Published: 21-08-2019 18:21
Stern Groep N.V., the Dutch listed automotive group, announces its results for the first half of 2019.
Key points in H1-2019
- Profit after tax in H1-2019 € 27.0 million (H1-2018: € 4.7 million);
- This includes the net book gain on the sale of SternLease BV of € 23.4 million;
- Profit after tax from continuing operations in H1-2019: € 1.1 million (H1-2018: € 2.1 million);
- Operating profit from continuing operations in H1-2019: € 5.2 million (H1-2018: € 4.5 million);
- Net revenue down 7.0% to € 492.2 million (H1-2018: € 529.4 million);
- Operating profit at Dealergroup Stern in H1-2019: € 4.8 million (H1-2018: € 4.7 million);
- Market share in passenger cars at 5.0% (H1-2018: 5.0%), market share in light commercial vehicles rises to 7.9% (H1-2018: 6.9%);
- After distribution of an interim dividend of € 2.50, net asset value per share rose to € 28.86 at the end of June 2019 (year-end 2018: € 27.34);
- Refinancing completed at the end of May 2019, new loan agreement with term until mid-2022.
Henk van der Kwast, Chief Executive Officer:
“We are delighted with the proceeds of the sale of SternLease. The structuring of our partnership with ALD Automotive is well under way, and looks to be very promising. Sales of new cars are well down this year compared to last year nation-wide, and this pressured our result, especially at Dealergroup Stern. The progress we are making behind the scenes with important efficiency improvements and the digitalisation of our business is more important for the longer term.”
IFRS 16 (recognition of lease obligations in the balance sheet) came into effect in 2019. To enable a realistic comparison with the results in 2018, all results are shown with and without application of IFRS 16.
The figures for SternLease B.V. and Mango Mobility B.V. in 2019 are classified as discontinued operations, due to the already completed sale of SternLease B.V. on 31 May 2019 and the proposed sale of the Mango Mobility operations.
The figures for 2018 in this press release have been adjusted for the purpose of comparison.
Progress in continuing operations in H1-2019
Net revenue declined by 7.0% compared to H1-2018 to € 492.2 million. This was mainly due to lower revenue from sales at Dealergroup Stern in line with a weaker market, as well as the sale of Arend Auto Amsterdam and the closure of 2 Vireo Auto branches. Partly due to this decline in revenue, the gross profit was down by € 1.9 million (2.1%). The gross margin was 18.1%, compared to 17.2% in H1-2018. This improvement in the relative margin was due to change in the ratio of revenue from sales to revenue from after-sales. A higher relative margin is realised on revenue from after-sales (such as workshops and parts) than from revenue from sales (cars).
Other operating income was € 3.0 million lower compared to H1-2018. The decline was due among other things to a € 0.9 million lower revaluation of income and dividend on the interest in Bovemij and a € 0.8 million decline in the book profit on the sale of real estate.
Employee expenses were 4.3% lower than in H1-2018, despite the CLA increases of 0.75% as of 1 July 2018 and 3.2% as of 1 February 2019 and despite the reorganisation expenses of around € 0.5 million recognised in H1-2019. The decrease in employee expenses was due to the reduction of the number of FTEs, mainly due to organic downsizing, but also as a result of the sale of Arend Auto Amsterdam at the end of Q3-2018. The number of FTEs is now more than 90 lower than at year-end 2018. Operating expenses (adjusted for the changes in presentation due to IFRS 16) were 5.4% lower than in H1-2018, partly due to cost-saving programmes already initiated in Q4-2018. Profit after tax from continued operations came to € 1.1 million (H1-2018: € 2.1 million).
Highlights Dealergroup Stern
226,000 new passenger cars were registered in the Netherlands in H1-2019, a decline of 10.5% compared to H1-2018. Only 21.4% of these registered cars were sold to private customers, compared to 36.8% in 2016. 44,000 new light commercial vehicles were registered in the Netherlands in H1-2019, an increase of 0.5% compared to H1-2018.
