Ireland | 27 October 2015 08:34
Berentzen-Gruppe Aktiengesellschaft / Release of an announcement according to Article 37x of the WpHG [the German Securities Trading Act]
27.10.2015 08:34
Interim report according to Article 37x of the WpHG, transmitted by
DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Compared with the equivalent period last year, the Berentzen Group improved
its consolidated revenues, adjusted consolidated operating profit
(consolidated EBIT) and adjusted consolidated operating profit before
interest, taxes, depreciation and amortisation (consolidated EBITDA) in the
first three quarters of the 2015 financial year. Consolidated revenues
excluding spirits taxes have risen to EUR 115.6 (109.6) million, while the
adjusted consolidated EBIT has increased to EUR 4.7 (2.5) million and the
adjusted consolidated EBITDA to EUR 10.7 (7.8) million.
(1) Business performance and economic position
(1.1) Overview of business performance and operating result
The Berentzen Group generated consolidated revenues of EUR 115.6 (109.6)
million in the first nine months of the 2015 financial year. The total
operating performance amounted to EUR 118.7 (114.5) million.
Adjusted consolidated EBIT increased to EUR 4.7 (2.5) million, with
adjusted consolidated EBITDA improving to EUR 10.7 (7.8) million
accordingly.
The results for this reporting period are essentially based on the
significant developments and events described below.
(1.2) Sales and revenue performance
By the end of the third quarter of 2015, the Berentzen Group had sold a
total of 55.7 (54.0) million 0.7-litre bottles in the Spirits segment
together with the Other segment which notably includes international
activities involving branded spirits. Of that total, domestic sales
accounted for 47.0 (44.0) million 0.7-litre bottles while international
sales amounted to 8.7 (10.0) million 0.7-litre bottles.
Sales of branded spirits declined by 5.4% overall compared with the
equivalent period last year to total 18.0 (19.1) million 0.7-litre bottles
as of 30 September 2015.
In domestic activities involving branded spirits, sales of the two core
brands 'Berentzen' and 'Puschkin' performed well. The 'Berentzen' umbrella
brand recorded a slight increase of 0.3% over the level reported for the
first nine months of the 2014 financial year. At the same time, domestic
sales of the 'Puschkin' brand rose faster, expanding by 2.9%. In contrast,
declining sales were recorded in other branded goods activities, notably
including traditional spirits, in line with the general market trend,
meaning that total domestic sales of branded spirits suffered an aggregate
decline of 0.6%.
International sales of branded spirits contracted by 21.1% overall.
Alongside the persistent structural weaknesses in the markets in the Czech
Republic and the Benelux states, the ongoing conflict in Ukraine and Crimea
had a negative effect on the sales performance in the markets of eastern
Europe in particular and in the cross-border business in this and
neighbouring regions. The market in Turkey was also affected by this. The
absence of Russian tourists from the holiday centres caused mainly by these
factors coupled with the weakness of the Russian currency, together with
growing security concerns due to domestic political unrest and civil wars
in neighbouring countries, led to a fall in business in the local
distribution channel of the hotel trade. This could not be offset by a
strong sales performance in the retail trade. Against this backdrop, the
share of exports in the total sales of branded spirits fell from 23.7% to
19.8%.
The sales performance in the spirits business involving private label
products was healthy overall, albeit uneven. Whereas international
activities contracted for similar reasons like the international branded
spirits business and suffered a decline in sales of 6.7%, domestic sales
increased by 10.6% in the first nine months of the 2015 financial year
compared with the equivalent period last year.
Including the international activities involving branded spirits grouped
together in the Other segment, the revenues in the Spirits segment of the
Berentzen Group excluding spirits taxes totalled EUR 69.8 (70.9) million in
the first nine months of the 2015 financial year. Total spirits revenues
including spirits taxes increased by around 5.6% over the equivalent period
in the previous year.
