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Ardagh Group S.A. - Fourth Quarter and Full Year 2017 Results

LUXEMBOURG, Feb. 22, 2018 /PRNewswire/ -- Ardagh Group S.A. (NYSE: ARD) today announced its financial results for the fourth quarter and year ended December 31, 2017.

Highlights
















December 31,
2017


December 31,
2016


Change


Change PF CCY




(€m except per share and ratio data)






Full Year










Revenue


7,644


6,345


20%


1%


Adjusted EBITDA 1


1,340


1,158


16%


2%


Adjusted earnings per share (€) 1


1.63


1.13


44%




Adjusted free cash flow 1


465


519


(10%)




Fourth Quarter










Revenue


1,789


1,826


(2%)


1%


Adjusted EBITDA 1


285


306


(7%)


(3%)


Adjusted earnings per share (€) 1


0.31


0.32


(4%)














Net debt to LTM Adjusted EBITDA 2


4.9x


5.4x






Dividend per share ($) 3


0.14







 

Paul Coulson, Chairman and Chief Executive, said "In 2017, we delivered pro forma constant currency Adjusted EBITDA growth of 2%, helped by the successful beverage can integration and de-levered as a result of strong free cash generation. Fourth quarter results were in line with our expectations, with constant currency revenue up 1% and Adjusted EBITDA advancing in three of our four divisions. Profit improvement initiatives in Glass North America are under way and we remain focused on driving growth in Adjusted EBITDA and cash generation as we continue to de-lever."

  • Full year Revenue and Adjusted EBITDA growth of 20% and 16% to €7,644 million and €1,340 million respectively, including a full year beverage can contribution;
  • Pro forma constant currency Revenue and Adjusted EBITDA growth of 1% and 2% respectively for the year;
  • Earnings per share €0.24 for 2017 (2016: loss per share €0.33);
  • Adjusted earnings per share growth of 44% to €1.63 for the full year;
  • Adjusted Free Cash Flow of €465 million, contributing to de-leveraging of 0.57x during 2017;
  • Over US$750 million of cash and IPO proceeds used to repay debt during 2017;  
  • Enhanced capital structure, with available liquidity of €1.3 billion and no debt maturities before 2021;  
  • Adoption of US dollar reporting from January 1, 2018;
  • 2018 outlook: Full year Adjusted EBITDA of approximately US$1.6 billion, with Adjusted Free Cash Flow in the region of US$550US$575 million and Adjusted earnings per share of US$1.90US$2.10. First quarter Adjusted EBITDA of approximately US$345 million.

 

Summary Financial Information












Three months ended December 31,


Year ended December 31,



2017


2016


2017


2016



(in € millions, except EPS, ratios and percentages)










Revenue


1,789


1,826


7,644


6,345

Profit/(loss) for the period


30


(6)


54


(67)

Adjusted profit for the period 4


73


65


375


229

Adjusted EBITDA 4


285


306


1,340


1,158

Adjusted EBITDA margin


15.9%


16.8%


17.5%


18.3%

Earnings/(loss) per share (€)


0.13


(0.03)


0.24


(0.33)

Adjusted earnings per share (€) 4


0.31


0.32


1.63


1.13

Pro forma Adjusted EBITDA






1,340


1,333










Net debt 5






6,525


7,254

Cash and available liquidity






1,333


1,022

Net debt to LTM Adjusted EBITDA 6






4.9x


5.4x










Cash generated from operations


487


503


1,330


1,109

Operating cash flow 4


373


438


959


950

Adjusted free cash flow 4


217


287


465


519

 

 

Financial Performance Review


Bridge of 2016 to 2017 Reported Revenue and Adjusted EBITDA


Three months ended December 31, 2017














Metal Packaging Europe


Metal Packaging Americas


Glass Packaging Europe


Glass Packaging North America


Group



€m


€m


€m


€m


€m

Reported revenue 2016


658


436


339


393


1,826

Organic


27


28


(6)


(28)


21

FX translation


(1)


(29)



(28)


(58)

Reported revenue 2017


684


435


333


337


1,789














Metal Packaging Europe


Metal Packaging Americas


Glass Packaging Europe


Glass Packaging North America


Group



€m


€m


€m


€m


€m

Reported Adjusted EBITDA 2016


98


57


66


85


306

Organic


1


5


2


(18)


(10)

FX translation


(1)


(4)



(6)


