Revenue down slightly, -5% (reported
data) Business activity confirmed resilient in France
Contrasting situations abroad Business targets
maintained
Regulatory News:
Séché Environnement (Paris:SCHP):
Limited impact from COVID-19 pandemic
Contributed revenue: €314m, i.e. -4.9% vs. 6/30/2019 Revenue -
France: €237m, i.e. -5.0% vs. 6/30/2019 Revenue - International:
€77m, i.e. -4.6% vs. 6/30/2019
Business confirmed resilient
Hazardous W. revenue: €198m, down slightly -6.2% Non Hazardous
W. revenue: €116m, stable at +0.1%
Outlook differs by region
France: Big bounce in HW and NHW businesses International:
cycles postponed and negative Forex impact
Business targets maintained for 20201 2020 contributed
revenue target to low end of the initial range of €650m to
€700m.
EBITDA target adjusted for 20201 Accounting for crisis
effects during Q2 and International uncertainties, leading to
anticipate a one-off impact up to 1% of contributed revenue on the
2020 EBITDA target.
Confidence in the 2022 trajectory Contributed revenue
targeted between €750m and €800m and EBITDA between 21% and 22% of
2022 contributed revenue.
First-half 2020 highlights
The first half of 2020 was marked by the COVID-19 pandemic,
which affected Séché Environnement's businesses and the
geographical regions where the Group is present, albeit in
different ways.
With contributed revenue of €313.6m as of June 30, 2020,
slightly down -4.9% compared to June 30, 2019, Séché Environnement
has demonstrated the resilience of its waste recovery and treatment
businesses, particularly in France.
This was because Séché Environnement carries on essential
business in environmental and health risk management, and addresses
a non-cyclical core industrial clientèle with strategic businesses
(energy, health, pharmaceuticals, chemistry, etc., amounting to 35%
of 2019 revenue) which continued to operate during the crisis,
while Local Authorities and Environmental Services (36% of
consolidated revenue in 2019) are characterized by the durability
of their markets.
However, the symmetry between changes by scope (France revenue:
-5.0% and International revenue: -4.6%) conceals contrasting
situations between regions and businesses over the period:
- In France (75% of revenue in 2019), the crisis primarily
affected services (stoppage of decontamination sites), sorting and
recovery (lower WEA2 volumes) and final waste management
(particularly polluted land treatment); meanwhile, materials
recovery (chemical purification), and incineration (particularly
hazardous waste) benefited from a good starting level of activity
and the continuation of industrial clients' activities. At the end
of the period, a sharp rebound in waste volumes and the resumption
of worksites led to a return to growth in this scope in June
compared to June 2019 (+2.8%).
- Internationally (25% of revenue in 2019), the crisis had
varying impacts on the subsidiaries' business, with a sharp decline
for Solarca (industrial maintenance sites) while Mecomer (Italy)
maintained a good level of growth over the period, and Spain and
South Africa saw moderate business contraction. In some places
(South Africa, LatAm), the unfavorable shift in foreign exchange
rates beginning in March compounded the decline in business.
Finally, the cycle shift, between the late arrival of the health
crisis in Latin America and the implementation of strict lockdowns
particularly in Chile and Peru, has heavily impacted business in
those areas, and hindered the overall recovery of the International
scope.
The continuation of current trends in France should spell a good
second half and, in that scope, the contraction in business seen in
the first half would at least partially be made up.
Internationally, uncertainties as to the strength of the
recovery in some geographical areas presage a 2020 revenue figure
below that of 2019.
These forecasts have allowed Séché Environnement to adjust its
business expectations for 2020, with a contributed revenue target
adjusted to low end of its initial range of €650m-€700m3.
Given the business resilience seen in the first half of the year
but also the one-off costs due to the health crisis in Q2 and the
persistent uncertainties as to the scale of the International
recovery in the second half, the Group is anticipating a negative
one-off impact up to 1% of contributed revenue on the EBITDA of 20%
of revenue targeted for fiscal year 2020.
Séché Environnement remains confident in its ability to meet its
2022 goals, which include a target consolidated revenue of between
€750m and €800m, of which 30% will come from International, and
EBITDA of between 21% and 22% of contributed revenue.