The sales volume in the Non-alcoholic Beverages segment fell by 7.4% to
1.21 (1.31) million hectolitres during the first nine months of the 2015
financial year. Within this total, production of own-brand regional mineral
waters and carbonated soft drinks increased by 0.4% and 2.7% respectively
over the equivalent period last year. With regard to carbonated soft
drinks, the natural energy drink 'Mio Mio Mate' enjoyed revenue growth of
38.2% and is now distributed throughout almost all of Germany. Sales in the
business involving contract bottling proved more than stable, expanding by
0.3%. The new franchise business involving the branded beverages of the
Sinalco Group was launched in this segment of the corporate group as
planned at the beginning of January 2015. For sales structure reasons as
well as due to delays as a consequence of demand-related availability
bottlenecks in the delivery of POS systems, the activities involving
franchise brands remained much lower than in the first three quarters of
the previous year than expected.
The Non-alcoholic Beverages segment recorded revenues of EUR 33.5 (38.7)
million.
The Fresh Juice Systems segment that has been part of the corporate group
since the start of the fourth quarter of 2014 achieved a very good sales
performance overall in terms of all the main system components in the first
nine months of the current financial year. Sales of juicers and oranges
increased by 39.8% and 20.4% respectively, while sales of bottling
equipment rose by 36.2%. Taking into account all system components,
tangible increases in sales were achieved in both the domestic Austrian
market and in international operations, notably in France and Poland as
well as Germany.
The Fresh Juice Systems segment generated revenues of EUR 12.3 (pro forma:
9.2) million in the first three quarters of the 2015 financial year.
Against the backdrop of the sales and revenue performance described above,
which differed across the four segments, the consolidated revenues of the
Berentzen Group rose by an aggregate of 5.5% in the first three quarters of
the 2015 financial year.
(1.3) Financial performance
At EUR 4.7 (2.5) million, the adjusted consolidated operating profit -
which includes neither net financial income nor non-recurring effects -
proved to be much better in the first nine months of the 2015 financial
year than in the same period of the previous year. The adjusted
consolidated operating profit before interest, taxes, depreciation and
amortisation increased to EUR 10.7 (7.8) million accordingly.
This good financial performance by the corporate group benefited in part
from the positive contribution to profits from the Fresh Juice Systems
segment which was included in the Interim Report within a second half year
for the first time.
This segment's contribution to profits is reflected in the higher total
operating performance and the stronger consolidated gross profit together
with an improved gross profit ratio, even if the Spirits segment also
accounted for a considerable proportion of this.
The operating costs in the corporate group increased in absolute terms
compared with the first three quarters of the 2014 financial year, albeit
to a lesser extent than accrued to the Fresh Juice Systems segment. In
adjusted terms, the operating costs in the corporate group declined overall
accordingly, mainly thanks to lower expenditure on marketing and trade
advertising. Although the budgeted costs for the Group's foreign
subsidiaries operating in the international branded spirits business
continued to depress the consolidated operating profit, this happened to a
much lesser extent than in the equivalent period last year.
The impact on the sales and revenue performance was spread across the
financial performance in the individual segments accordingly. Whereas the
Spirits and Fresh Juice Systems segments reported stronger results than in
the equivalent period in the previous year, profits were down in the
Non-alcoholic Beverages segment and the Other segment encompassing mainly
international activities involving branded spirits.
The corporate group had a total of 494 (479) employees on 30 September
2015.
(1.4) Cash flows and financial position
Cash flows
The total funding of the Berentzen Group since the end of the 2014
financial year is as follows.
Since October 2012, the long-term funding of the corporate group has taken
the form of an unsecured bond issued by Berentzen-Gruppe Aktiengesellschaft
with a volume of EUR 50.0 million and a maturity of five years. This bond
is listed in the Open Market section of Deutsche Börse AG (OTC segment of
the Frankfurt Stock Exchange) in the Entry Standard segment for bonds. The
net proceeds of EUR 48.9 million arising from the issue of the bond
attracting nominal interest of 6.50% p.a. have been used to date to fund
the business activities of Group companies operating outside of Germany and
to build up stocks of scarce raw materials and semi-finished products. T M
P Technic-Marketing-Products GmbH based in Linz, Austria, was acquired at
the start of the fourth quarter of 2014 using funds raised by the bond. The
Fresh Juice Systems segment in the Berentzen Group was formed to
accommodate the acquisition of this company.