(11)

Reported Adjusted EBITDA 2017


98


58


68


61


285












Reported Adjusted EBITDA 2017 margin


14.3%


13.3%


20.4%


18.1%


15.9%

Reported Adjusted EBITDA 2016 margin


14.9%


13.1%


19.5%


21.6%


16.8%

















Year ended December 31, 2017


















Metal Packaging Europe


Metal Packaging Americas


Glass Packaging Europe


Glass Packaging North America


Group



€m


€m


€m


€m


€m

Reported revenue 2016


2,235


1,059


1,392


1,659


6,345

Acquisition


680


621




1,301

Proforma revenue 2016


2,915


1,680


1,392


1,659


7,646

Organic


80


59


11


(35)


115

Reclassification





(15)


(15)

FX translation


(28)


(25)


(27)


(22)


(102)

Reported revenue 2017


2,967


1,714


1,376


1,587


7,644














Metal Packaging Europe


Metal Packaging Americas


Glass Packaging Europe


Glass Packaging North America


Group



€m


€m


€m


€m


€m

Reported Adjusted EBITDA 2016


366


139


296


357


1,158

Acquisition


104


71




175

Proforma Adjusted EBITDA 2016


470


210


296


357


1,333

Organic


26


29


11


(39)


27

FX translation


(5)


(4)


(6)


(5)


(20)

Reported Adjusted EBITDA 2017


491


235


301


313


1,340












Reported Adjusted EBITDA 2017 margin


16.5%


13.7%


21.9%


19.7%


17.5%

Pro forma Adjusted EBITDA 2016 margin


16.1%


12.5%


21.3%


21.5%


17.4%


 

Full Year

Revenue increased by €1,299 million, or 20%, to €7,644 million in 2017, compared with €6,345 million in the year ended December 31, 2016. The inclusion of the Beverage Can Acquisition for a full year increased revenue by €1,301 million compared with the prior year. Revenue growth also reflected higher selling prices driven by the pass-through of higher input costs, partly offset by adverse currency translation effects of €102 million, which were largely attributable to unfavorable movements in the US dollar and British pound. Adjusted EBITDA increased by €182 million, or 16%, to €1,340 million in the year ended December 31, 2017. Growth reflected a full year contribution from the Beverage Can Acquisition, as well as synergy realization and cost reductions, partly offset by higher input costs and unfavorable currency translation effects.

Fourth Quarter

Group

Revenue of €1,789 million for the quarter ended December 31, 2017 represented a decrease of 2% at actual exchange rates and, at constant currency, increased by 1% compared with the same period last year. The reduction in revenue was attributable to €58 million adverse currency translation effects, partly offset by 1% organic growth. Fourth quarter Adjusted EBITDA of €285 million decreased by 7% at actual exchange rates, compared with the same period last year. On a constant currency basis, Adjusted EBITDA decreased by 3%, with growth in three of our four divisions, more than offset by a decline in Glass North America.

Metal Packaging Europe

Revenue increased by 4%, to €684 million in the three-month period ended December 31, 2017, compared with the same period last year. Growth reflected 4% organic growth, partly offset by €1 million negative currency translation effects. Adjusted EBITDA for the quarter of €98 million increased by 1% at constant currency compared with the same period last year, reflecting continued synergy realization.

Metal Packaging Americas

Revenue of €435 million in the fourth quarter of 2017, was in line with the same period last year. Organic revenue growth of 6%, as a result of the pass through of higher input costs and favorable volume/mix, was offset by negative currency translation effects of €29 million. Adjusted EBITDA increased by €1 million to €58 million, compared with the same period last year and by 9% on a constant currency basis. Growth in Adjusted EBITDA primarily reflected higher volumes and continued cost efficiencies, partly offset by currency translation effects of €4 million.

Glass Packaging Europe

Revenue declined by 2% to €333 million in the three-month period ended December 31, 2017, compared with the same period last year, mainly reflecting lower glass engineering revenues. Adjusted EBITDA for the quarter increased by 3% to €68 million, compared with the same period last year, as a result of cost savings.

Glass Packaging North America

Revenue decreased by 14% to €337 million in the fourth quarter, compared with the same period last year. On a constant currency basis, revenue was 8% lower, due mainly to lower volumes, in particular in the beer and wine end markets. Adjusted EBITDA decreased by 28% to €61 million in the fourth quarter, compared with the same period in 2016. Adjusted EBITDA at constant currency was 23% lower than the prior year as a result of lower volumes, increased freight costs and higher input costs compared with the same period last year.

