IFCO systems: Q2-Results 2010
IFCO's group revenues grew by 5.6% to US $195.2 million in Q2 2010 compared to
Q2 2009 and in H1 2010 by 8.1% to US $383.6 million (currency adjusted by 8.5%
in Q2 2010 and by 8.4% in H1 2010). Operational profitability (EBITDA) improved
significantly by 22.5% to US $36.1 million in Q2 2010 compared to Q2 2009 and in
H1 2010 by 25.6% to US $67.9 million (currency adjusted by 27.4% in Q2 2010
and by 26.5% in H1 2010). As a consequence LTM Q2 2010 EBITDA reached US
RPC Management Services showed again robust and sustainable growth,
delivering significant gains in both revenues in Q2 2010, which grew by 12.1%
(currency adjusted by 18.3%) to US $106.0 million, and in EBITDA, which grew by
17.1% (currency adjusted by 23.2%) to US $30.6 million, respectively. Pallet
Management Services revenues were close to last year’s level with revenues at US
$89.2 million, although EBITDA increased by 42.3% to US $8.0 million in Q2 2010.
The sources of RPC Management Services' revenue gains have held steady in
recent quarters, resulting from a combination of organic volume growth in our
European RPC business as well as strong and sustainable growth in our RPC US
business. Our European business benefited from higher usage and increased
penetration of our current customer base as well as winning new retailers in certain
markets. Also our efforts to develop the business in East Europe showed good
progress and supported the overall positive volume development in Europe.
Growth in our RPC US business has accelerated even further due to increasing
RPC penetration in our existing customer base and a steady flow of new retailers
adopting the RPC model. RPC South America’s growth momentum continued to
Revenues in Pallet Management Services came in close to previous year levels for
Q2 and H1 2010. Although the market pricing environment remained below 2009
levels, the negative sequential trends flattened out, with Q2 2010 average pallet
pricing at the same average levels as Q1 2010. Volumes in certain regions of the
US have experienced a rebound from 2009 levels, while other regions remain in a
depressed state. Service related revenues showed a good growth momentum and
continued to increase as a percentage of total revenues.
Gross profit margin on a group level increased in Q2 2010 by 2.8 percentage points to 22.8% (H1 2010, grew 2.5 percentage points to 21.8%). RPC Management Services’ gross profit margin grew from 27.1% in Q2 2009 to 28.7% in Q2 2010. Gross profit margin in our European RPC business benefited from slightly higher per trip revenues, constant per unit cost of goods sold and relative lower depreciation. Gross profit margin in the RPC US business decreased slightly as a result of slightly lower prices, as well as higher freight costs resulting from higher fuel prices and a higher rate of expedited RPC pool movements in order to meet the increasing customer demand. All regions continue to benefit from the scale effects of the growing business on fixed costs. Gross profit margin in the Pallet Management Services business grew to 15.8% from 12.5 % in Q2 2009, with the effects of lower year-over-year customer prices and higher fuel prices now more than offset by significantly lower raw materials costs, improved labor productivity, a more efficient transportation cost structure, and a higher mix of profitable service revenues.
Currency adjusted group EBITDA increased in Q2 2010 by 27.4% to US $36.1 million (H1 2010, by 26.5% to US $67.9 million). LTM Q2 2010 currency adjusted EBITDA reached a record level of US $135.8 million. EBITDA on a currency adjusted basis in RPC Management Services increased significantly in Q2 2010 by 23.2% to US $30.6 million (H1 2010, by 27.1% to US $58.0 million). RPC Management Services EBITDA margin improved in Q2 2010 by 1.2 percentage points to 28.8%. EBITDA in Pallet Management Services increased by 42.3% to US $8.0 million in Q2 2010 (H1 2010, by 22.9% to US $14.9 million). EBITDA margin in this segment grew in Q2 2010 to 8.9% from 6.2% in Q2 2009.
Currency adjusted EBIT increased by US $7.4 million, or 39.8%, to US $26.1 million in Q2 2010 (H1 2010, by 38.1% to US $47.2 million). LTM Q2 2010 currency adjusted EBIT reached a record level of US $95.7 million.
