUR160.7m, compared with H1 2009. At constant exchange rates, this equated to a reduction of 2% YoY. During Q2 alone, sales as reported increased by 1% but were down 2.1% YoY at constant exchange rates.

Sales into the telecom infrastructure market continued to record good growth, and aviation battery sales recovered strongly during Q2. This growth trend looks set to continue. In contrast, the industrial standby power and rail markets showed reduced sales, although the industrial standby sector is expected to return to growth in H2.

The small nickel battery activity (ex.RBS Division) had a strong H1 due to a market recovery and some market share gains.

EBITDA margin for the division increased to 16.8% compared to 16.6% in H1 2009. Excluding costs of the Jacksonville project, EBITDA margin reached 17.2% of sales at EUR27.6m. Cost reduction measures have enabled the division to increase the gross margin strongly during the first half while maintaining investment in future developments.

Specialty Battery Group (SBG)

SBG sales in H1 increased by 3.4% as reported to EUR129.3m, and by 1.7% at constant exchange rates. Q2 was extremely strong with sales increasing by 20.0% as reported and 15.1% at constant exchange rates.

The main driver of this growth was the civil electronics business and in particular the demand for batteries from the utility meter market. The military activities reported a slight growth in Q2 despite a challenging base of comparison.

During H2, the civil electronics activity is expected to continue to grow coupled with stronger sales in the space market. In contrast, as indicated earlier, the military market will remain more difficult and will not be a growth driver in 2010.

The EBITDA margin for the division has increased by 100 bps to 22.9% of sales in H1 2010. This improvement results from good cost control and stable prices.

Other activities

Costs of "Other activities" are costs not allocated to operational divisions and include costs of central functions such as IT, research and central management, finance and administration, a proportion of which is recharged to each of the product lines.

EBITDA of other activities for the first half year is EUR(2.4)m compared to EUR(2.8)m in 2009.

Investments in applications for the future

Saft continues to invest heavily in two very significant emerging applications: batteries for clean vehicles and renewable energy storage.

In the developing renewable energy storage market, Saft has announced a new demonstration contract with the SMUD, and has been awarded a contract for the development and supply of containerised batteries for a grid stabilisation project in Spain.

In the clean vehicle space, Johnson Controls-Saft continues to see additional opportunities develop. Ford has decided to launch the Ford Transit Connect EV in Europe as well as in 2010 in the US, whilst Azure Dynamics will purchase batteries from Johnson Controls-Saft for a new PHEV delivery vehicle to be sold alongside the HEV model being launched in H2 2010.

Finally, in the important Chinese market, Johnson Controls-Saft is continuing discussions with a number of potential strategic partners.

Outlook

Based on the H1 performance, Saft confirms unchanged FY10 sales guidance at 0 to 5% at constant exchange rates, but is increasing its 2010 profitability guidance as follows:

          In euro million       FY 2009  H1 2010  FY 2010        FY 2010
                                         Actual   Initial        Revised
                                               Estimate (**)  Estimate (***)

    Sales                         559.3   290.0    0 to 5%       0 to 5%

                                  18.1%   18.9%  greater than  greater than
                                                 or equal to    or equal to
    EBITDA margin % (*)                             18.0%          18.5%
    Average EUR/$ exchange rate    1.39    1.33       1.39          1.33

(*) Excluding costs related to the construction project of Jacksonville lithium-ion

factory.

(**) Excluding impact of the costs related to the Jacksonville project estimated at $5 to 6 million.

(***) Excluding impact of the costs related to the Jacksonville project re-estimated at $2 to 3 million.

Saft sales and EBITDA sensitivity to exchange rates remained unchanged as follows:

    - a 10% change in EUR/$ exchange rates results in a 4% change in sales,

    - a 10% change in EUR/$ exchange rates results in a 6 to 7% change in
      EBITDA.


    Financial calendar 2010

    2010 Q3 turnover                                 3 November 2010
    FY sales and results 2010                       17 February 2011

IMPORTANT LEGAL INFORMATION AND CAUTIONARY STATEMENTS

Certain statements contained herein are forward-looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans, objectives or results of operation. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and Saft's plans and objectives to differ materially from those expressed or implied in the forward looking statements.