Analysis of business in the first half of 2020
As of June 30, 2020, Séché Environnement reported consolidated
revenue of €313.8m, compared to €342.3m one year earlier. Reported
consolidated revenue includes non-contributed revenue of €0.2m (vs.
€12.5m as of June 30, 2019).
Net of non-contributed revenue, contributed revenue totaled
€313.6m as of June 30, 2020 (vs. €329.8m one year earlier), marking
a -4.9% decline over the period (reported data) and -7.8% in
organic terms4.
Breakdown of revenue by geographic region
At June 30
2019
2020
Gross change
Organic change
In €m
As a %
In €m
As a %
Subsidiaries in France (contributed
revenue)
o/w scope effect
249.5
-
75.7%
237.0
75.6%
-5.0%
-5.0%
International subsidiaries
o/w scope effect
80.3
43.2
24.3%
76.6
13.6
24.4%
-4.6%
-17.0%
Total contributed revenue
329.8
100.0%
313.6
100.0%
-5.0%
-7.8%
Non-audited consolidated data At constant exchange rates,
contributed revenue at June 30, 2019 was €325.3m, illustrating a
negative foreign exchange effect of €4.5m over the period.
The period was characterized by the COVID-19 crisis, which hurt
geographical regions in different ways, with significant foreign
exchange effects and cycle delays between France and International
outside Europe:
- In France, contributed revenue totaled €237.0m at June
30, 2020 vs. €249.5m one year earlier, reflecting a decrease of
-5.0% for the period. This scope had a strong start to the fiscal
year, particularly in industrial markets. Beginning in the second
half of March, the crisis hurt some businesses such as Services
(Pollution Remediation & Decontamination sites), final waste
management (smaller contaminated soil volumes), and
sorting/recovery of Waste from Economic Activity (WEA). At the same
time, recovery and incineration, particularly of hazardous waste,
were barely affected by the effects of the lockdown. After hitting
a low in April, most businesses saw a sharp rebound, and revenue in
France climbed back up, with growth returning in June (+2.8% over
June 2019). Revenue earned in France accounted for 75.6% of
contributed revenue in the first half of 2020 (vs. 75.7% in H1
2019).
- Internationally, revenue totaled €76.6m at June 30, 2020
vs. €80.4m one year earlier, reflecting a decrease of -4.6% for the
period. This includes a scope effect of €13.6m from the first
quarter, reflecting the contribution of Mecomer, which was
consolidated as of April 1, 2019. At constant scope, revenue
earned by International subsidiaries totaled €63.0m, down -21.6% at
current exchange rates and -17.0% at constant exchange rates.
Besides producing a cycle delay, the health crisis also revealed
contrasting situations between regions and subsidiaries:
- In Europe (Italy, Spain, Germany), business at
subsidiaries saw a -16% decline over the period, except for Mecomer
which posted revenue that was up +4.9%.
- Outside Europe, the crisis was accompanied by a very
substantial decline in exchange rates beginning in March,
particularly in South Africa and to a lesser extent in Peru (€4.5m
impact over the first half of the year). As such:
- Interwaste (South Africa): Revenue at June 30, 2020 was €29.2m,
a -9.7% decline at current exchange rates but a +1.2% increase at
constant rates.
- Kanay (Peru): Revenue (€5.5m at June 30, 2020) was down -18.5%
at current exchange rates and -18.0% at constant rates.
- SAN (Chile) suffered a large contraction in its business due to
a strong first half of 2019, with revenue of €2.5m, down -43.9% at
current exchange rates and -19.1% at constant rates.
- Solarca (Rest of the World) suspended its worksite operations
at the start of the first half, with revenue of €6.2m, down -48.1%
(no significant foreign exchange effect).
Revenue earned by international subsidiaries
accounted for 24.4% of contributed revenue in the first quarter of
2020 (vs. 24.3% one year earlier).