Net result improved from a net loss of US $5.4 million in Q2 2009 to a net profit of US $6.1 million in Q2 2010 (H1 2010 from a net loss of US $2.7 million to a net profit of US $7.0 million). The significant net operational improvements discussed above were partially offset by higher ICE related expenses and a higher deferred tax provision. Net finance costs decreased in both Q2 2010 and H1 2010 as a result of the one-time costs recognized in Q2 2009 in connection with the Company’s 2009 refinancing.
IFCO's cash flow from continuing operations, excluding the cash flow effect of income tax payments and ICE related payments, more than doubled to US $64.6 million in H1 2010 from US $31.2 million in H1 2009 as a result of higher profit levels and improved working capital development.
Our capital expenditure levels increased by US $14.6 million, or 109.4%, to US $28.0 million during Q2 2010 (H1 2010, by 113.0% to US $52.9 million). The realization of the planned growth in Europe and the US has led to continued investments in our RPC pools in 2010.
ROCE from continuing operations, on a LTM basis, increased to 21.9% as of June 30, 2010, compared to 19.0% as of year-end 2009 and compared to 16.0% as of June 30, 2009. This positive development is the result of the Company’s increased profitability and continuous improved utilization of the RPC pool leading to relative
lower capex spending.
Our sources of liquidity currently include cash from operations, cash and cash
equivalents on hand, amounts available under our RCF and certain factoring
agreements. As of June 30, 2010, our liquidity declined to US $78.5 million compared to US $138.2 million as of December 31, 2009 and compared to U $100.1 million as of June 30, 2009. The decline is caused by the growth driven capex in our RPC pools, ICE related payments, the dividend payment and the STECO vendor note payment. We believe that these sources of liquidity are sufficient to finance our future capital and operational requirements in accordance with our business plans.
(1) The Company has made changes according to IAS 8 leading to restated Q2 2009 and H1 2009 Financial
Statements. For more details we refer to our quarterly report.
Outlook: As the financial crisis that unfolded in 2008 spread to the worldwide
economy up to today, IFCO experienced challenging economic climates in many of
its markets. While the economy in the United States remained in a weak but slightly
improved condition during Q2 2010, it is expected that the European economy will recover during 2010.
Accordingly, the European RPC Management Services business will continue to
leverage IFCO’s leadership position and market experience to meet or exceed
overall market development. The Company plans to increase its sales initiatives
and to continue to expand its geographic presence in Western Europe, Central
Eastern Europe (CEE) and South America. In the United States, IFCO realized
increases in the overall RPC penetration among grocery food retailers and plans to
grow in excess of this market development. Based on the Company’s solid RPC
business model, IFCO expects that the RPC Management Services businesses will
continue to grow in 2010. IFCO’s investments to support this growth will be
carefully aligned with its business development and are targeted to continually
increase the return on its invested capital.
IFCO’s Pallet Management Services business has significantly been negatively
affected by the overall economic decline in the United States in 2009, primarily as a
result of pressure on prices from lower market demand. Nevertheless, IFCO
remains confident that the key competitive advantages of the Pallet Management
Services business – the breadth of service offerings, the national network and the
value proposition at a national and local level – have not changed and should allow
its Pallet Management Services segment to stabilize revenues and increase
profitability in 2010. Q2 2010 has shown nearly flat revenue development as a first
slight sign of recovery.
The Company believes that its current assessment of the markets and its business
development as described above should result in overall significant gains in both
revenues and operational profitability in 2010 as compared to 2009.
Financially, IFCO expects to be able to fund its capital, operational and debt
service requirements through its own operating cash flows.
For further explanations, please see IFCO's quarterly report, which will be filed with
the Deutsche Börse AG on or about August 12, 2010, and will be available on the
Company's website www.ifcosystems.com or www.ifcosystems.de. The Company
will hold a conference call on August 19, 2010. The details are available on the
This release contains forward-looking statements that reflect Management's current
view with respect to future events. All statements contained in this release that are
not clearly historical in nature or necessarily depend on future events are forward-
looking. The words "anticipate", "believe", "expect", "estimate", "planned" and
similar expressions are generally intended to identify forward-looking statements.
These statements are based on current expectations, estimates and projections of
the Management on currently available information. Many factors could cause the
actual results, performance or achievements to be materially different from those
that may be expressed or implied by such statements. We do not assume any
obligation to update the forward-looking statements contained in this release.
IFCO SYSTEMS N.V.
Tel: +49 89 744 91 316
Fax: +49 89 744 767 316