Piaggio Group: First Half 2006

Sep 12 2006 09:17
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Board of Directors meeting

  •  NET SALES 903.3 MLN (+10.9% YoY)
  •  EBITDA € 135 MLN (+9% YoY)
  •  OPERATING INCOME € 92.7 MLN (+18.3% YoY)
  •  NET PROFIT € 64.4 MLN (+26.3% YoY)
  •  NET DEBT DOWN TO € 326.2 MLN

PIAGGIO & C. S.p.A.: NET PROFIT € 49.4 MLN

Milan, 11 September 2006 – At a meeting today in Milan chaired by Roberto Colaninno, the Board of Directors of Piaggio & C. S.p.A. examined and approved figures for Group performance in the first six months of 2006, drawn up in compliance with the Ias/Ifrs international financial reporting standards. The company’s shares were admitted for trading on Borsa Italiana’s automated trading system, Mercato Telematico , last 11 July.
The first six months saw positive business performance by the Group, confirming its growth strategies, with favourable progress on international markets (notably the USA and India) and significant recoveries in the motorcycle business.
The half-year saw growth in all Piaggio Group earnings indicators, with:

  •  net sales of € 903.3 million, for YoY growth of 10.9%;
  •  EBITDA growth of 9% to € 135.0 million;
  •  net profit of € 64.4 million, over € 51 million in the year-earlier period;
  •  net debt at € 326,2 million, a decrease of approximately € 85 million from € 411.4 million at 31 December 2005.


These results were achieved against a YoY decline of 4% in shipments on the world two-wheel motor vehicle market, but growth on markets of greatest interest to Piaggio, Europe (+6%) and North America (+7%). 
On the light transport vehicles market, sales volumes increased in both the geographical regions addressed by the Group (Europe +4.9%, India +25%).
The half-year figures are detailed below:
Consolidated net sales totalled € 903.3 million, a YoY increase of 10.9% (€ 814.3 million). Growth reflected increased shipments in both businesses (two-wheelers and light transport vehicles, LTV). Specifically, the main contributions came from the motorcycle sector (+26%), driven by the launch of new Aprilia and Moto Guzzi models, and the growth of the LTV business in Europe (+6%) and in India (+40%). Significant progress was made in the two-wheeler business in North America (+60%).
The net sales figure includes € 36.5 million on the supply order placed with Piaggio by Poste Italiane S.p.A. at the end of 2005.
The industrial gross margin was € 282.0 million, with a return on net sales of 31.2%, and an increase of 13.2% from € 249.1 million in the year-earlier first half.

EBITDA amounted to € 135.0 million, a rise of 9% on € 123.9 million in the year-earlier period. The 2006 first-half EBITDA margin was 14.9%, compared with 15.2% a year earlier: the 2005 half-year figure included reimbursement of prior-period public eco-incentives for € 18.6 million, while the 2006 half-year figure includes a portion of parent company non-recurring expense, € 4 million, for admission to trading procedures. Net of these extraordinary items, positive in 2005 and negative in 2006, EBITDA would have been € 139 million at 30 June 2006 and € 105.3 million at 30 June 2005 (+32.0%), with an EBITDA margin of 15.4% and 12.9% respectively.

Industrial depreciation and amortisation were € 42.3 million in the first half.
Operating income was € 92.7 million, with a return on net sales of 10.3%. In the first half of 2005, operating income was € 78.4 million (9.6% on net sales).
The Group posted a net financial charge of € 14.3 million.
After tax of € 13.7 million and minority interests of € 0.4 million, the first half of 2006 closed with consolidated net profit of € 64.4 million, an improvement of more than 26% from € 51.3 million in the half year to 30 June 2005.
Net debt stood at € 326.2 million at 30 June 2006, down from € 411.4 million at 31 December 2005 and € 397.7 million at 31 March 2006. The decrease reflected positive cash flow from operations of € 107 million. Investments absorbed resources totalling € 31.7 million.
 
Group shareholders’ equity was € 413.3 million, from € 348.5 million at 31 December 2005.

Post balance-sheet events

On 11 July 2006 the company was admitted for trading on the Borsa Italiana automated trading system, at € 2.3 per share and capitalisation of more than € 887 million.
On 28 August, the new Board of Directors was appointed to align the company’s corporate governance system with the requirements of the voluntary code of conduct. The directors have a three-year mandate, until approval of results at 31 December 2008.