Alongside this long-term funding, the drawdown of factoring lines
represents a further focal point of gross external funding. The ensuing
total volume of funding available to the Berentzen Group on the basis of
two existing factoring agreements running until March 31, 2018 amounts to
EUR 45.0 (45.0) million. Added to this is a formally unlimited factoring
line under three further central settlement and factoring agreements. In
the first nine months of the 2015 financial year, therefore, there was an
average gross funding volume of EUR 8.2 (8.5) million.
The volume of funding from credit agreements with the providers of working
capital to the Berentzen Group totals EUR 4.1 (5.0) million, including two
working capital lines totalling an aggregate of EUR 1.6 million made
available to international Group companies and after the Berentzen Group
had returned a working capital line of EUR 2.5 million that was not
utilised at any time and was not longer required at the start of the fourth
quarter of 2014 with effect from December 31, 2014.
No repayments on long-term loans were made; the ongoing repayment of short-
and medium-term funding instruments was carried out as planned. The
consolidated net cash inflow arising from operating, investing and
financing activities amounted to EUR 12.3 (9.5) million in the first three
quarters of the 2015 financial year.
Financial position
The non-current assets continue to be funded by non-current liabilities
with matching maturities.
The disposal in June 2015 of a property at the Haselünne facility allocated
to the Spirits segment that was no longer required for operating purposes
was largely completed during the reporting period.
The working capital committed has declined since the year-ago reporting
date. Despite an increase in inventories and trade receivables, this can be
attributed mainly to an increase in liabilities, although the individual
asset and liability items included in the total did develop in different
ways.
The consolidated equity ratio at 30 September 2015 was 25.6% (28.3%), while
the consolidated equity ratio adjusted for cash and cash equivalents was
37.2% (44.9%).
(1.5) Significant events during the reporting period
Conversion of preferred shares into ordinary shares
The extraordinary general meeting of the ultimate parent of the Berentzen
Group, Berentzen-Gruppe Aktiengesellschaft, on 20 July 2015 and the special
meeting of the company's preferred shareholders on 20 July 2015 adopted a
resolution to convert the 4,800,000 shares of no-par preferred stock of the
company without voting rights into shares of no-par ordinary stock with
voting rights, with the preferential rights to profits abrogated. At that
date, the capital stock of Berentzen-Gruppe Aktiengesellschaft was divided
into 4,800,000 shares of no-par ordinary stock with voting rights and
4,800,000 shares of no-par preferred stock without voting rights.
The conversion of the previously listed 4,800,000 shares of no-par
preferred stock without voting rights into shares of ordinary stock with
voting rights took effect on 28 September 2015 when the amendments to the
company's Articles of Association were filed in the Commercial Register.
The shares of preferred stock were delisted from the Frankfurt Stock
Exchange on the same day after the markets closed.
Following completion of the conversion, the capital stock of
Berentzen-Gruppe Aktiengesellschaft consists of a single class of share
divided into 9,600,000 shares of no-par ordinary stock. These were admitted
for trading on the regulated market (General Standard) of the Frankfurt
Stock Exchange on 29 September 2015 and have been tradable since 30
September 2015.
Purchase of own shares
On July 21, 2015, the Executive Board of Berentzen-Gruppe
Aktiengesellschaft decided to make use of the authorisation granted by the
extraordinary general meeting on July 20, 2015 to acquire own shares in
accordance with Section 71 (1) No. 8 AktG and, starting July 27, 2015 until
further notice, to acquire shares of preferred stock and, after completion
of the conversion of the shares of preferred stock into shares of ordinary
stock as resolved on July 20, 2015 by the extraordinary general meeting and
the special meeting of the preferred shareholders on the same day, shares
of the company's ordinary stock up to a total volume (excluding incidental
acquisition costs) of EUR 1.5 million on the stock exchange. The total
number of shares purchased by Berentzen-Gruppe Aktiengesellschaft under
this stock buy-back programme by October 26, 2015 amounted to 133,959
no-par shares; this represents 1.40% of the capital stock. The shares may
be used for any or all of the purposes listed in the authorisation granted
by the general meeting.
Other significant events
No other significant events occurred during the report period.
