Recticel announces annual results of different segments for 2012

Automotive

- REBITDA of EUR 90.7 million (+2.3%) and REBIT of 50.8 million (+7.8%), including a EUR 7.0 million reversal of provisions for early retirement rights
- Sales of EUR 1,319.5 million (-4.3%), mainly due to Automotive and Bedding
- Result of the period (share of the Group) increased by 0.8% to EUR 17.6 million
- Net financial debt(5): from EUR 149.6 million to EUR 172.6 million, including the EUR 23 million financing of a new Insulation plant in Bourges (France)
- Proposal to pay a gross dividend of EUR 0.29 per share

Comments on the consolidated results
Sales: from EUR 1,378.1 million to EUR 1,319.5 million (-4.3%) The weakening sales trend observed in Q1/2012 (-2.4%), in Q2/2012 (-3.2%) and in Q3/2012 (-6.0%) has extended in Q4/2012 (-5.5%), mirroring the weak European economic environment on which the Group relies for 95% of its activity and the softer demand in most end-use markets.
Sales decreased in Automotive (-10.8%) and Bedding (-5.3%), while Flexible Foams and Insulation remained overall stable.

Before exchange rate differences (accounting for +0.9%) and net changes in the scope of consolidation (+0.03%) sales contracted by 5.2%.

Changes in the scope of consolidation in 2012 related to the following elements:
- The Group decided in June 2011 to buy out the 50% joint venture partners in Greece (Teknofoam Hellas) and in Turkey (Teknofoam Turkey). With effect as from 1 July 2011, these subsidiaries are consolidated following the global consolidation method (previously 50% following the proportional consolidation method).

- As from 01 January 2012: first consolidation of Recticel India Private Limited, which started up in the course of 2011 (previously not consolidated).

REBITDA: from EUR 88.6 million to EUR 90.7 million (+2.3%)
The Group substantially compensated the contribution lost due to the lower sales volumes through the implementation of structural productivity and efficiency improvement measures throughout the entire supply chain. In addition the raw material cost increases were passed on into the selling prices, while the average market price of raw materials reached a new all time record over the year 2012.

Furthermore, considering the changes in the Belgian legislation with regard to early retirement rights and the Group’s confirmed policy to maintain employability of its senior workforce, the Group reversed EUR 7.0 million of accumulated provisions for early retirement rights. This reversal is included in the reported REBITDA.

Sales
Sales in Flexible Foams decreased by 1.3% from EUR 596.2 million to EUR 588.3 million. The Comfort sub-segment reported stable sales (EUR 363.1 million; -0.7%) despite deteriorating demand. Demand has been soft in Southern Europe throughout the year, while the overall sales level stabilized in a very competitive market in the other countries. In the second half of the year, signs of a slowdown became tangible in Central & Eastern European countries.

The Technical Foams sub-segment (EUR 203.0 million, -2.2%) suffered from the lower demand from the various industrial and automotive markets, especially in Belgium, France and Spain. On the contrary, sales levels improved strongly in the USA and in emerging markets such as China, Turkey and India.

In the Composite Foams sub-segment (EUR 22.1 million, -3.0%) sales decreased as a result of lower trim volumes linked to improved efficiency, and lower bonded foam sales volumes.

Sales
Sales in Bedding decreased by 5.3% from EUR 292.2 to EUR 276.5 million, impacted by reduced consumer confidence leading to a delay in the purchase of slow moving consumer goods. In that environment, and in line with the market, sales of branded products suffered more than non-branded or private label products.

Sales of the ‘Brand’ sub-segment (EUR 149.8 million; -6.2%) decreased in all countries, except in Poland. However, the successful market introduction of the innovative Geltex technology in 2H/2012 has positively impacted volumes.


Sales evolution in the ‘Private label’ sub-segment (EUR 126.0 million; -4.4%) was mixed. Higher sales in Switzerland and Scandinavia were compensated by significantly lower sales in Austria and to a lesser extent in Poland. Germany and Benelux remained stable.

Changes brought in the management of the division during 2012, including the appointment of a new General Manager Bedding, have immediately been translated in the Q4/2012 performance.

Sales
Sales in Insulation decreased by 1.1% from EUR 223.1 million to EUR 220.7 million. The Building Insulation sub-segment, which accounts for more than 90% of the segment sales, stabilised its turnover at EUR 205.3 million (-0.7%).

After a good performance during the first nine months of the year, Q4/2012 ended 10.5% below last year, as a result of softer construction markets, and an unfavourable comparison basis with Q4/2011 which had been very strong as a result of accelerated ordering from customers following Recticel’s price increase announcement for January 2012.

Throughout the year, the overall activity level has been impacted by soft residential construction and renovation markets in Europe, with the exception of Germany. More specifically, the Dutch market has collapsed, while UK has been soft during the whole year. France and Belgium started to suffer in H2/2012.

Despite a difficult European construction market, structural demand for high performing polyurethane building insulation products is expected to continue to grow on the long term as a result of stricter insulation standards and regulations, higher energy prices and ever growing awareness of the need for more and better insulation.
The Industrial Insulation sub-segment (EUR 15.3 million; -5.4%) remained below expectations; particularly the fourth quarter was weak.