Outlook

Consistently with Piaggio’s goal of maintaining its lead in product’s innovation, the second half saw the market launch of the Piaggio MP3.
In the motorcycle segment, Piaggio will continue efforts for the recovery of the Aprilia and Moto Guzzi brands.
The priority in the LTV segment continues to be supporting growth on the Indian market, where an important enhancement to the product portfolio is planned by the end of the year with the introduction of the first version of the 4-wheeler vehicle.
Piaggio chairman Roberto Colaninno said: “our success, thanks to strong cash flow, in reducing debt and funding growth plans strengthens the Group strategy, especially in view of the need to invest in new product ranges and new initiatives, particularly on the international markets. Our strategy for 2007 will see management focus on international business – notably India, China and North America – whose contribution to Piaggio Group aggregate revenues is expected to improve significantly over the medium term.”

The Parent Company Piaggio & C. S.p.A. 
The half-year figures for the parent company have been drawn up in compliance with the Ias/Ifrs standards. In the first half of 2006, Piaggio &. C. S.p.A. had net sales of € 711.1 million, positive EBITDA of € 102.7 million, a pre-tax profit of € 55.9 million and a net profit of € 49.4 million.

For more information:
IMMSI Press Office     Piaggio Group Press Office
Via Vivaio, 6 - 20122 Milan    Via Vivaio, 6 - 20122 Milan
Massimiliano Levi     Roberto M. Zerbi
Tel. +39 02 76212621     Tel. +39 02 76212643-44-45-46
Fax +39 02 76212629     Fax +39 02 76212629
massimiliano.levi@immsi.it     press@piaggio.com
www.immsi.it      www.piaggio.com

Piaggio – Consolidated schedules

Income Statement

In thousands of euro Note 1st half
2006 1st half    2005  Change
    
Net sales 4 903,310 814,292 89,018
    
Costs for materials 5 519,356 463,885 55,471
Costs for services and  use of third-party assets 6 172,500 158,970 13,530
Staff costs 7 124,843 121,860 2,983
Depreciation of tangible assets 8 20,123 22,950 (2,827)
Amortisation of intangible assets 8 22,135 22,603 (468)
Other income from operations 9 64,760 81,500 (16,740)
Other costs from operations 10 16,364 27,138 (10,774)
Operating income   92,749 78,386 14,363
    
Profit on equity investments  (2)  (2)
Financial income 11 5,460 9,602 (4,142)
Financial charges 11 (19,745) (24,176) 4,431
Income before tax   78,462 63,812 14,650
    
Tax for the period 12 13,712 12,533 1,179
    
Net result from assets in use   64,750 51,279 13,471
    
Assets to be discontinued:    
Gain or loss from assets to be discontinued  13   0
    
Consolidated net profit   64,750 51,279 13,471
    
Attributable to:    
Equity holders of the parent  64,429 51,039 13,390
Minority interests  321 240 81
    
Earnings per share (in €) 14 0.17 0.14 0.03
Diluted earnings per share (in €) 14 0.16

Balance Sheet

At 30 June At 31 December 
In thousands of euro Note 2006 2005 Change
    

ASSETS    

Non-current assets    

Intangible assets 15 623,949 624,746 (797)
Property, plant and equipment 16 249,223 259,591 (10,368)
Investment property 17 0 506 (506)
Equity investments 18 607 650 (43)
Other financial assets 19 6,086 10,354 (4,268)
Non-current tax receivables 20 7,193 7,156 37
Deferred tax assets 21 38,676 35,135 3,541
Trade and other receivables 22 2,652 7,140 (4,488)
Total non-current assets   928,386 945,278 (16,892)
    
Assets held for sale  27 701  55 646
    

Current assets    

Trade and other receivables 23 351,538 176,772 174,766
Current tax receivables 20 13,896 12,440 1,456
Inventories 24 245,952 192,029 53,923
Other financial assets 25 44,992 137 44,855
Cash and cash equivalents 26 39,647 42,770 (3,123)
Total current assets   696,025 424,148 271,877
    
TOTAL ASSETS   1,625,112 1,369,481 255,631

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