Breakdown of revenue by division
At June 30
2019
2020
Gross change
Organic change
In €m
As a %
In €m
As a %
Hazardous Waste division
o/w scope effect
213.8
32.5
64.8%
197.5
13.6
63.0%
-7.6%
-12.7%
Non-Hazardous Waste division
o/w scope effect
116.0
10.7
35.2%
116.1
-
37.0%
+0.1%
+1.1%
Total contributed revenue
329.8
100.0%
313.6
100.0%
-4.9%
-7.8%
Non-audited consolidated data
In the first half of 2020, the waste treatment and recovery
divisions demonstrated the resilience of Séché Environnement's
business. As such, after a substantial contraction in volume and a
sharp decline in some service businesses (worksites) in France and
abroad, the divisions saw their business recover significantly,
particularly the Hazardous Waste division.
The Hazardous Waste (HW) division, which accounts for
63.0% of consolidated contributed revenue, recorded revenue of
€197.5m at June 30, 2020, down -7.6% from the first half of 2019 at
current exchange rates. Subtracting the scope effect and foreign
exchange fluctuations, the division's decline was -12.7%,
reflecting the fact that markets moved differently from one
geographical region to another, with substantially more resilient
business in France even as the cycle shifts observed in the
International scope led to a greater contraction in its HW
business:
- In France, the division brought in €144.9m in revenue,
representing a slight decline of -1.0% compared to the same period
last year. The division had a promising start to the fiscal year,
supported by solid industrial markets and the growth of Services
businesses (Decontamination). The arrival of the health crisis in
mid-March led to the suspension of decontamination work, as well a
decline in the volumes of contaminated soil in treatment
facilities. Businesses linked to industrial activity, such as
incineration and materials recovery (chemical purification), were
substantially less affected given the Group's positioning in favor
of a strategic industrial clientèle, which remained operational.
Since May, the division has benefited from the resumption of
decontamination work and a sharp rebound in volumes, particularly
in final waste treatment facilities.
- Internationally, the division's revenue totaled €52.6m
at June 30, 2020 vs. €64.2m one year earlier, a decrease of -22.0%
in reported data. Subtracting the scope effect (€13.6m) and foreign
exchange fluctuations, the decline in organic terms was -39.3%. The
substantial contraction of International revenue from the HW
division, at constant scope and exchange rates, reflects cycle
shifts in the health crisis between different geographical regions,
as the post-crisis restart of industrial markets has been slower
than in France.
With contributed revenue of €116.1m, the Non Hazardous Waste
(NHW) division is slightly up (+0.1% at constant exchange rates
and +1.1% in organic terms) compared to the first half of 2019
(€116.0m), and accounts for 37.0% of contributed revenue:
- In France, the division recorded contributed revenue of
€92.1m, down -10.7% from the first half of 2019. Over the period,
the division was affected by the reduced contribution of the energy
recovery business (ramp-up of Sénerval), and during the health
crisis, by the decline in the Services business (decontamination
sites) and by the contraction in WEA volumes. The sharp jump in
volumes and return of site-based work to a normal level enabled the
division to rebound at the end of the period to its pre-crisis
level of activity.
- Internationally, revenue totaled €24.0m at June 30, 2020
(vs. €12.9m one year earlier). The strong organic growth in the
division (+106%) particularly reflects the large contribution from
Interwaste (South Africa), which benefited from spot markets in
that period.
Breakdown of revenue by activity
At June 30
2019
2020
Gross change
Organic change
In €m
As a %
In €m
As a %
Treatment
o/w scope effect
158.0
15.1
47.8%
-
157.3
13.6
50.1%
-0.4%
-8.4%
Recovery
o/w scope effect
60.6
4.5
18.4%
-
44.4
-
14.2%
-26.6%
-26.0%
Services
o/w scope effect
111.2
23.6
33.8%
-
111.8
-
35.7%
+0.5%
+3.1%
Total contributed revenue
329.8
100.0%
313.6
100.0%
-4.9%
-7.8%
Non-audited consolidated data
Treatment activities brought in €157.3m at June 30, 2020
vs. €158.0m one year earlier, a slight decline of -0.4% (reported
data).
