13 May 2020
13 May 2020, Comments Comments Off on Trigano announces first half-year results and outlook for rest of 2020
Trigano announces first half-year results and outlook for rest of 2020

Trigano has announced sales of € 1,163.4M in the first half-year 2019/2020, up 2.3 percent compared to the first half of previous financial year (+ 1.9% at constant scope), and commented on its outlook for the rest of 2020.

Consolidated current operating profit for the first half-year reached € 89.3M and represents 7.7 percnet of sales (8.8 percent in 2018/2019). First half-year results were affected by an unfavourable sales mix in terms of margin, by a level of productivity below expectations in the factories that were refitted a few months ago, as well as by an increase in warranty costs.

The financial result (€ -4.0M) benefited from an adjustment of the minority debt amounting € 3.1M. Considering a corporate tax expense of € 22.4M and the positive contribution of equity affiliates (€ 2.1M), the net consolidated profit reached € 65.7M (€ 72.0M in 2018/2019) and represents € 3.41 per share:

The level of investments is stable compared to the first half of the previous financial year (€ 20.1M compared to € 19.9M in 2018/2019). In addition, Trigano acquired a factory previously rented in Poggibonsi (Tuscany) for
€ 9M, generating annual rental savings of around € 1M. This transaction is not considered as an investment under IFRS 16.

During this half-year, Trigano again strengthened its financial structure: net debt, traditionally at its peak at the end of February, reached € 78.0M (€ 174.3M on 2019/02/28), i.e. 8.4% of consolidated shareholders’ equity (21.6% on 2019/02/28). The application of IFRS 16 had the effect of increasing financial debt by € 17.1 million as of February 29, 2020 (rental debts).

Trigano has been affected since mid-March by sanitary measures intended to curb the spread of the Covid-19 virus.

Trigano implemented an action programme to manage this crisis taking into account, as a priority, the respect for the physical integrity of its personnel, but also the interest of its dealer networks and suppliers.

The main components of these programmes are:

  • –  Implementation of a remote working organisation for a large number of key functions
  • –  Limitation of the activity of most business units to the completion of incomplete vehicles, delivery to still open retail customers and to websites as well as the reception of components to facilitate a restart of production
  • –  Reduction of staff costs by anticipating holiday taking, termination of temporary contracts, non-renewal of fixed-term contracts and using partial unemployment compensation systems offered in different countries.
  • –  Focus on the recovery of customer receivables as part of an active steering of cash management.
  • –  Reorganisation of production schedules so as to favour the manufacture of vehicles already sold to end customers as soon as production resumes
  • –  Solicitation of possible cancellations of orders from networks so as not to excessively delay the manufacture of new collections or overload dealers with unsold products.

Activity and results of the second half-year will be strongly impacted by the coronavirus crisis. It will not be possible to make up losses in manufacturing volumes before the end of the financial year and expected levels of productivity during the phases of restarting the production tool will be significantly lowered due to sanitary constraints.

The Covid-19 crisis caused a major economic shock, the consequences of which on European demand for leisure vehicles are difficult to predict.

In the short term, restrictions on gathering people in one place could disturb or even hinder the holding of fairs and exhibitions, and weakened dealers could reduce their commitments to order new model vehicles. In this context, Trigano will intensify its efforts to control its working capital requirement and will remain attentive to the evolution of demand in order to adapt its production means and the level of overhead costs.

In the medium and long term, Trigano’s outlook for main European markets is positive. Indeed, the leisure lifestyle made possible by the motorhome is an individual lifestyle which avoids collective means of catering, accommodation and transport. This gives motorhomes a decisive advantage in terms of sanitary security which will be all the more taken into account by consumers after the epidemic that we are experiencing. In addition, taxes based on CO2 emissions from motorhomes have been fully lifted in the UK and are expected to be largely lifted in Sweden.

Trigano achieved sales of € 603.4M in the second quarter of 2019/2020, up 7.3% at constant scope and exchange rates:

The European leisure vehicle markets continued to grow in the first half of the year with the exception of the Scandinavian and British markets, which remained depressed, affected by the introduction of high taxes on CO2 emissions.

Activity in the second quarter was marked by the total or partial resolution of problems of vehicles type-approval, chassis availability and refitting of certain plants encountered in the previous months. Sales of motorhomes (+ 10.6%) returned to a high pace of growth, while those of caravans (-3.2%) were slightly down compared to the previous year.

Deliveries of static caravans (-7.9%) were affected by the late receipt of orders from some campground managers. Finally, sales of accessories for leisure vehicles (+ 9.7%) benefited from the market dynamism in Netherlands and Germany.

Trailers activity (+ 4.9%) remained well oriented, camping equipment (-38.2%) and garden equipment (+ 8.3%) are in low season and changes in their sales in Q2 are therefore not significant.

The activity of Trigano will naturally be impacted by measures of closure of non-food businesses across a large part of the European territory, as well as by containment measures. Most of Trigano’s production units have been put into reduced activity or are temporarely closed.

The experience acquired during the 2008 economic crisis will enable Trigano to take the appropriate measures to emerge strengthened from this ordeal and to be able to restart production quicklyin order to satisfy a high order backlog.

Trigano says its financial strength is also a fundamental asset in this crisis period.

Excluding the influence of external phenomena, Trigano says its prospects on the main markets are positive. Indeed, motorhomes are experiencing a significant expansion in the important markets and the fences corresponding to taxes based on CO2 emissions have been completely removed in United Kingdom and should be largely lifted in Sweden.

The leisure mode made possible by motorhomes is an individual mode which avoids collective means of accommodation and transport. This gives motorhomes a decisive advantage over other means of leisure and this will be especially true after the end of the epidemic that is currently being experienced. The very positive results of sales to the public in January and February 2020 illustrate this.

Trigano will continue to implement all internal growth operations that have been initiated and will seize any acquisition opportunity corresponding to its external growth policy.