Tarkett, producer of wood flooring reports that its net sales at constant scope of consolidation and exchange rates moved up 3.0% in H1 2017. The CIS, APAC & Latin America segment delivered robust growth (+7.2%), led mainly by an increase in volumes and an improved mix in CIS countries. The Sports segment also put in a good H1 performance (+5.3%), while the EMEA segment posted a 4.2% rise in sales. Only North America segment (‐1.6%) continued to suffer from a high year‐on‐year comparison basis. All segments helped drive the acceleration in organic growth in Q2 (up 3.2%) versus Q1 (+2.8%) with the exception of EMEA, hit by a negative calendar effect of around ‐4.0% in Q2.
Reported sales were up 5.1% on H1 2016. Exchange rates accounted for a positive 2.0% impact, thanks to gains in the US dollar and Russian ruble against the euro that offset the fall in pound sterling. The acquisition of the assets of AlternaScapes, a Florida‐based landscape turf distributor and installer, had a minorscope impact (+0.1%).
Adjusted EBITDA was €160m versus €151m in H1 2016, while the adjusted EBITDA margin came in at 11.8% compared to 11.7% in the six months to June 30, 2016. The CIS, APAC & Latin America segment posted strong adjusted EBITDA growth, driven by a good performance in the CIS segment in terms of selling prices, volumes and productivity. Adjusted EBITDA for the Sports segment benefited from a US$ 12m one‐off settlement payment in connection with a favorable ruling enforced against AstroTurf. In contrast, adjusted EBITDA for EMEA and for North America was down, owing mainly to the rise in raw material costs and the negative impact of certain currencies in the EMEA region. The rise in raw material prices had an adverse impact of €13m for the Group as a whole. Productivity gains represented €18m.
Net profit attributable to owners of the Company was ‐€98m, reflecting a €150m provision in relation to the proceedings in progress with the French Competition Authority. Tarkett decided to accrue a €150m provision in its financial statements at June 30, 2017 in relation to the proceedings in progress with the French Competition Authority. This procedure follows an inquiry initiated in March 2013 towards several resilient flooring manufacturers on the French market and relates to former practices that began back in 1990. On July 25, 2017, the Group signed minutes of a settlement agreement with the investigation services. This settlement, along with the final amount of the fine, will be subject to a final decision by the “Collège” of the French Competition Authority. This non‐recurring provision is treated as an adjustment to EBITDA and to EBIT.
Consequently, adjustments to EBIT represented ‐€164.2m in H1 2017 compared to ‐€11.3m in H1 2016. Financial income and expenses amounted to ‐€12.2m from ‐€11.3m in H1 2016. Lower interest payments on borrowings were offset by a rise in forex losses. The effective tax rate excluding the €150m provision (not tax deductible) is 30.9% compared to 36.6% in H1 2016.