(2) Outlook
(2.1) Underlying conditions
In October 2015, the International Monetary Fund (IMF) again reduced its
forecast for global economic growth in 2015 by 0.2 percentage points to
3.1%. In contrast, the IMF reaffirmed its most recent forecast for the
eurozone and Germany dated July 2015, with both expected to enjoy growth of
1.5%. The leading economic research institutions in the German-speaking
area - including the German Institute for Economic Research (DIW Berlin) -
were even more optimistic with regard to the development of gross domestic
product in Germany in their Joint Economic Forecast that was published at
the same time; the anticipated growth of 1.8% confirms the forecast made by
DIW Berlin in June 2015. The likely development of the underlying economic
conditions, which is practically unchanged compared with the first three
quarters of the financial year, may benefit the segments of the Berentzen
Group through to the end of 2015, although the company believes that it
will probably only have a limited tangible impact. Depending on how events
unfold, however, global political crises and conflicts that have expanded
during the course of 2015, especially in the Middle East and Ukraine but
also in parts of Europe, could continue to have a visible negative effect.
This has already been the case since the start of the year in some of the
markets served by the Berentzen Group.
Accordingly, the German and also the - heavily fragmented - European
spirits market in its entirety can look forward to stagnating sales at best
and cannot rely on any major outside growth stimulus. Furthermore, the
experience gained in recent years indicates ever more imponderables for the
German market in particular regarding what have traditionally been strong
sales towards the end of the year - a period which is proving ever harder
to reliably forecast. The sales performance in the other international
spirits markets served by the Berentzen Group will similarly again prove
uneven, partly due to the markets in the Czech Republic and the Benelux
states. The UK-based market researcher Euromonitor is forecasting a further
minor contraction of the Dutch spirits market, whereas the expectations for
the Czech market remain clearly negative from the Berentzen Group's point
of view. Uncertainty about the market trends continues to surround the
Turkish market. Even if the market researchers from Euromonitor recently
considered sales growth to be possible for the Turkish spirits market as a
whole in the current year, it remains difficult to make valid sales
forecasts in light of a series of imponderables such as regulatory
obstacles, the present domestic social and political circumstances and
conflicts close to its borders coupled with the consequences of the
economic crisis in Russia. The domestic and international activities
involving private label products are expected to stabilise at around the
same high level as recent years.
For our activities involving non-alcoholic beverages, the industry-specific
underlying economic conditions remain mixed, depending on the product
category. The Verband Deutscher Mineralbrunnen (VDM), a German mineral
water industry association, recently predicted a positive sales trend for
natural mineral water in 2015 and contracting sales of soft drinks at the
same time, albeit with a stable sales situation in the market overall.
For the Fresh Juice Systems segment, an internal assessment leads the
Berentzen Group to believe that the ongoing trend for sensible, healthy
diets, and hence the positive development of sales and revenues involving
fresh drinks, will persist, with a correspondingly positive impact on the
sales performance described above.
(2.2) Business activities
Over the remaining months of the 2015 financial year, the commercial
activities of the Berentzen Group will continue to focus overall on
generating growth and boosting, or at least stabilising, profitability by
means of a strategic optimization and alignment of the individual segments.
In this context, the corporate group will concentrate more heavily on
fast-growing segments covering fresh and sustainability-oriented drinks in
order to free itself better from domestic and international industry risks
arising from the market demand for spirits and sugary non-alcoholic
beverages.
In the Spirits segment, the main goal is to persist with the revitalisation
of the 'Berentzen' brand that has been undertaken over the last two
financial years with a focus on the two core brands 'Berentzen' and
'Puschkin'. Regaining momentum in long-standing international markets,
mainly in the Czech Republic and the Benelux states, remains the main
objective in international activities involving branded spirits. In terms
of international activities in the Turkish market, the central objective is
essentially to achieve further sales and revenue growth, or at least to
stabilise their levels at the year-ago totals in each case in light of the
difficult underlying conditions as described above, and to improve the
gross profit. The sales strategy that has been initiated in the spirits
activities involving private label products will continue to be applied -
in line with the trend for branded premium products - mainly involving the
roll-out of innovative products and promotions.
The Non-alcoholic Beverages segment continues to face two main challenges.