We have now completed the review of our Glass North America division. The main conclusions are as follows:

  • Closure of the Milford, Massachusetts, production facility, as announced in January;
  • We intend to pursue growth opportunities in stronger performing end markets, such as food, wine and spirits. In order to avail of these opportunities, we will convert production capacity from the mass beer sector to these alternative end markets;
  • This will result in a reduction in overall production capacity, but an even greater reduction in our mass beer capacity;
  • Targeted investment in Glass North America's network, including state of the art inspection equipment, to enhance our competitive position and enable differentiation through a focus on innovation, quality and service;
  • Revision of our freight and logistics infrastructure and arrangements, where rates remain at elevated levels, to optimize costs and ensure effective recovery.

These initiatives are expected to lead to a restoration of appropriate profitability in Glass North America, through an increased focus on improved manufacturing performance, so as to bring it into line with our European Glass business.

Financing Activity

In December, the Group closed a committed five year $850 million Global Asset Based Loan Facility. The new facility, secured by trade receivables and inventories, reflects the Group's increased scale following the Beverage Can Acquisition in 2016.

Earnings Webcast and Conference Call Details

Ardagh Group S.A. (NYSE: ARD) will hold its fourth quarter 2017 earnings webcast and conference call for investors at 3 p.m. BST (10 a.m. EST) on February 22, 2018. Please use the following webcast link to register for this call:

Webcast registration and access:

http://event.on24.com/wcc/r/1585909-1/32EC5CA902EB04FF3D278C6A4EA4C4D7

Conference call dial in:

United States callers: 1866 928 7517
International callers: +44 20 3139 4830

Participant pin code: 40582638#

Slides and annual report

Supplemental slides to accompany this release are available on our website at http://www.ardaghgroup.com/investors

The Group's 2017 annual report on Form 20-F is expected to be filed in March 2018.

The 2017 annual report on Form 20-F for ARD Finance S.A., issuer of the Senior Secured Toggle Notes due 2023, will also be filed in March 2018 and will be available at http://www.ardholdings-sa.com/

About Ardagh Group

Ardagh is a global leader in metal and glass packaging solutions, producing packaging for most of the world's leading food, beverage and consumer brands. It operates 109 facilities in 22 countries, employing approximately 23,500 people and has global sales of approximately €7.6 billion.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Non-GAAP Financial Measures

This press release may contain certain consolidated financial measures such as Adjusted EBITDA, working capital, net debt, Adjusted profit/(loss), Adjusted earnings/(loss) per share, and ratios relating thereto that are not calculated in accordance with IFRS or US GAAP. Non-GAAP financial measures may be considered in addition to GAAP financial information, but should not be used as substitutes for the corresponding GAAP measures. The non-GAAP financial measures used by Ardagh may differ from, and not be comparable to, similarly titled measures used by other companies.

 

 

Condensed Consolidated Financial Statements

Consolidated Income Statement






















Year ended December 31, 2017


Year ended December 31, 2016



Before







Before








exceptional


Exceptional





exceptional


Exceptional






items


Items


Total


items


Items


Total



€m


€m


€m


€m


€m


€m
















Revenue


7,644




7,644


6,345




6,345

Cost of sales


(6,321)


(85)



(6,406)


(5,221)


(15)



(5,236)

Gross profit/(loss)


1,323


(85)



1,238


1,124


(15)



1,109

Sales, general and administration expenses


(359)


(43)



(402)


(300)


(116)



(416)

Intangible amortization


(235)




(235)


(173)




(173)

Operating profit/(loss)


729


(128)



601


651


(131)



520

Finance expense


(459)


(123)



(582)


(450)


(165)



(615)

Finance income







78



78

Profit/(loss) before tax


270


(251)



19


201


(218)



(17)

Income tax (charge)/credit


(87)


122



35


(93)


43



(50)

Profit/(loss) for the year


183


(129)



54


108


(175)



(67)
















Profit/(loss) attributable to:















Owners of the parent







54







(67)

Non-controlling interests













Profit/(loss) for the year







54







(67)

Profit/(loss) per share:















Basic profit/(loss) for the year attributable to equity holders







€0.24







(€0.33)

 

 