In organic terms, the market share of Dealergroup Stern for passenger cars remained stable at 5.0% (H1-2018 adjusted for the sale of Arend Auto Amsterdam and closure of 2 Vireo Auto branches). The market share of Dealergroup Stern for light commercial vehicles stands at 7.9% (compared to 6.9% in H1-2018, adjusted for the sale of Arend Auto Amsterdam).
Revenue at Dealergroup Stern declined on balance by € 37.6 million (6.7%) to € 522.9 million. Half of this decrease was due to the weaker market, and the other half to the stated closures and divestments in 2018.
The relative margin on sales of new passenger cars remained the same, despite the decline in the number of cars sold to private customers. Partly as a result of the limited availability of engineers, the decision to no longer hire freelance engineers and the sale of Arend Auto Amsterdam last year and the closure of 2 Vireo Auto branches, revenue from workshops was slightly lower than in H1-2018. The margin on after-sales (workshops and parts), however, increased, due to realised efficiency improvements and lower failure and goodwill costs as a result of the Fast Forward project. Employee expenses were down 2.3% in organic terms, despite the CLA increases and the reorganisation expenses. Operating expenses were lower in organic terms, partly due to the cost-saving programmes initiated at the end of 2018.
Dealergroup Stern accordingly realised an operating profit (EBIT) of € 4.8 million in H1-2019 (H1-2018: € 4.7 million).
The balance sheet total of Dealergroup Stern at 30 June 2019 stood at € 291.9 million, down 2.9% on year-end 2018 and 6.8% lower than at 30 June 2018.
Highlights Stern Mobility Solutions
The figures for SternLease B.V. and Mango Mobility B.V. in 2019 are classified as discontinued operations, due to the already completed sale of SternLease B.V. on 31 May 2019 and the proposed sale of the Mango Mobility operations. The comparative figures for 2018 have been adjusted.
The Stern Mobility Solutions segment now consists mainly of the rental operations (SternRent).
This segment also includes the SternPartners operations. The majority of these operations were converted into SternLease contracts in H1-2019, and included in the sale at the end of May 2019. We expect to fully discontinue the operations of SternPartners by the end of 2019. The number of contracts at 30 June 2019 was approximately 200 (year-end 2018: 686 contracts).
The operating profit (EBIT) of Stern Mobility Solutions came to € 0.2 million (H1-2018: € 0.1 million). The rental fleet of SternRent consisted of 2,720 vehicles at 30 June 2019, 5.9% larger than at year-end 2018. The balance sheet total at 30 June 2019 was € 59.3 million.
Highlights Stern Car Services
This segment consists of SternPoint (car body repairs, minor repairs and light commercial vehicle interiors).
The SternPoint operations at Bunnik were merged with the operations of SternPoint Houten for reasons of efficiency in H1-2019. The premises at Bunnik will be sold. We expect the new (large) SternPoint branch in Amsterdam West (Radarweg) to be completed at the beginning of 2020. All the car body repair operations of SternPoint in Amsterdam will then be merged into this branch. The current SternPoint branch in Amsterdam Noord will then be closed.
Revenue at SternPoint was down 3.0% compared to H1-2018. This (temporary) decline was partly due to the merging of the operations of the car body repair branches in Amsterdam Zuidoost and Amsterdam West at that time with the branches in Amstelveen and Amsterdam Noord.
The number of SternPoint branches currently stands at 16. Stern Car Services aims to achieve national relevance with a network of larger car body repair branches with carefully selected brand certifications on a geographical basis.
The operating profit (EBIT) of Stern Car Services came to € 0.1 million positive in H1-2019, a clear improvement compared to H1-2018. The decline in revenue in H1-2019 was offset by significant efficiency improvements. We expect the operating result in H2-2019 to show a clear improvement on H2-2018, as a result of already realised efficiency improvements and the additional car body repair revenue that will come from the long-term partnership with ALD Automotive.
The operating profit of the Other segment was € 0.2 million in H1-2019 compared to € 0.1 million in H1-2018. This includes holding costs not recharged, which were significantly lower in H1-2019 than in H1-2018, mainly due to the lower number of FTEs.
These cost savings were offset by lower other operating income. In H1-2019, there was € 0.9 million lower income from revaluation and dividend on the interest in Bovemij and a € 0.8 million decline in the book profit on the sale of real estate.