The first consists of pressing ahead with the further development of the
own-brand regional waters and trend brands, concentrating on the products
'Mio Mio Mate' and 'Mio Mio Cola', not only through to the end of the
current financial year but also beyond. This was one of the reasons behind
the decision taken by the Berentzen Group at the beginning of September
2015 to close the Norden facility used by the Non-alcoholic Beverages
segment exclusively to exploit and bottle 'Sankt Ansgari' mineral water by
the end of the year. This product will be gleaned from a newly tapped
source at the Haselünne facility and also bottled there in future. The move
is part of a plan to expand the bottling variants and exploit this
opportunity to extend the distribution area for this mineral water. The
second main challenge is to successfully manage the franchise business with
the branded beverages of the Sinalco Group that commenced at the start of
the year and to integrate the contract bottling of these products taking
place at the same time. Against the backdrop of the developments over the
first nine months of the 2015 financial year, these activities will
continue to be prioritised, not only over the final quarter of the current
financial year but also beyond. Accordingly, the challenge continues to be
to cushion the consequences of the barriers to implementation mentioned
above to the greatest extent possible.
The primary goals for the Fresh Juice Systems segment remain to continue
expanding its activities in international markets and - supported by an
additional distribution in the German market completed by the sales
organisation of the Non-alcoholic Beverages segment in April 2015 - to
unlock the sales potential in Germany, together with the prospective
successive consolidation of the domestic Austrian market. These goals are
to be furthered by the introduction of more technical innovations in the
system component of juicers. The roll-out of a new generation of
particularly compact juicers starting in the fourth quarter of 2015 will
make it possible to tap new sales channels, especially in the hospitality
sector.
(2.3) Anticipated performance of the corporate group
The forecasts for the 2015 financial year stated in the annual report for
the 2014 financial year and partly updated in the Group Half-yearly
Financial Report 2015 are each based on an unchanged corporate structure
compared with the end of the 2014 financial year and do not include any
forecast-related non-recurring effects.
Based therefore on the assumption of organic development in the corporate
group, the Berentzen Group largely reaffirms the forecasts it made in the
annual report for the 2014 financial year, a few of which were updated in
the Group Half-yearly Financial Report 2015, given the anticipated
development for the 2015 financial year as described above. With regard to
the total operating performance and the adjusted consolidated operating
profit, the corporate group is reiterating its expectation that both will
improve tangibly. In terms of financial performance in the 2015 financial
year, the Berentzen Group currently expects to record positive segment
results (contribution margin after marketing budgets) that are considerably
higher in the Spirits segment and slightly higher in the Other segment that
mainly encompasses the international activities involving branded spirits.
The Non-alcoholic Beverages segment is forecast to record a tangible
decline in its segment result over the 2015 financial year as a whole due
mainly to the development in the year to date of the delayed start-up of
the franchise business. Regarding the Fresh Juice Systems segment that has
only been part of the corporate group since October 2014, the Berentzen
Group is continuing to predict a positive segment result that is
significantly higher than the level achieved in the 2014 financial year on
account of the contributions to profits that are attributable to the
corporate group for a whole year for the first time, among other factors.
All in all, the Berentzen Group has no new information to suggest that the
significant forecasts and other statements regarding the anticipated
development of the corporate group for the 2015 financial year made in the
2014 Annual Report and partially updated in the Group Half-yearly Financial
Report 2015 have changed materially, even if as reported above some changes
have occurred regarding the forecasts for individual segment results. To
summarize, the corporate group is again expected to enjoy a healthy
improvement in the financial performance and a practically unchanged good,
solid financial position in the 2015 financial year.
The actual business performance depends on the general economic and
industry-specific environment and may be negatively affected by more
heavily adverse changes in the underlying conditions than described. Both
positive and negative deviations from the forecast may result from not only
the opportunities and risks described in the Report on opportunities and
risks included in the annual report for the 2014 financial year and partly
updated in the Group Half-yearly Financial Report 2015, but also from
opportunities and risks not identifiable when the present Interim Report
was prepared.
Haselünne, October 27, 2015
Berentzen-Gruppe Aktiengesellschaft
The Executive Board
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Language: English
Company: Berentzen-Gruppe Aktiengesellschaft
Ritterstraße 7
49740 Haselünne
Germany
Internet: berentzen-gruppe.de
End of Announcement DGAP News-Service
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