Plastic Omnium - 2018 Registration Document

4 2018 CONSOLIDATED FINANCIAL STATEMENTS Comments on the year and outlook PLASTIC OMNIUM 2018 REGISTRATION DOCUMENT 131 The operating margin, after amortization of intangible assets acquired in business combinations and after the share of profit of associates and joint ventures, amounted to €610.1 million in 2018 (8.4% of consolidated revenue), versus €614.7 million in 2017 (9.6% of consolidated revenue). As anticipated, the full consolidation of HBPO (a less capital-intensive assembly business) from July 1, 2018 onward, has had a dilutive impact on the percentage of operating margin. control combined with a continued improvement in industrial efficiency helped to cope with the volatility of production and record an operating margin of 8.5% in the 2 nd  half-year. The operating margin for Plastic Omnium Industries for the year 2018 stands at €577.6 million, i.e. 9.2% of consolidated sales, compared with €599.7 million in 2017, i.e. 9.3% of consolidated sales. A strict cost In 2018, the operating margin of Plastic Omnium Modules stood at €32.5 million, i.e. 3.4% of consolidated sales. Pro forma , i.e. if the takeover of HBPO had occurred on January 1, 2018, operating margin would have come to €50.5 million, or 2.6% of revenue, including the negative €17.5 million relating to the amortization of customer contracts over 7 years, recognized in the context of the price set for the acquisition of HBPO. Consolidated revenue and operating margin by business in million of euros 2017 2018 Revenue Operating margin % Revenue Operating margin % Plastic Omnium Industries 6,433.0 599.7 9.3% 6,287.8 577.6 9.2% Plastic Omnium Modules 0.0 15.1 na 956.9 32.5 3.4% TOTAL 6,433.0 614.7 9.6% 7,244.6 610.1 8.4% In 2018, Plastic Omnium recognized net non-current income of +€114.4 million (compared to -€57.3 million in 2017). This takes in a positive impact of €255 million due to the revaluation of the historic 33.33% holding in HBPO under the takeover operation for the joint venture. It also takes account of particularly high non-current expenses due to the volatility and uncertainty surrounding the market. As at December 31, 2018, the net financial loss stood at €70.2 million, versus a loss of €65.7 million as at December 31, 2017, representing 1.0% of consolidated revenue. In 2018, the amount of tax on this result came to -€113.0 million, i.e. an effective rate of 18.8%, versus -€81.3 million in 2017 (an effective rate of 18.9%). Net profit from continued operations thus rose significantly by +31.9% to €541.3 million and represents 7.5% of consolidated sales. Net profit from discontinued operations came to €1.5 million. This corresponds to the net profit from the Environment business up until the date of disposal (December 18, 2018), and to disposal result. Net profit amounted to €542.8 million ( i.e. 7.5% of consolidated sales), growth of +26.1%. Net profit, Group share came to €533.3 million ( i.e. 7.4% of consolidated sales), growth of +25.4% over the figure for 2017 (€425.2 million or 6.6% of consolidated sales). Basic earnings per share amounted to €3.63, versus €2.88 in 2017 (+26.0%). SUSTAINED INVESTMENTS AND STRONG GENERATION OF FREECASH-FLOW The Group has been engaged in a program of sustained investments since 2016 and in 2018 invested €561.6 million, i.e. 7.8% of consolidated sales ( versus €447.5 million or 7.0% of consolidated sales in 2017 restated under IFRS 5), an increase of 25.5%. These investments included: the commissioning of 2 plants operating intelligent exterior systems in ● the United States and China, Greer and Shenyang both supplying BMW; 2 clean energy systems plants in India – Hansalpur supplying Suzuki and Smyrna in the United States supplying Nissan; and a site for the assembly of front-end modules in Mexico for Daimler; the ongoing construction of 5 plants (1 in India, 1 in Morocco, 1 in ● Slovakia, 1 in China and 1 in Malaysia) and 4 assembly sites for modules (1 in Mexico, 1 in China, and 2 in Germany); the building or extension of three R&D centers: ● the creation of an advanced research center for new energies, ● Δ -Deltatech, due to open in Brussels mid 2019, the building of a new development and testing center for clean ● energy systems in Wuhan (China) in 2019, the digitalization and extension of the global R&D center for ● intelligent exterior systems in Lyon by 2020. This sustained investment program is largely funded by EBITDA that rose to €918.2 million in 2018 (or 12.7% of consolidated sales versus 892.5 million and 13.9% of consolidated sales 2017). As at December 31, 2018, the Group thus generated a free cash-flow of €218.0 million, i.e. 3.0% of consolidated sales ( versus €176.0 million in 2017).