Touax: H1 2019 Results

World News: . []

PRESS RELEASE                                                                                                          Paris, 11 September 2019 – 5.45 p.m.

 

“Following the strategic refocusing at the end of 2017 on the long-term transportation equipment leasing business, priority has been placed on improving the Group's profitability. Eighteen months later, the effects of this strategy and its effective implementation are borne out in the results,” say Fabrice and Raphael Walewski, TOUAX SCA’s managing partners.

“In 2018, we launched a Continuous Improvement Program (CIP), developed a new fleet management organization in the freight railcar activity, raised €110m for asset financing, issued a €16.6m Euro PP, syndicated €24m of assets to third party investors and signed further investment commitments of $80m, and invested €40m in containers and €24m in freight railcars.

During the first half of 2019, we continued to implement our strategic plan, which enabled us to record an improvement in profitability, with a 25% increase in EBITDA as well as a double-digit increase in operating income.

To ensure future support for the growth and profitability strategy, Touax signed a loan of €40m in June, which was followed in August by a Euro PP of €10m to refinance the €23m Ornane bond and pursue investment in tangible assets, thus ensuring a higher recurrence of leasing revenue over the coming years.”

Consolidated revenue from activities in the first half of 2019 reached €79.5 million compared with €74.4 million in the same period in 2018. At constant scope and currency, revenue from activities increased by 3%.

Revenue from the leasing activity reached €65.9 million versus €65.2 million in the first half of 2018, an increase of 1.2% (-2.2% at constant exchange rates) thanks mainly to the freight railcars division, which saw an increase in both the utilization rate and rental prices. Revenue from the leasing of managed equipment in the containers division increased (+42% at constant currency). The decrease in the fleet managed for third parties and corresponding leasing revenue are linked to second-hand sales and the end of finance lease contracts.

Sales reached €12.1 million (at constant scope and exchange rates) versus €8.3 million in the first half of 2018 thanks to the development of trading activity in new containers and the sale of second-hand containers on behalf of investors; disposals linked to the fleet age, as part of the normal cycle of activity.

Syndication fees and capital gains not linked to recurring activities came to €0.8 million versus €1 million the previous year.

Leasing revenue increased by 11.2% to €28.3 million in June 2019, thanks to an increase in leasing prices and in the utilization rate. The utilization rate averaged 88.8% in the first half of 2019 versus 84.2% the previous year. These increases underscore the improvement in the operating performance of the railcar division.

Sales of railcars and syndication margins decreased by €1.4 million, attributable to lower volumes during the period in relation to the first half of 2018.

In line with the growth in owned equipment, revenue from the leasing of owned equipment increased to €2.9 million, an increase of 42% at constant currency while revenue from managed equipment fell to €25.7 million (€23.9 million at constant currency) compared with €30.4 million the previous year, attributable to the reduction in the fleet under management (-18,845 CEUs) following sales of used containers as part of the normal cycle of activity and the end of finance lease contracts. The average utilization rate over the period was 97.7% compared with 98.9% in the first six months of 2018.

Sales of containers reached €7.4 million at June 30, 2019 compared with €3.8 million in the first half of 2018 (+€3.1 million at constant currency) thanks to the development of trading activity in new and used containers. Syndication fees remained stable at €0.4 million, with 13,620 CEUs syndicated to financial investors during the first half of the year, Touax keeping the fleet’s management.

(1) The Group calculates EBITDAR (earnings before interest, tax, depreciation, amortization and rent) by adding current operating income to depreciation and amortization and provisions for fixed assets and distributions to investors.

(2) EBITDA corresponds to EBITDAR minus distributions to investors.

(3) Including €156.0 million in non-recourse debt at June 30, 2019. As at 30 June 2019, the finance lease commitments are booked in Lease liabilities following IFRS16 application.

(4) Operating cash flows include the purchase and sale of equipment.

EBITDA of the freight railcars division came to €10.3 million, a decrease over the period (-€1.2 million) despite an increase in revenue from activities due to costs related to the repair and revision of railcars carried out for leasing purposes.

EBITDA of the river barges division came to €1.4 million in the first half of 2019 compared with €2.4 million in 2018, the decrease linked to the lack of equipment sales over the period.

Central costs decreased by €1 million and EBITDA of the Modular Buildings’ activity in Africa improved by €0.6 million over the period.

This will be used to refinance the €23 million Ornane bond (redemption of €21.7 million on August 1, 2019 following exercise by investors of their put option; the remaining portion will be redeemed on September 18, 2019 when Touax exercises its call option) with the balance used to finance the Group's investment plan.

The aim of this bond issue is to extend the average maturity of the Group's debt.

The net proceeds of the issue will be used to finance the investment plan.

The growth of rail traffic in Europe and Asia, the need to renew the existing fleet of European freight wagons following a weak investment cycle in the last decade, the increase in the market share of leasing companies, and the desire developed countries to favor low carbon transport, should continue to boost activity.

The European river transport market continues to be underpinned by the increase in the transport of building and biomass materials, which in turn is underpinning requirements for new river barges.

According to the IMF, global GDP growth is expected to decline to 3.2% before rising slightly to 3.5% in 2020. The market share of container lessors has increased from 40% to 52% over the last decade. In a context of weaker growth, the utilization rate of the existing fleet of containers belonging to lessors remains high in the world (around 98%), reflecting the non-contraction of global traffic (all areas combined).

The slowdown in global economic growth is likely to have a limited impact on the Group, which continues to benefit from renewal requirements in transportation equipment, enabling it to continue gradually increasing its profitability by developing trading business and reconstituting its own-asset base.

 

TOUAX Group leases out tangible assets (freight railcars, river barges and containers) on a daily basis worldwide, both on its own account and for investors. With nearly €1.2bn in assets under management, TOUAX is one of the leading European players in the leasing of such equipment.

TOUAX is listed on the EURONEXT stock market in Paris - Euronext Paris Compartment C (ISIN code: FR0000033003) - and is listed on the CAC® Small, CAC® Mid & Small and EnterNext©PEA-PME 150 indices.

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Globe Newswire: 16:45 GMT Wednesday 11th September 2019

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