This change incorporates a €13.6m scope effect resulting from
the contribution of Mecomer in the first half of 2020 (consolidated
effective April 1, 2019). In organic terms, treatment activities
were down ‑8.4%:
- In France, treatment activities contracted -3.0% to
€130.2m, benefiting from the resilience of the NHW division, while
the decline in contaminated soil (related to the stoppage of
decontamination work) hurt the HW division during the health
crisis.
- Internationally, these activities saw a sharp organic
decline (-40.0%), with contrasting changes between Mecomer, which
grew over the period, and non-Europe business which remained
persistently affected.
Treatment activities accounted for 50.1% of contributed
revenue.
Recovery activities brought in €44.4m at June 30, 2020
(vs. €60.6m a year earlier, down -26.6% at current exchange rates
and -26.0% at constant rates:
- In France, revenue from recovery activities stood at
€33.6m (-24.1%), reflecting the lower performance of energy
recovery activities, which were hurt by the ramp-up of the Sénerval
incinerator in the winter while hazardous waste recovery activities
(chemical purification) continued to hold up well.
- In the International scope, revenue fell stood at
€10.8m, down -33.5% at current exchange rates and down -31.2% at
constant rates, hurt by a sharp decline in PCBs activities in Latin
America (spot markets) and to a lesser extent, by Valls Quimica
(Regeneration) whose activities are increasingly focused on
businesses with higher value added against a backdrop of less
buoyant economic conditions in Spain.
Recovery activities accounted for 14.9% of contributed
revenue.
Services activities recorded contributed revenue of
€111.8m at June 30, 2020 (vs. €111.3m a year earlier, up +0.5% at
current exchange rates and +3.1% at constant rates:
- In France, revenue from services activities was €73.2m,
up +3.1% over the period, reflecting the bounce in Decontamination
activities after the health crisis.
- In the International scope, revenue stood at €38.7m, a
-4.1% contraction at current exchange rates and up +2.9% at
constant rates, representative of positive movement by Interwaste
(South Africa) even as the Solarca project's activities were badly
hurt over the period.
Services activities accounted for 35.7% of contributed
revenue.
Business outlook maintained for 2020 - Confidence in the 2022
trajectory
Séché Environnement is growing in promising waste recovery and
treatment markets, with solutions that address the challenges of
its industrial and governmental clients for the circular economy,
fighting climate change, and promoting sustainable development.
These markets are characterized by their resilience, which has
as much to do with the inevitable nature of waste output as it does
with regulations that support their growth in terms of both volume
and value.
For this reason, after a health crisis that has led to an
unprecedented GDP contraction in France and many countries where
the Group is present, Séché Environnement has observed:
- In France, the return to growth of most of its business,
with a rebound in volumes that has been keenly felt in the HW
division, while the NHW division is continuing its positive course.
The continuation of these trends is strengthening the prospect of a
good second half in this scope, compared to a second-half 2019 that
saw few challenges given the partial unavailability of some sites
(the revamping of Salaise 3; the restart of Sénerval) and the lower
contribution from some businesses (Decontamination). For this
reason, the second half might allow for the first-half decline in
activity within this scope to be partially made up.
- In the International scope, each geographical area and
subsidiary is facing a different situation:
- Solarca (4% of revenue in 2019) is expected to benefit from a
high level of billings in the second half of the year, due to the
postponement of its projects, and Mecomer (5% of revenue in 2019)
is expected to continue its pace of growth observed throughout the
first half of the year.
- Valls Quimica (Spain; 4% of revenue in 2019) and Interwaste
(South Africa; 9% of revenue in 2019) have recovered despite a
bleak economy.
- Latin America (4% of revenue in 2019): The current situation
still looks uncertain with respect to how long the crisis will last
and what impacts it will have on the business of subsidiaries
there.
The continuation of these trends, accompanied
by persistently unfavorable foreign exchange effects, suggest that
this scope will see a lower contribution in the second half of 2020
than in the second half of 2019.
These facts have allowed Séché Environnement to adjust its
business expectations for 20205, with a contributed revenue target
at low end of its initial range of €650m-€700m.