Consolidated Statement of Financial Position








At December 31,



2017


2016



€m


€m

Non-current assets





Intangible assets


3,422


3,904

Property, plant and equipment


2,808


2,911

Derivative financial instruments


6


124

Deferred tax assets


184


259

Other non-current assets


21


20



6,441


7,218

Current assets





Inventories


1,128


1,125

Trade and other receivables


1,062


1,164

Derivative financial instruments


13


11

Cash and cash equivalents


654


772



2,857


3,072

TOTAL ASSETS


9,298


10,290

Equity attributable to owners of the parent





Issued capital


22


Share premium


1,090


136

Capital contribution


431


431

Other reserves


(321)


(324)

Retained earnings


(2,370)


(2,313)



(1,148)


(2,070)

Non-controlling interests


1


2

TOTAL EQUITY


(1,147)


(2,068)

Non-current liabilities





Borrowings


6,926


8,142

Employee benefit obligations


831


905

Derivative financial instruments


251


Deferred tax liabilities


486


694

Related party borrowings



673

Provisions


37


57



8,531


10,471

Current liabilities





Borrowings


2


8

Interest payable


59


81

Derivative financial instruments


2


8

Trade and other payables


1,658


1,539

Income tax payable


135


182

Provisions


58


69



1,914


1,887

TOTAL LIABILITIES


10,445


12,358

TOTAL EQUITY and LIABILITIES


9,298


10,290

 

 

Consolidated Statement of Cash Flows








Year ended December 31,



2017


2016



€m


€m

Cash flows from operating activities





Cash generated from operations


1,330


1,109

Interest paid — excluding cumulative PIK interest paid


(406)


(372)

Cumulative PIK interest paid



(184)

Income tax paid


(90)


(84)

Net cash from operating activities


834


469

Cash flows from investing activities





Purchase of business, net of cash acquired



(2,685)

Purchase of property, plant and equipment


(422)


(310)

Purchase of intangible assets


(19)


(12)

Proceeds from disposal of property, plant and equipment


5


4

Net cash used in investing activities


(436)


(3,003)

Cash flows from financing activities





Proceeds from borrowings


3,497


3,950

Repayment of borrowings


(4,061)


(2,322)

Proceeds from borrowings with related party



673

Proceeds from share issuance


306


6

Contribution from parent



431

Repayment of borrowings issued to related party



404

Dividends paid


(148)


(270)

Early redemption premium paid


(85)


(108)

Deferred debt issue costs paid


(35)


(60)

Proceeds from the termination of derivative financial instruments


42


Net cash (outflow)/inflow from financing activities


(484)


2,704

Net (decrease)/increase in cash and cash equivalents


(86)


170

Cash and cash equivalents at the beginning of the year


772


553

Exchange (losses)/gains on cash and cash equivalents


(32)


49

Cash and cash equivalents at the end of the year


654


772

 

 

Financial assets and liabilities


At December 31, 2017, the Group's net debt and available liquidity is as follows:




















Maximum


Final













amount


maturity


Facility






Undrawn

Facility


Currency


drawable


date


type


Amount drawn


amount





Local






Local


€m


€m





currency






currency









m






m





2.750% Senior Secured Notes


EUR


750


15-Mar-24


Bullet


750


750


4.625% Senior Secured Notes


USD


1,000


15-May-23


Bullet


1,000


834


4.125% Senior Secured Notes


EUR


440


15-May-23


Bullet


440


440


4.250% Senior Secured Notes


USD


715


15-Sep-22


Bullet


715


596


4.750% Senior Notes


GBP 


400


15-Jul-27


Bullet


400


451


6.000% Senior Notes


USD


1,700


15-Feb-25


Bullet


1,700


1,414


7.250% Senior Notes


USD


1,650


15-May-24


Bullet


1,650


1,376


6.750% Senior Notes


EUR


750


15-May-24


Bullet


750


750


6.000% Senior Notes


USD


440


30-Jun-21


Bullet


440


367


Global Asset Based Loan Facility


USD


813


07-Dec-22


Revolving




678

Finance Lease Obligations


GBP/EUR






Amortizing


7


7


Other borrowings/credit lines


EUR


4


Rolling


Amortizing


3


3


1

Total borrowings / undrawn facilities












6,988


679

Deferred debt issue costs and bond premium












(60)


Net borrowings / undrawn facilities












6,928


679

Cash and cash equivalents












(654)


