PR Newswire/Les Echos/
? ? NINE-MONTH 2008 BUSINESS REVIEW
? FULL-YEAR 2008 RESULTS FORECAST
? FULL-YEAR 2009 FINANCIAL TARGETS
The economic and financial environment in which Chargeurs operates has
deteriorated very significantly since September 2008, leading to a contraction
in the markets served by the Group's main customers. This situation will
severely affect the Group's fourth-quarter financial performance and negatively
impact its full-year results.
Consequently, Chargeurs has taken even stronger corrective action to put the
Group back on the path to profitability in 2009.
Consolidated revenue declined 13% over the first nine months to €476 million
based on a comparable scope of consolidation.
Plummeting apparel sales in most Western countries caused a sudden slowdown in
the garment making production chain and, further upstream, in the textile
business. Faced with declining purchasing power and worried about their
economic future, consumers are currently scaling back clothing purchases in an
attempt to balance the family budget.
At the same time, weakening demand in the construction industry in the US and
Western Europe reduced Chargeurs Protective Films' revenue.
The Group's operations were also hampered and hurt by higher and/or extremely
volatile prices for oil, energy and several other raw materials, as well as for
such currencies as the US dollar, Australian dollar, South African rand,
British pound and South Korean won.
Given the persistence of these unfavorable factors in the fourth quarter,
Chargeurs has decided to step-up the plan initiated at the end of the first
half to align its business to its markets and eliminate loss-making areas.
Together, these measures have resulted in exceptional restructuring costs of €31
.1 million that will lead to an operating loss, estimated at €17.6 million for
the full year. Excluding exceptional expenses, the Group would have posted
operating income of €13.5 million for 2008.
A net loss of around €33 million is expected for the full year on annual
revenue of €617 million.
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ANALYSIS BY OPERATING SEGMENT
? Chargeurs Protective Films
Full-year data 2007 Forecast 2008 Pro forma 2008 Target 2009
(in € millions) (*)
Revenue 208.3 199 199 191
Operating income 16.4 12.8 12.8 13.4
(*) Excluding exceptional measures
Chargeurs Protective Film's revenue declined 6% in the first nine months of the
year, demonstrating strong resilience at a time when new housing starts
plummeted by 31% in the United States and 28% in the five largest countries of
Europe.
The business anticipates full-year revenue of €199 million and operating income
of €12.8 million despite the negative impact over the first three quarters of
the euro's rise against the US dollar, British pound, South Korean won and
Chinese renminbi.
Looking forward to 2009, Chargeurs Protective Film sees revenue declining 4% to
€191 million. An improved euro/dollar exchange rate and lower oil prices should
help reduce the constraints weighing on operating profitability.
As a result, an operating income target of €13.4 million has been set for 2009.
? Chargeurs Interlining
Full-year data 2007 Forecast 2008 Pro forma 2008 Target 2009
(in € millions) (*)
Revenue 251 225 225 217
Operating income 11 (10.6) 5.4 7
(*) Excluding exceptional measures
Chargeurs Interlining's nine-month revenue was down 9.5% from the year-earlier
period due to lower volumes in France, Italy, Spain and Germany, changes in the
scope of consolidation and an unfavorable exchange rate against the US dollar
and linked currencies such as the South Korean won and the Hong Kong dollar.
The business anticipates full-year revenue of €225 million for 2008.
Drastic measures have been taken to reduce the business' fixed costs and align
production resources to the sudden slowdown in the European and North American
markets. Two manufacturing facilities out of three will be closed in the Czech
Republic as the koruna's appreciation has made production costs prohibitive.
The impact of the alignment plan will be fully reflected in 2010 operating
income. The remaining unit in the Czech Republic will serve the high-end market
, notably in Italy. P. 2
Restructuring is also being carried out in France.
Taken together, these measures represent a cost of €16 million and concern 217
people. As a result, the business expects to post an operating loss of around €
10.6 million for full-year 2008.
Excluding restructuring costs, operating income would amount to €5.4 million
for the year.