About Saft

Saft (Euronext: Saft) is a world specialist in the design and manufacture of high-tech batteries for industry. Saft batteries are used in high performance applications, such as industrial infrastructure and processes, transportation, space and defence. Saft is the world's leading manufacturer of nickel batteries for industrial applications and of primary lithium batteries for a wide range of end markets. The group is also the European leader for specialised advanced technologies for the defence and space industries and world leader in lithium-ion satellite batteries. Saft is also delivering its lithium-ion technology to the emerging applications of clean vehicles and renewable energy storage. With approximately 4,000 employees worldwide, Saft is present in 18 countries. Its 15 manufacturing sites and extensive sales network enable the group to serve its customers worldwide. Saft is listed in the SBF 120 index on the Paris Stock Market.

    This press release includes the main Financial Statements as appendices.

    Also available on Saft's website https://www.saftbatteries.com/ are:

    - Saft's 2010 Interim Report, including the Interim Condensed
      Consolidated Financial Statements,

    - A presentation on Saft's interim results.

    Appendices

    Consolidated balance sheet

    Assets

    In euro million                          As of        As of        As of

                                          June 30, December 31, December 31,
                                              2010         2009         2008
                                                     .
    Non-current assets
    Intangible assets, net                   225.4        228.2        236.0
    Goodwill                                 117.0        104.8        107.3
    Property, plant and equipment, net       134.2        109.9        112.6
    Investment properties                      0.1          0.2          0.2
    Investments in joint undertakings         42.7         30.0         19.5
    Deferred income tax assets                10.2         10.1         13.3
    Other non current financial
    assets                                     1.0          0.9          1.3
                                             530.6        484.1        490.2
    Current assets
    Inventories                               77.8         63.1         79.2
    Trade and other receivables              151.4        141.1        153.8
    Derivative financial instruments           0.8          2.2          0.1
    Cash and cash equivalents                225.3        207.4         68.8
                                             455.3        413.8        301.9
    Total assets                             985.9        897.9        792.1


    Consolidated balance sheet
    Liabilities and equity

    In euro million                          As of        As of        As of

                                          June 30, December 31, December 31,
                                              2010         2009         2008

    Shareholders' equity
    Ordinary shares                           24.7         24.7         18.5
    Share premium                             92.6         92.5       (27.7)
    Treasury shares                          (1.0)        (0.3)        (1.0)
    Cumulative translation adjustments        40.1         11.8          7.6
    Fair value and other reserves            (8.0)         12.8          9.1
    Group consolidated reserves              170.9        164.3        146.7
    Minority interest in equity                1.3          1.0          0.6
    Total shareholders' equity
    Liabilities                              320.6        306.8        153.8
    Non-current liabilities
    Debt                                     342.8        312.7        324.3
    Other non-current financial                8.5          8.1          5.5
    liabilities
    Deferred grants related to assets          8.3          0.0          0.0
    Deferred income tax liabilities           67.6         69.0         66.8
    Pensions and other retirement
    benefits                                   9.0          8.5          9.5
    Provisions for other liabilities and
    charges                                   36.1         33.3         38.5
                                             472.3        431.6        444.6
    Current liabilities
    Trade and other payables                 172.8        136.4        152.9
    Taxes payable                              1.8          5.3          2.3
    Debt and other current financial           3.0          3.2         25.6
    liabilities
    Derivative instruments                     3.4          2.1          5.6
    Pensions and other retirement              0.7          1.0          0.2
    benefits
    Provisions for other liabilities and
    charges                                   11.3         11.5          7.1
                                             193.0        159.5        193.7
    Total liabilities and equity             985.9        897.9        792.1


    Consolidated income statement


    In euro million                        Period    Period ended    Period
                                            ended                     ended
                                                     June 30, 2009
                                          June 30,                  June 30,
                                            2010                      2008