654

Derivative financial instruments used to
hedge foreign currency and interest rate risk












251


Net debt / available liquidity












6,525


1,333

 

 

Reconciliation of profit/(loss) for the period to Adjusted profit












Three months ended December 31,


Year ended December 31,



2017


2016


2017


2016



€m


€m


€m


€m

Profit/(loss) for the period


30


(6)


54


(67)

Total exceptional items 7


86


33


251


218

Tax credit associated with exceptional items 8


(89)


(17)


(122)


(43)

Intangible amortization


57


77


235


173

Tax credit associated with intangible amortization


(16)


(22)


(67)


(52)

Loss on derivative financial instruments


5



24


Adjusted profit for the period


73


65


375


229










Weighted average ordinary shares


236.3


202.0


229.6


202.0










Earnings/(loss) per share (€)


0.13


(0.03)


0.24


(0.33)










Adjusted earnings per share (€)


0.31


0.32


1.63


1.13



Reconciliation of profit/(loss) for the period to Adjusted EBITDA, cash generated from operations, operating cash flow and Adjusted free cash flow












Three months ended December 31,


Year ended December 31,



2017


2016


2017


2016



€m


€m


€m


€m

Profit/(loss) for the period


30


(6)


54


(67)

Income tax (credit)/charge


(95)


(6)


(35)


50

Net finance expense


111


121


582


537

Depreciation and amortization


153


172


611


507

Exceptional operating items


86


25


128


131

Adjusted EBITDA


285


306


1,340


1,158

Movement in working capital


225


251


64


120

Acquisition-related, IPO, start-up and other exceptional
costs paid


(20)


(53)


(65)


(159)

Exceptional restructuring paid


(3)


(1)


(9)


(10)

Cash generated from operations


487


503


1,330


1,109

Acquisition-related, IPO, start-up and other exceptional
costs paid


20


53


65


159

Capital expenditure


(134)


(118)


(436)


(318)

Operating cash flow


373


438


959


950

Interest 9


(124)


(112)


(404)


(347)

Income tax


(32)


(39)


(90)


(84)

Adjusted free cash flow


217


287


465


519

 

 

1

A reconciliation to the most comparable GAAP measures can be found in the tables at the back of this release

2

2016 reflects Adjusted EBITDA on a pro forma basis, including twelve months Adjusted EBITDA for the Beverage Can Business.

3

Dividend declared on February 08, 2018. Payable on March 13, 2018 to shareholders of record on February 27, 2018.

4

A reconciliation to the most comparable GAAP measures can be found in the tables at the back of this release

5

Net debt is comprised of net borrowings and derivative financial instruments used to hedge foreign currency and interest rate risk, net of cash and cash equivalents.

6

2016 reflects Adjusted EBITDA on a pro forma basis, including twelve months Adjusted EBITDA for the Beverage Can Business.

7

Total exceptional items for the three months ended December 31, 2017 include €46 million asset impairment charges in Glass Packaging North America and Metal Packaging Europe, €20 million capacity realignment and restructuring costs in Metal Packaging Europe and €15 million costs directly attributable to the acquisition and integration of the Beverage Can Business and IPO and other transaction related costs.  Total exceptional items for the year ended December 31, 2017 include €123 million debt refinancing and settlement costs, €46 million asset impairment charges as noted above, €43 million costs directly attributable to the acquisition and integration of the Beverage Can Business and IPO and other transaction related costs and €32 million capacity realignment and restructuring costs in Metal Packaging Europe.

8

The three months and year ended December 31, 2017 includes a €68 million one-time non-cash benefit on re-measurement of the Groups's deferred tax positions, following the enactment of the Tax Cuts and Jobs Act of 2017 signed into US law on December 22, 2017.

9

Interest paid in the year ended December 31, 2017, excludes €2 million of interest paid in lieu of notice, relating to the 6.750% Senior Notes due 2021. Interest paid in the year ended December 31, 2016, excludes: (i) €15 million in respect of notes held in escrow for the period between their issuance and the completion of the acquisition of the Beverage Can Business, (ii) €10 million of interest, paid in lieu of notice, relating to the 9.250% and 9.125% Senior Notes due 2020 repaid in full in May 2016 and (iii) cumulative PIK interest paid of €184 million.

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/ardagh-group-sa---fourth-quarter-and-full-year-2017-results-300602656.html

SOURCE Ardagh Group S.A.





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