Adler Modemärkte AG: Focus on Improved Profitability and Free Cash Flow in 2017
Free Cash Flow Increases Significantly to EUR11.4 million in 2016Focus on Improved Profitability and Free Cash Flow in 2017 EBITDA Expected to Increase to EUR 27-30 Million Despite Difficult Environment
Haibach (near Aschaffenburg), 16 March 2017: Despite a 1.3% improvement in revenue, which amounted to EUR 169.6 million in Q4, Adler Modemärkte AG did not manage to realise prior-year revenue figures in 2016 overall. Given the highly difficult environment for the textile retail industry in general, the Company posted a 3.8% drop in revenue (-4.6% like-for-like) to EUR 544.6 million in the year under review (2015: EUR 566.1 million). However, the Company did succeed in improving online revenue as projected, by 34% to EUR 8.9 million. This corresponds to a 1.6% share of consolidated revenue. The aim is to increase that share to at least 10% over the coming five years.
Final quarter of the year sees substantial year-on-year earnings improvement The ADLER Group's cost of materials decreased less markedly than did revenue, by 1.7% to EUR 256.5 million. Accordingly, gross profit declined from EUR 304.9 million to EUR 288.1 million and the gross profit on goods sold fell as expected from 53.9% to 52.9%. Since the cost efficiency measures introduced in 2016 had an increasingly noticeable positive effect, the margin rose from 56.6% to 57.0% in the final quarter of the year, however. Although EBITDA fell from EUR 33.3 million to EUR 23.3 million over the year as a whole, thanks to the solid development in the fourth quarter, this figure was significantly higher than the target corridor of EUR 14-17 million that had been defined on 20 October 2016. Earnings before interest and taxes (EBIT) fell from EUR 17.0 million to EUR 6.5 million, and earnings before taxes fell from EUR 12.1 million to EUR 1.7 million. After taxes, ADLER reported only a slight profit of EUR 0.4 million (2015: EUR 7.9 million); however, taking into consideration that a loss of EUR 18.3 million had been reported at the end of the first nine months of the year, the very clear improvement in the closing quarter of the year is evident. Earnings per share was also slightly positive at EUR 0.02 (previous year: EUR 0.43).
"The cost reduction measures which we had initiated in 2016 had an increasingly positive effect in the fourth quarter. In light of the generally difficult industry environment, the results generated can truly be considered a success. We intend to build on that success in 2017 and increase EBITDA substantially to EUR 27-30 million", said Lothar Schäfer, CEO of Adler Modemärkte AG.
Free cash flow increases to EUR 11.4 million - balance sheet structure remains sound Despite the decline in revenue and earnings, the Company successfully realised significant improvements in its cash flow thanks to cost savings, reduced investments and efficient working capital management. Operating cash flows increased from EUR 19.5 million to EUR 22.2 million, and free cash flow even increased from EUR 2.9 million to EUR 11.4 million. A negative figure of EUR -20.2 million had been reported for that metric at the end of the first nine months. At the reporting date, ADLER continues to boast a highly sound balance sheet structure. For instance, with total assets reduced from EUR 243.4 million to EUR 222.6 million, the equity ratio amounted to 42.8% and was thus virtually at the same level as in the previous year (43.1%). The decrease in cash and cash equivalents from EUR 52.1 million at the end of 2015 to EUR 42.8 million as at 31 December 2016 was limited thanks to the positive development in the fourth quarter. Net financial liabilities rose during the same period from EUR 24.4 million to EUR 28.4 million. By comparison, at the end of September 2016 that figure had been significantly higher at EUR 61.5 million.
EBITDA expected to increase to EUR 27-30 million in 2017 despite general conditions which remain difficult The positive effects resulting from the cost efficiency measures are not expected to be fully evident until 2017. Approximately EUR 10 million in savings overall are expected in connection with optimised procurement processes, personnel expenses, marketing expenditures and other outlays. Adler Modemärkte AG therefore remains confident of a significant increase in earnings for financial year 2017 despite the persistently difficult conditions. The Executive Board expects EBITDA to increase to EUR 27-30 million. Despite the expected substantial improvements in online sales, the weakness in the textile retail industry is likely to lead to a slight decline in consolidated revenue in 2017.
Given that the Company only generated a small net profit in 2016 and in light of the Company's continued focus on a conservative CAPEX strategy and cash flow management against the backdrop of the current conditions in 2017, the Executive Board and the Supervisory Board will not propose the distribution of a dividend for the 2016 financial year to the Company's Annual General Meeting on 24 May 2017 (previous year: EUR 0.50). The slowdown in the Group's expansion can be seen in the fact that ADLER plans to open only one new store in 2017 (186 ADLER stores as at 31 December 2016).
The basis for the Company's previously-announced sustainable long-term growth remains intact.
Adler Modemärkte AG's 2016 annual report is now available for inspection or download from the Company's website at the following link:http://www.adlermode-unternehmen.com/en/investor-relations/reports-and-publications/annual-reports/2016
ADLER Group's key performance indicators
(EUR million) 2016 2015 Change Revenue 544.6 566.1 -3.8% Gross profit 288.1 304.9 -5.5% Earnings before interest, taxes, depreciation and amortisation (EBITDA) 23.3 33.3 -30.0% Earnings before interest and taxes (EBIT) 6.5 17.0 -61.8% Earnings before taxes (EBT) 1.7 12.1 -86.0% Consolidated net profit for the year 0.4 7.9 -94.9% Earnings per share (in EUR) 1) 0.02 0.43 -95.3% Operating cash flow 22.2 19.5 13.8% Free cash flow 11.4 2.9 293.1%
1) Based on 18,510,000 no-par value shares
31 Dec. 2016 31 Dec. 2015 Change Total assets (EUR million) 222.6 243.4 -8.5% Equity (EUR million) 95.8 104.9 -8.7% Equity ratio (in %) 43.0 43.1 - Debt/equity ratio 1.32 1.32 - Cash and cash equivalents (EUR million) 42.8 52.1 -17.9% Employees 3,984 4,203 -5.2% Total number of stores 183 177 3.4%
Contact: Adler Modemärkte AG Investor Relations Katrin Schreyer Tel.: +49 6021 633 1828 Email: email@example.com
16.03.2017 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.deLanguage: English
Company: Adler Modemärkte AG Industriestraße Ost 1-7 63808 Haibach
Germany Phone: +49 (0) 6021 633 0 Fax: +49 (0) 6021 633 1299 E-mail: firstname.lastname@example.org Internet: www.adlermode.com ISIN: DE000A1H8MU2 WKN: A1H8MU Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange End of News DGAP News Service