    Revenues                                 290.0         287.4       306.4
    Cost of sales                          (200.2)       (204.8)     (220.8)
    Gross profit                              89.8          82.6        85.6
    Distribution and sales costs            (18.2)        (17.1)      (15.9)
    Administrative expenses                 (21.7)        (21.4)      (21.7)
    Research and development expenses       (11.1)         (8.4)       (7.4)
    Restructuring costs                      (0.4)         (0.5)         0.0
    Other operating income and expenses        1.9           2.0         0.1
    Operating profit                          40.3          37.2        40.7
    Finance costs-net                        (6.5)         (5.6)       (8.3)
    Share of profit / (loss) of associates   (6.2)         (4.2)       (4.5)

    Profit before income tax                  27.6          27.4        27.9
    Income tax expense                       (4.8)         (5.8)       (5.4)
    Profit for the period                     22.8          21.6        22.5

    Equity holders of the company             22.8          21.4        22.5
    Minority interest                          0.0           0.2         0.0
    Basic earnings per share (in EUR per
    share)                                    0.92          1.14        1.20
    Diluted earnings per share (in EUR
    per share)                                0.92          1.14        1.20

    Consolidated statement of comprehensive income

    In euro million                               Period    Period    Period
                                                   ended     ended     ended

                                                 June 30,  June 30,  June 30,
                                                   2010      2009      2008
    Profit for the period                           22.8      21.6      22.5
    Other comprehensive income
    Fair value gains / (losses) on cash flow
    hedge                                          (2.1)       3.0     (0.7)
    Fair value gains / (losses), net on
    investment hedge                              (29.0)       0.2       4.5
    Actuarial gains and losses on
    defined-benefit pensions plans                   0.0       0.9       0.0
    Currency translation adjustments                28.5     (0.2)     (4.9)
    Tax effect on income / (expenses) recognised
    directly in equity                              10.4     (1.1)     (1.0)
    Total other comprehensive income for the
    period, net of tax                               7.8       2.8     (2.1)
    Total comprehensive income for the period       30.6      24.4      20.4
    Attributable to:
    Equity holders of the company                   30.3      24.2      20.4
    Minority interest                                0.3       0.2       0.0

    Consolidated statement of cash flows

    In euro million                               Period    Period    Period
                                                   ended     ended     ended

                                                 June 30,  June 30,  June 30,
                                                   2010      2009      2008
    Net profit for the period                       22.8      21.6      22.5
    Adjustments:
    Earning of equity basis companies (net of
    dividends)                                       6.2       4.7       5.0
    Income tax expense                               4.8       5.8       5.4
    Depreciation of property, plant and
    equipment and amortisation of intangible
    assets                                          15.4      15.8      14.2
    Finance costs-net                                6.5       5.6       8.3
    Net movements in provisions                    (1.2)     (1.6)     (4.7)
    Other                                          (0.9)       1.4       0.1
                                                    53.6      53.3      50.8
    Change in inventories                          (9.1)       6.9     (8.1)
    Change in trade and other receivables          (4.5)       7.6       3.0
    Change in trade and other payables              13.0    (18.6)     (1.2)
    Changes in working capital                     (0.6)     (4.1)     (6.3)
    Cash flows generated from operations before
    interest and tax                                53.0      49.2      44.5
    Interest paid                                  (6.8)     (8.5)    (11.9)
    Income tax paid                                (3.7)         0     (2.0)
    Net cash provided by operating activities       42.5      40.7      30.6
    Cash flows from investing activities
    Acquisition of subsidiaries, net of cash
    acquired                                      (17.0)    (21.8)     (3.8)
    Purchase of property, plant and equipment     (24.4)     (7.7)    (10.9)
    Purchase of intangible assets                  (2.9)     (2.2)     (3.0)
    Proceeds from sale of property, plant and
    equipment                                        1.5       0.2       1.2
    Variation of other non-current financial
    assets and liabilities                         (0.1)       0.1       0.3
    Net cash used in investing activities         (42.9)    (31.4)    (16.2)
    Cash flows from financing activities
    Proceeds from issuance of ordinary shares        0.1       0.0       0.0
    Purchase / Sale of treasury shares and
    liquidity contract                             (0.7)       0.0       0.0
    Debt repayments                                  0.0    (10.2)       0.0
    Grants related to assets                         7.7       0.0       0.0
    Increase/(decrease) in other long-term
    liabilities                                      0.0       0.0       0.4
    Dividends paid to company shareholders           0.0       0.0       0.0
    Net cash generated by/(used) in financing
    activities                                       7.1    (10.2)       0.4
    Net increase/(decrease) in cash                  6.7     (0.9)      14.8
    Cash and cash equivalents at beginning of
    period                                         207.4      68.8      42.3
    Exchange gain / (loss) on cash and cash
    equivalents                                     11.2       1.3     (0.6)
    Cash and cash equivalents at end of period     225.3      69.2      56.5