On this basis, the one-off negative impacts of the health crisis
in Q2 (change in waste mix, …), the lower contribution of energy
recovery over the period and the uncertainties as to the strength
of the International recovery, could impact up to 1% of revenue the
EBITDA of 20% of contributed revenue targeted for 2020.
Séché Environnement is confident in its ability to continue its
2022 trajectory, which includes a target consolidated revenue of
between €750m and €800m, including 30% from International
operations, and EBITDA of between 21% and 22% of contributed
revenue.
Conference call
A conference call to discuss the business activity for the first
half of 2020 will be held (in French only) on July 28, 2020 at 6:00
p.m. Paris time.
To participate in the conference, please dial +33 (0)1 70 71
01 59. Code: 60 17 90 85 #
Material to accompany the presentation will be available from
5:45 p.m. on Séché Environnement's website:
https://www.groupe-seche.com/en/investors/home
The conference recording will be available at +33 (0)1 72 72 74
02 – Code: 41 89 46 566 #
Calendar Consolidated results at
June 30, 2020: September 14, 2020 after market close
About Séché Environnement Séché
Environnement is one of France's leading players in the
recovery and treatment of all types of waste, from both industry
and local communities. Séché Environnement is the leading
independent operator in France. It is uniquely positioned as a
specialist in highly complex waste, operating within regulated
waste recovery and treatment markets with high barriers to entry,
and develops cutting edge hazardous and non-hazardous waste
recovery and treatment solutions. Its facilities and expertise
enable it to provide high value-added solutions to its industrial
and public authority clients, targeting the challenges of the
circular economy and sustainable development requirements, such
as:
- material or energy recovery from hazardous and non-hazardous
waste;
- a comprehensive range of treatment solutions for solid, liquid
and gaseous waste (thermal, physical-chemical and radiation
treatment, etc.);
- the storage of final hazardous and non-hazardous waste;
- eco-services such as decontamination, decommissioning, asbestos
removal and rehabilitation;
- the global management of environmental services under
outsourcing agreements.
Leveraging its extensive expertise, Séché Environnement operates
in more than 15 countries around the world and is developing
rapidly internationally through organic growth and acquisitions.
Already operating in Europe (Spain and Germany, and now Italy)
Séché Environnement has recently taken a leading position in Latin
America (Peru and Chile) and in South Africa. The Group currently
employs around 4,500 people worldwide (including about 2,000 in
France). Séché Environnement has been listed on Eurolist by
Euronext (Compartment B) since November 27, 1997. It is eligible
for equity savings funds dedicated to investing in SMEs and is
listed in the CAC Mid&Small, Enternext PEA-PME 150, and
Enternext Tech40 indexes.
Important notice
This press release may contain information of a provisional
nature. This information represents either trends or targets as of
the date of publication of the press release and may not be
considered as results forecasts or as any other type of performance
indicator. This information is by nature subject to risks and
uncertainties which are difficult to foresee and are usually beyond
the Company's control, which may imply that expected results and
developments differ significantly from announced trends and
targets. These risks notably include those described in the
Company's Registration Document, which is available on its website
(www.groupe-seche.com). This information therefore does not reflect
the Company's future performance, which may differ considerably,
and no guarantee can be given as to the achievement of these
forward-looking figures. The Company makes no commitment on the
updating of this information. More detailed information on the
Company can be obtained on its website (www.groupe-seche.com), in
the Regulated Information section. This press release does not
constitute an offer of shares or a solicitation in view of an offer
of shares in any country, including the United States. Distribution
of this press release may be subject to the laws and regulations in
force in France or other countries. Persons in possession of this
press release must be aware of these restrictions and observe
them.
1 See Investor Day, June 26, 2018: targeted EBITDA at 20% of
contributed revenue for 2020 2 WEA: Waste from Economic Activities
3 See "Investor Day", June 26, 2018 and "Investor Day", December
17, 2019 4 Organic: at constant scope and exchange rates 5 See
"Investor Day", June 26, 2018 and "Investor Day", December 17,
2019
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version on businesswire.com: https://www.businesswire.com/news/home/20200728005506/en/
Séché Environnement Manuel Andersen Head of
Investor Relations +33 (0)1 53 21 53 60
m.andersen@groupe-seche.com
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