IFCO’s group revenues grew by 5.6% to US $195.2 million in Q2 2010 compared to
Q2 2009 and in H1 2010 by 8.1% to US $383.6 million (currency adjusted by 8.5%
in Q2 2010 and by 8.4% in H1 2010). Operational profitability (EBITDA) improved
significantly by 22.5% to US $36.1 million in Q2 2010 compared to Q2 2009 and in
H1 2010 by 25.6% to US $67.9 million (currency adjusted by 27.4% in Q2 2010 and
by 26.5% in H1 2010). As a consequence LTM Q2 2010 EBITDA reached US $142.8
million.
RPC Management Services showed again robust and sustainable growth, delivering
significant gains in both revenues in Q2 2010, which grew by 12.1% (currency
adjusted by 18.3%) to US $106.0 million, and in EBITDA, which grew by 17.1%
(currency adjusted by 23.2%) to US $30.6 million, respectively. Pallet
Management Services revenues were close to last year’s level with revenues at US
$89.2 million, although EBITDA increased by 42.3% to US $8.0 million in Q2 2010.
The sources of RPC Management Services’ revenue gains have held steady in recent
quarters, resulting from a combination of organic volume growth in our European
RPC business as well as strong and sustainable growth in our RPC US business.
Our European business benefited from higher usage and increased penetration of
our current customer base as well as winning new retailers in certain markets.
Also our efforts to develop the business in East Europe showed good progress and
supported the overall positive volume development in Europe. Growth in our RPC
US business has accelerated even further due to increasing RPC penetration in
our existing customer base and a steady flow of new retailers adopting the RPC
model. RPC South America’s growth momentum continued to develop.
Revenues in Pallet Management Services came in close to previous year levels for
Q2 and H1 2010. Although the market pricing environment remained below 2009
levels, the negative sequential trends flattened out, with Q2 2010 average
pallet pricing at the same average levels as Q1 2010. Volumes in certain regions
of the US have experienced a rebound from 2009 levels, while other regions
remain in a depressed state. Service related revenues showed a good growth
momentum and continued to increase as a percentage of total revenues.
Gross profit margin on a group level increased in Q2 2010 by 2.8 percentage
points to 22.8% (H1 2010, grew 2.5 percentage points to 21.8%). RPC Management
Services’ gross profit margin grew from 27.1% in Q2 2009 to 28.7% in Q2 2010.
Gross profit margin in our European RPC business benefited from slightly higher
per trip revenues, constant per unit cost of goods sold and relative lower
depreciation. Gross profit margin in the RPC US business decreased slightly as a
result of slightly lower prices, as well as higher freight costs resulting from
higher fuel prices and a higher rate of expedited RPC pool movements in order to
meet the increasing customer demand. All regions continue to benefit from the
scale effects of the growing business on fixed costs. Gross profit margin in the
Pallet Management Services business grew to 15.8% from 12.5% in Q2 2009, with
the effects of lower year-over-year customer prices and higher fuel prices now
more than offset by significantly lower raw materials costs, improved labor
productivity, a more efficient transportation cost structure, and a higher mix
of profitable service revenues.
Currency adjusted group EBITDA increased in Q2 2010 by 27.4% to US $36.1 million
(H1 2010, by 26.5% to US $67.9 million). LTM Q2 2010 currency adjusted EBITDA
reached a record level of US $135.8 million. EBITDA on a currency adjusted basis
in RPC Management Services increased significantly in Q2 2010 by 23.2% to US
$30.6 million (H1 2010, by 27.1% to US $58.0 million). RPC Management Services
EBITDA margin improved in Q2 2010 by 1.2 percentage points to 28.8%. EBITDA in
Pallet Management Services increased by 42.3% to US $8.0 million in Q2 2010 (H1
2010, by 22.9% to US $14.9 million). EBITDA margin in this segment grew in Q2
2010 to 8.9% from 6.2% in Q2 2009.
Currency adjusted EBIT increased by US $7.4 million, or 39.8%, to US $26.1
million in Q2 2010 (H1 2010, by 38.1% to US $47.2 million). LTM Q2 2010 currency
adjusted EBIT reached a record level of US $95.7 million.
Net result improved from a net loss of US $5.4 million in Q2 2009 to a net
profit of US $6.1 million in Q2 2010 (H1 2010 from a net loss of US $2.7 million
to a net profit of US $7.0 million). The significant net operational
improvements discussed above were partially offset by higher ICE related
expenses and a higher deferred tax provision. Net finance costs decreased in
both Q2 2010 and H1 2010 as a result of the one-time costs recognized in Q2
2009 in connection with the Company’s 2009 refinancing.
IFCO’s cash flow from continuing operations, excluding the cash flow effect of
income tax payments and ICE related payments, more than doubled to US $64.6
million in H1 2010 from US $31.2 million in H1 2009 as a result of higher profit
levels and improved working capital development.
Capital expenditure levels increased by US $14.6 million, or 109.4%, to US
$28.0 million during Q2 2010 (H1 2010, by 113.0% to US $52.9 million). The
realization of the planned growth in Europe and the US has led to continued
investments in our RPC pools in 2010.
Outlook: As the financial crisis that unfolded in 2008 spread to the worldwide
economy up to today, IFCO experienced challenging economic climates in many of
its markets. While the economy in the United States remained in a weak but
slightly improved condition during Q2 2010, it is expected that the European
economy will recover during 2010.
Accordingly, the European RPC Management Services business will continue to
leverage IFCO’s leadership position and market experience to meet or exceed
overall market development. The Company plans to increase its sales initiatives
and to continue to expand its geographic presence in Western Europe, Central
Eastern Europe (CEE) and South America. In the United States, IFCO realized
increases in the overall RPC penetration among grocery food retailers and plans
to grow in excess of this market development. Based on the Company’s solid RPC
business model, IFCO expects that the RPC Management Services businesses will
continue to grow in 2010. IFCO’s investments to support this growth will be
carefully aligned with its business development and are targeted to continually
increase the return on its invested capital.
IFCO’s Pallet Management Services business has significantly been negatively
affected by the overall economic decline in the United States in 2009, primarily
as a result of pressure on prices from lower market demand. Nevertheless, IFCO
remains confident that the key competitive advantages of the Pallet Management
Services business – the breadth of service offerings, the national network and
the value proposition at a national and local level – have not changed and
should allow its Pallet Management Services segment to stabilize revenues and
increase profitability in 2010. Q2 2010 has shown nearly flat revenue
development as a first slight sign of recovery.
The Company believes that its current assessment of the markets and its business
development as described above should result in overall significant gains in
both revenues and operational profitability in 2010 as compared to 2009.
Financially, IFCO expects to be able to fund its capital, operational and debt
service requirements through its own operating cash flows.
For further explanations, please see IFCO’s quarterly report, which will be
filed with the Deutsche Borse AG on or about August 12, 2010, and will be
www.ifcosystems.com. The Company will hold a conference call on August 19, 2010. The details are available on the Company’s website.
Source: IFCO Systems