    Consolidated statement of changes in equity


                  Number of     Attributable to equity    Minority    Share-
                    shares      holders of the company    interest   holders'
    In euro       making up                                           equity
    million          the
                   capital
                              Share   Share  Consolidated
                             Capital Premium reserves and
                                               retained
                                               earnings
    Balance at
    01/01/2008    18,514,086    18.5  (15.1)        122.7      0.8     126.9
    Employee
    stock option
    schemes
    (value of
    employee
    services)                    0.0     0.0          1.7      0.0       1.7
    Dividend paid                0.0  (12.6)          0.0      0.0    (12.6)
    Purchase /
    Sale of
    treasury
    shares                       0.0     0.0        (0.3)      0.0     (0.3)
    Total
    comprehensive
    income                       0.0     0.0         38.3    (0.2)      38.1
    Balance at
    31/12/2008    18,514,086    18.5  (27.7)        162.4      0.6     153.8
    Employee
    stock option                 0.0     0.0          0.8      0.0       0.8
    schemes
    (value of
    employee
    services)
    Dividend to
    be paid                      0.0     0.0       (12.6)      0.0    (12.6)
    Purchase /
    Sale of
    treasury
    shares                       0.0     0.0          0.0      0.0       0.0
    Total
    comprehensive
    income                       0.0     0.0         24.2      0.2      24.4
    Balance at
    30/06/2009    18,514,086    18.5  (27.7)        174.8      0.8     166.4
    Employee
    stock option
    schemes
    (value of
    employee
    services)                    0.0     0.0          0.8      0.0       0.8
    Capital
    increase with
    maintenance
    of
    preferential
    subscription
    rights         5,696,328     6.0   114.4        (5.5)      0.0     114.9
    Capital
    increase by
    exercise of
    stock options    231,864     0.2     5.8          0.0      0.0       6.0
    Dividend paid
    in shares        241,815     0.0     0.0          5.6      0.0       5.6
    Purchase /
    Sale of
    treasury
    shares                       0.0     0.0          0.8      0.0       0.8
    Total
    comprehensive
    income                       0.0     0.0         12.1      0.2      12.3
    Balance at
    31/12/2009    24,684,093    24.7    92.5        188.6      1.0     306.8
    Employee
    stock option
    schemes
    (value of
    employee
    services)                    0.0     0.0          0.6      0.0       0.6
    Capital
    increase by
    exercise of
    stock options      4,450     0.0     0.1          0.0      0.0       0.1
    Dividend to
    be paid                      0.0     0.0       (16.8)      0.0    (16.8)
    Purchase /
    Sale of
    treasury
    shares                       0.0     0.0        (0.7)      0.0     (0.7)
    Total
    comprehensive
    income                       0.0     0.0         30.3      0.3      30.6
    Balance at
    June 30, 2010 24,688,543    24.7    92.6        202.0      1.3     320.6

    For more information, visit Saft at https://www.saftbatteries.com/

    SAFT

    Jill Ledger, Corporate Communications and Investor Relations Director
    Tel: +33-1-49-93-17-77, [email protected]

    FINANCIAL DYNAMICS

    Stéphanie BIA, Tel: +33-1-47-03-68-16, [email protected]
    Yannick DUVERGÉ, Tel: +33-1-47-03-68-10, [email protected]
    Clément BENETREAU, Tel: +33-1-47-03-68-12, [email protected]


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