Press Releases

Debt reduction affords Haniel greater entrepreneurial leeway

04/07/2014

  • Haniel Holding Company significantly reduces debt
  • Market value considerably increased
  • Rating lifted
  • Disposal of Celesio initiated in 2013
  • Profit improved

Duisburg, 7 April 2014. The Haniel Holding Company successfully concluded its debt-reduction programme, significantly reducing its net financial liabilities. In addition, by initiating the disposal of Celesio in financial year 2013 and completing the sale in February 2014, the Group created the leeway it needs to restructure its portfolio. Operating profit for financial year 2013 rose from EUR 154 million to EUR 166 million despite the fact that the Haniel Group's revenue amounted to EUR 3.6 billion, which was EUR 0.5 billion less than in the previous year due to the weak economy.

"2013 marked a turning point for Haniel. Having reduced our debt, we are now ideally positioned to secure the successful long-term future of our Company", said Chairman of the Management Board, Stephan Gemkow. "Going forward, we wish to heighten our profile as an active, long-term oriented investor and will do so responsibly."

Debt significantly reduced, new leeway created
The Haniel Holding Company successfully reduced its net financial liabilities from EUR 2.2 billion to just under EUR 1.6 billion at the end of 2013. As a result of the sale of the 50.01 per cent interest in Celesio AG, which was initiated last year and completed in February 2014, an additional EUR 2.0 billion flowed to the Company. The proceeds from the sale provided Haniel with additional entrepreneurial leeway to restructure its portfolio. Not only the Haniel Holding Company, but also the individual divisions were able to reduce their debt in financial year 2013.

Market value increased, rating lifted
In the summer of 2013, Standard & Poor's and Moody's had already lifted their ratings of Franz Haniel & Cie. GmbH by one level to BB+ and Ba1, respectively, both with a stable outlook. This represents a direct consequence of the improved market value gearing, i.e., the ratio of the net financial liabilities at the Holding Company level to the market value of the investment portfolio, which increased significantly from EUR 3.2 billion to EUR 5.3 billion. The ratings upgrade by both agencies is a key step toward achieving the coveted investment grade rating.

Decline in revenue due to weak economy
In a weak economic environment, the Haniel Group's revenue in financial year 2013 - adjusted for the discontinued operation Celesio - fell from EUR 4.1 billion to EUR 3.6 billion. TAKKT increased its revenue by 1 per cent. Bolstered by the solid rental revenue, CWS-boco was just able to maintain stable revenue. The decrease in the Haniel Group's revenue was therefore attributable to the weaker performance of the ELG division. The decline in demand for stainless steel products and falling prices for raw materials - particularly nickel - had a negative impact on this division's business. Strategic acquisitions in the area of superalloys represented a positive highlight for ELG in the financial year. As a result of these acquisitions, the division was able to solidify its leading position in this market segment and expand on its technical advantage for trading in and processing high-alloy, nickel-rich scrap and titanium scrap.

Improved operating profit
The Haniel Group's operating profit increased from EUR 154 million in the previous year to EUR 166 million despite lower revenue. CWS-boco's operating profit rose by 10 per cent thanks to the efficiency enhancements realised under the Focus Future repositioning project. By contrast, operating profit at TAKKT and ELG fell by 14 percent and 11 percent, respectively, due to a cyclically weaker revenue trend and to one-off items.

Significant profit before and after taxes
The Haniel Group's profit before taxes was up significantly as compared to the previous year, from a EUR 1.5 billion loss before taxes to a EUR 117 million profit before taxes. This increase resulted from a significantly higher investment result and improved results from financing activities. The investment result from the METRO GROUP attributable to Haniel increased from EUR -1.4 billion in the previous year to EUR 75 million. The earnings contribution attributable to Haniel in the previous year had been severely weighed down by the impairment loss on the Metro investment. However, due to portfolio effects, the METRO GROUP generated a higher operating profit for the financial year 2013 despite decreasing revenue. This was due primarily to the fact that one-off expenses were lower for portfolio and restructuring measures. The Haniel Group's profit after taxes for 2013 totalled EUR 267 million and was thus a considerable turn-around from the previous year's loss of EUR 1.7 billion. The profit or loss from discontinued operations rose from EUR -149 million in the previous year to EUR 185 million in 2013. That figure includes earnings from the Celesio division, for which Haniel initiated the sales process during the 2013 financial year. The European Pharmacy Network in particular, which expanded to over 100 pilot pharmacies within one year, had a positive effect on Celesio in 2013. In addition, considerable progress was again made under the Operational Excellence Program.

Haniel expects growth for 2014
Haniel expects positive development for the Group in the current financial year. In a slightly improved macroeconomic climate, the Group expects to generate revenue growth, adjusted for currency translation effects, in the high single-digit percentage figures. Haniel also expects to raise its earnings figures in 2014. "Haniel is enkelfähig ("grandchildable"): with a stable balance sheet structure, financial resources, our focus on sustainable business models and strong values, we are confident that we are well-equipped to face the future", said Chairman of the Management Board, Stephan Gemkow. "In future, as an active, long-term oriented investor we want to structure our portfolio in a more balanced, more profitable way", said CFO Dr Florian Funck.

 

Overview: 2013 financial figures

(IFRSs) in EUR million

 2012*

2013

Change (in per cent)

Haniel Group

 

 

 

Revenue**

4,060

3,580

-12%

Operating profit**

154

166

+8%

Profit before taxes**

-1,525

117

>+100%

Profit after taxes

-1,728

267

>+100%

Haniel cash flow

617

540

-12%

Cash flow from operating activities

519

649

+25%

Capital expenditure

740

292

-61%

Average number of employees (headcount)

56,480

50,279

-11%

Net financial liabilities

4,859

3,843

-21%

Holding Company Franz Haniel & Cie.

 

 

 

Net financial liabilities

2,212

1,586

-28%

CWS-boco

 

 

 

Revenue

757

748

-1%

Operating profit

58

64

+10%

Average number of employees (headcount)

7,643

7,527

-2%

ELG

 

 

 

Revenue

2,364

1,880

-20%

Operating profit

53

47

-11%

Average number of employees (headcount)

1,098

1,224

+11%

TAKKT

 

 

 

Revenue

940

953

+1%

Operating profit

112

96

-14%

Average number of employees (headcount)

2,340

2,551

+9%

Celesio (discontinued operation)

 

 

 

Revenue

22,934

21,427

-7%

Operating profit

370

427

+15%

Average number of employees (headcount)

45,166

38,754

-14%

METRO GROUP

 

 

 

Haniel investment result

-1,373

75

>+100%

 

 

 

 

* Prior-year figures adjusted in accordance with IAS 8 and IFRS 5.

** excl. Celesio. Haniel initiated the sale of Celesio in 2013 and the Division is therefore no longer included in the Haniel Group's revenue, operating profit and profit before taxes for the 2012 and 2013 financial years.