INGENICO GROUP 2018 full year results - Challenging year - Improved revenue trajectory in the second half 2018 - 2019 EBITDA above €550m -Launch of Fit for Growth transformation plan
|Paris, 12th February 2019|
2018 full year results
Challenging year with 2% organic growth and €488m EBITDA
In line with January 22th, 2019 communication
Improved revenue trajectory in the second half 2018 with 6% organic growth
2019 EBITDA above €550m with a FCF conversion at c. 50%
Launch of Fit for Growth transformation plan
2018 operating & financial performance
Revenues of €2,643 million, up 2% on an organic basis and 5% on a reported basis
EBITDA: €488 million, representing a margin of 18.4%
49% FCF to EBITDA conversion rate, highlighting the strong cash generation
Group net profit attributable to shareholders of €188 million
Proposed dividend of €1.10 representing a 36% pay out
Launch of Fit for Growth transformation plan:
Banks & Acquirers revival through an industrial and commercial redesign
Accelerate Retail growth profile with strategic initiatives and a new operating model
Global transformation plan aiming at improving operational efficiencies and streamlining G&A
Net savings of €35 million and investments of €15 million
2019 financial objectives
Organic growth between 4% and 6%
EBITDA above €550m
c. 50% of FCF/EBITDA conversion
Ingenico Group (Euronext: FR0000125346 - ING), the global leader in seamless payment, today announced its 2018 full-year results.
Nicolas Huss, Chief Executive Officer of Ingenico Group, commented: "As the new CEO, I am very proud of leading Ingenico, which enjoys leading
technologies and positions in integrated payment solutions. 2018 has however been a challenging year. I have now assessed key issues faced in 2018 and set up a new seasoned and international
management team to drive the company repositioning. The Group is already in motion to deliver a 2019 EBITDA above €550 million.
Retail performance will be sustained by ongoing deployment of our direct access to merchant's strategy, and strategic growth initiatives. B&A performance has been affected by adverse market conditions and lack of execution in mature countries in 2018. B&A is thus being repositioned and optimized to benefit from ongoing opportunities such as recovery in Emerging Countries or deployment of Android. Ingenico management team will also be very focused on executing the Fit for Growth transformation plan, together with renewed attention on cash-flow generation.
We are looking forward to detailing our new strategic plan during a Capital Markets Day on April 24th".
|(in millions of euros)||2018||2017*||Year-on-Year Difference|
|Adjusted gross profit||1,048||1,066||-2%|
|As a % of revenue||39.6%||42.5%||-2.9 pts|
|Adjusted operating expenses||(560)||(540)||+4%|
|As a % of revenue||-21.2%||-21.6%||-0.4 pts|
|As a % of revenue||18.4%||21.0%||-2.6 pts|
|Profit from ordinary activities, adjusted (EBIT)||416||453||-8%|
|As a % of revenue||15.7%||18.1%||-2.4 pts|
|Net profit attributable to Group shareholders||188||253||-26%|
|Adjusted free cash flow||285||269||+6%|
|Free cash flow||238||239||-0%|
|Net debt-to-EBITDA ratio||3.1x||2.8x|
|Equity attributable to Group shareholders||1,845||1,832||+1%|
* 2017 reported, restated from IFRS 15 impact
2018 full-year performance
In 2018, revenue totalled €2,643 million, representing a 2% increase on a comparable basis, with an acceleration in the second semester while organic growth reached 6%. On a reported basis revenue was 5% higher than 2017 and was including a negative foreign exchange impact of €110 million.
Over the year, Banks & Acquirers posted a revenue of €1,305 million, a decrease of 4% on comparable basis, but returning to a slight organic growth of 2% in the second semester. On a reported basis the activity decreased by 8% and was including a negative foreign exchange impact of €62 million.
The Retail Business Unit reported a revenue of €1,339 million, showing an increase of 8% over the period on comparable basis, with a strong organic growth acceleration in the second semester reaching double digit. On a reported basis, revenue increased by 22% during the year and was including a negative foreign exchange impact of €48 million.
Adjusted gross profit
In 2018, adjusted gross profit reached €1,048 million, down 2% compared to €1,066 million in 2017, and representing 39.6% of revenues.
Operating expenses contained throughout the year
In 2018, adjusted operating costs were €560 million, representing 21.2% of revenue, compared to €540 million in 2017 when adjusted operating costs represented 21.6% of revenue.
The short term savings plan launched in July 2018 delivered €15 million in the second half of this year.
18.4% of EBITDA margin
EBITDA was €488 million against €526 million in 2017, representing an EBITDA margin of 18.4%, down 1.9 points compared to the 2017 pro forma figures and 2.6 points compared to 2017 on a reported basis.
The Banks & Acquirers EBITDA stood at €277 million, down from €371 million last year. It represented a 21.2% EBITDA margin, down 4.8 points compared to the 26% pro forma EBITDA margin of 2017, significantly impacted by the negative geographical mix.
The Retail EBITDA came in at €210 million, up 18% versus last year. The margin this year represented 15.7%, up 1.9 points compared to the 2017 pro forma EBITDA, driven by the repositioning of the business unit carried out over the past two years.
EBIT and operating income
EBIT margin represented 15.7% of revenue and reached €416 million, compared to €453 million in 2017.
The other income and expenses reached €-48 million compared to €-30 million in 2017. The increase is mainly due to reorganization and M&A related costs. The operating income also includes price purchase allocation costs that represented €90 million in 2018 compared to €52 million in 2017 (see exhibit 4).
After taking into account the other income & expenses and price purchase allocation above described, operating income was €278 million (10.5% of revenue), against €371 million in 2017 (14.8% of revenue).
Net profit attributable to shareholders
The financial results account for €-38 million compared to €-27 million in 2017. Income tax were reduced to €52 million in 2018 from €86 million in 2017. This improvement is mainly explained by the
US tax reform and a more favourable change in the country mix. Those changes led to an effective tax rate for the Group of 21.5%, against 25.0% in 2017.
In 2018, Group net profit attributable to shareholders came in at €188 million, against €253 million in 2017.
A strong cash generation despite increase of non-recurring expenses
The adjusted free cash flow4 was up 6% in 2018 at €285 million, i.e. a conversion rate of 59%. The group's operations, post other income and expenses, generated a free cash flow of €238 million, i.e. an FCF/EBITDA conversion ratio of 49%. The capital expenditures increased as expected to €117 million against €88 million in 2017.
The Group's net debt increased slightly to €1,518 million against €1,471 million one year ago. This was mainly due to the purchase of the 20% stake in Ingenico Holdings Asia Limited, that of Airlink and €87 million of Ingenico's shares buyback. The ratio of net debt to EBITDA is up to 3.1x from 2.8x at the end of 2017, but down from the first half of 2018 that landed at 3.6x.
Proposed dividend of €1.10 per share
In line with the Group's dividend policy, a proposal to distribute a dividend of €1.10 per share will be presented to the Annual General Meeting of shareholders on 11th June 2019, representing a distribution rate of 36%. This dividend will be payable in cash or shares, according to the holder's preference.
Performance in the fourth quarter of 2018
||FY 2018||Q4 2018|
|€m||% Change||€m||% Change|
|Banks & Acquirers||1,305||-4%||-8%||364||1%||-1%|
In the fourth quarter of 2018, Ingenico Group reported a revenue of €727 million, up 5% on a comparable basis compared to the fourth quarter 2017. On a reported basis, revenue increased by 5% including a negative foreign exchange impact of €17 million.