Growth in earnings for 2018, financial structure further strengthened

Press release date: 
20/03/2019 - 5:45pm

 

Reims, Wednesday March 20, 2019 - 5:45 pm

LANSON-BCC is reporting 8.9% growth in net income for 2018, up to €12.69m. Despite an unfavorable environment in France and the UK - the Group’s two longstanding core markets - 2018 was an encouraging year overall: several Houses recorded growth in France and for Export, the price-mix effects were positive on the whole and financial expenses were further reduced. This enabled the Group to strengthen its financial structure again. As a family-owned pure player for Champagne, the Group is moving forward with its long-term value development strategy with determination.

Highlights

Global Champagne shipments came to 301.9 million bottles (-1.8%). The French market (48.7% of the volumes shipped) recorded a further contraction to –4.2% (–2.5% in 2017). Development was limited for the other European Union countries (-0.9%), linked primarily to the downturn on the UK market (-3.6% after –19% over 2016 and 2017). Countries outside the European Union continued to make progress (+2.1% with 26.1% of the volumes sold). The total value of Champagne shipments is proving resilient, up +0.3% to €4.9bn (source: CIVC).

Against this backdrop of significant instability, the LANSON-BCC Group’s Houses naturally show contrasting trends. While Lanson recorded a drop in its business, primarily in the UK, Philipponnat, with its renowned Clos des Goisses cuvee, De Venoge, with the successful launch of its Princes cuvee, and Chanoine, with its Tsarine cuvee, improved their performances significantly, while the other Houses - Boizel, Burtin and Alexandre Bonnet – were stable.

Consolidated income statement

IFRS (€m)

2018

2017

Change

Revenues

277.50

261.59

+6.1%

Gross margin

98.38

93.66

 

EBIT

21.88

20.39

+7.3%

% of revenues

7.9%

7.8%

 

Financial income and expenses

-3.70

-3.95

+6.3%

Corporate income tax

-5.60

-4.78

 

Net income

12.69

11.65

+8.9%

% of revenues

4.6%

4.5%

 

 


2018 consolidated revenues came to €277.50m (+6.1%). Excluding the brokerage subsidiary, whose activity is traditionally subject to fluctuations, consolidated revenues represent €271.94m (+6.1%).

The Group’s EBIT reflects the impact of a further decline on the UK market. However, the progress made by several Houses, both in France and for Export, and the globally positive price-mix effects made it possible to offset the UK market’s continued downturn and, at least partially, the increase in the cost price of bottles sold during the period.

EBIT came to 21.88m, compared with €20.39m, up +7.3%.

Financial expenses primarily concern financing for the aging of Champagne stocks. They show a further slight improvement to -€3.70m, versus -€3.95m, thanks to the moderation of the average cost of financial debt at less than 1%.

Pre-tax earnings are up +10.7% to €18.18m.

Corporate income tax represents -€5.60m, up +17.1%, with an effective corporate income tax rate of 30.8%.

Net income is up +8.9% to 12.69m, with a net margin rate of 4.6%.

Consolidated balance sheet

Shareholders' equity represents 283.9m, compared with €273m at end-2017.

Consolidated net financial debt totaled 521.7m (80% fixed rate), versus €505.55m at end-2017. 86% of this debt, representing €447.3m, compared with €437.38m at end-2017, concerns financing for the aging of a stock of wine over 3.5 years on average, which is an essential part of the Champagne wine production process; its book value was €526.8m, versus €507.22m at end-2017. In view of this outstanding debt, a reasonable level of sales growth is expected for the coming years.

Other financial debt, with €74.4m versus €68.17m at end-2017, concerns the investments in our Houses, including €12.2m for purchasing vineyards.

The Group has continued tostrengthen its financial structure: gearing, at 1.84, is at a normal level for Champagne due to the significant levels of stock for aging. It has continued to fall from a high of 5.68 at end-2006 following the acquisition of Burtin and Champagne Lanson. Excluding stocks, this ratio drops to 0.26.

LANSON-BCC’s Board of Directors will be submitting a proposal for the General Meeting on May 3, 2019 to approve a stable dividend of €0.50 per share, to be paid out on May 10, 2019 (28% of net income). As has been the case since 2006, the Group has capitalized the bulk of its earnings in order to give it the resources needed to drive its development.

 

Outlook

LANSON-BCC is reasserting its long-term value development strategy. The significant investments made in the Group’s Houses, first to upgrade their industrial and wine-production tools, then more recently to open them up to the public, aim to further strengthen their positioning in the high-end and luxury sector. At the start of 2019, the arrival of new managers to head up Lanson, Chanoine and Boizel illustrates the new ambitions for their growth.

 

As always, since the last quarter of the calendar year accounts for nearly 50% of its total sales, the LANSON-BCC Group will not be publishing forecasts for 2019.

 

Additional information

The consolidated financial statements for 2018 were approved by the Board of Directors on March 20, 2019. The audit procedures on the consolidated accounts have been completed. The certification report will be issued once the necessary procedures have been finalized for filing the 2018 registration document.

Champagne Lanson  Champagne Tsarine    Champagne Besserat de Bellefon  Champagne Boizel   Champagne De Venoge   Champagne Philipponnat  Maison Alexandre Bonnet