STEF 2018 revenues and profits up, but higher net leverage “close to the danger zone”

Cold chain logistics provider STEF reported a decent set of annual results last week, with headline revenues and EBIT numbers up significantly against comparable 2017 figures.

The French company said it strengthened in 2018 as it entered, via M&A, “the frozen food market in Italy, solidifying its position as a leader in the French seafood market”, and reinforced its operations by creating six new key sites.

However, it added, its performance “was impacted by year-end traffic problems associated with the disrupted social climate in France and by the positions still to be consolidated in the Netherlands, in Switzerland, and in out-of-home catering in France”.

These factors clearly affected its earning power, while it also highlighted reduced food consumption trends in some European countries (Italy, Spain, Belgium) and a slowdown in agri-food production domestically.

Group turnover rose 9.4% to €3.2bn, mainly thanks to a mix of acquisition, organic growth in France and fuel surcharges. Annual EBIT and net income were 3.7% and 0.8% higher, respectively at €137.2m and €94.4m, than one year earlier.

EBIT and net income margins came in at 4.2% and 2.9%, respectively, against 4.4% and 3% in the prior year. By comparison, 2017 turnover rose 5.4% to €2.97bn, but its EBIT and net income lines rose at a steeper pace.

2018 EBITDA rose about 5% to €253m, as heavy investment grew significantly, but so did gross debts, up to €687m from €577m, with similar trends for net debt. It burned €107m of cash annually, which led to an implied net leverage of 2.6x (2017: 2.1x) – this is closer to the danger zone, although operating cash flows rose.

It has three major units operating under its corporate umbrella: the largest being the domestic transport business Transport France, which saw revenues rise to almost €1.4bn from less than €1.3bn in 2017, with operating income up to €94.2m from €71.9m.

Secondly, turnover from Logistics France grew to €567m from €524m. Operating income halved to €8.30m – however, this was boosted by €6.5m from real estate gains.

International operations, STEF’s second largest sales contributor, recorded turnover of €778m, yet operating income fell to €23.9m from €32.2m.

Finally, the financials of other operating activities, including maritime assets, were mixed.

Exiting chief executive officer Jean-Pierre Sancier said 2018 was a good year in terms of turnover but “a more mixed year in terms of operating income. With moderate growth expected for 2019, the group has decided to focus on improving its service quality, speeding up its specialisation strategy, and continuing to strengthen its transport network in Europe”.

The group said that “in view of the resignation of Francis Lemor and Jean-Pierre Sancier from their respective posts, the board of directors decided to combine the functions of chairman and chief executive officer.” Stanislas Lemor will be appointed chairman and chief executive, and Marc Vettard will be appointed deputy chief executive, it added.

The board of directors has announced a €2.50 dividend per share for the year (2017: €2.45 per share; 2016: €2.25 per share).

Source: Transport Intelligence, March 19, 2019

Author: Alessandro Pasetti


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