In 2009, Chargeurs Interlining will continue to focus on its Asian units,
primarily in China and Bangladesh, while stepping up technological
diversification efforts that offer attractive growth prospects.
It has set targets of €217 million for revenue and €7 million for operating
income for 2009.
Chargeurs Wool
?
Full-year data 2007 Forecast 2008 Pro forma 2008 Target 2009
(in € millions) (*)
Revenue 254.2 193 193 143
Operating income 5.5 (6.6) (2.3) 1.5
(*) Excluding exceptional measures
Chargeurs Wool's revenue contracted by 22% in the first nine months due to a
sharp decline in business volume and, to a lesser extent, lower raw wool prices.
Full-year revenue is forecast at €193 million for 2008.
The business has accelerated its withdrawal from manufacturing operations,
pulling out of combing in Australia, New Zealand and South Africa. It is now
focused industrially on competitive combing operations in China and South
America. The closures and divestments will represent an expense of €4.3 million
in 2008 and affect 218 people.
Lower volumes and the resulting erosion in margins have made it difficult to
absorb fixed costs, leading to an operating loss in 2008.
Excluding restructuring expenses, the operating loss would have come to €2.3
million.
Chargeurs Wool expects to generate operating income of €1.5 million in 2009 on
revenue of €143 million.
INVESTMENTS IN ASSOCIATES
Due to the unprecedented deterioration of the apparel market since September
2008, Fashion Company, the Group's joint venture with Holfipar, will generate
losses in 2008. This situation is reflected in Chargeurs' estimated 2008 results
.
P. 3
CONSOLIDATED TARGETS FOR FULL-YEAR 2009
Full-year data Pro forma Forecast 2008 Pro forma 2008 Target 2009
(in € millions) 2007 (2)
(1)
Revenue 713.5 617 617 551
Operating income 27.7 (17.6) 13.5 19
Net income 15.6 (33) 1.8 9
(1) Restated as if Chargeurs Fashion had been excluded from the scope of
consolidation from January 1, 2007.
(2) Excluding exceptional measures
The Group's targets for full-year 2009, based on business forecasts that
continue to assume a recession in our markets, as projected by the OECD, call
for revenue of €551 million, operating income of €19 million and net income of €
9 million.
However, given the limited visibility for 2009, demand in the Group's markets
may decline more than anticipated in the assumptions used to establish these
targets. Chargeurs will therefore keep a close eye on the financial crisis'
impact on the business environment, step up efforts to generate cash flow,
reduce costs and pay down debt, and inform the financial markets of any
corrections that may be required.
FINANCIAL POSITION Dec. 31, 2007 Forecast Target
(in € millions) Dec. 31, 2008 Dec. 31, 2009
Net debt 55 66 49
Equity 243 203 212
Gearing (%) 23 33 23
Equity per share (in euros) 23.2 19.5 20.4
(see Appendix: Q3 analysis)
November 14, 2008
Corporate Communications
Tel.: +33 (0)1 71 72 31 65 - www.chargeurs.fr
P. 4
APPENDIX
Third-quarter and nine-month revenue
(in € millions) Third quarter Nine months
2008 Pro forma 2008 Pro forma
2007 (1) 2007 (1)
Chargeurs Protective Films 49 50 153 163
Chargeurs Interlining 54 60 171 189
Chargeurs Wool 38 67 152 194
TOTAL 141 177 476 546
(1) Restated as if Chargeurs Fashion had been excluded from the scope of
consolidation from January 1, 2007.
Analysis of third-quarter revenue
The 20% decrease from third-quarter 2007 is primarily attributable to the 43%
decline in Chargeurs Wool's sales caused by lower raw wool prices and volumes.
Reduced volumes also led to a 10% decrease in Chargeurs Interlining's revenue.
Sales at Chargeurs Protective Films were stable.
November 14, 2008
Financial Calendar 2009
Full-year 2008 Revenue January 16
Full-year 2008 Financial Results March 6
Q1 2009 Financial Information May 7
Annual Meeting of Shareholders May 7
P. 5
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