Applus+ 2022 First Half Results Announcement

26/07/2022

    Applus Services, S.A. (“Applus+” or “the Group”), one of the world’s leading and most innovative companies in Testing, Inspection and Certification, today announces the results for the first half year ended 30 June 2022 (“the period”).

    Highlights

    • Strong first half with all divisions performing well
    • High single digit organic revenue growth and mid-single digit inorganic contribution
    • Acquisitions aligned with the Strategic Plan with five made in 2022
    • Statutory vehicle inspection contracts in Galicia, Massachusetts and Buenos Aires extended; Costa Rica terminated
    • Outlook maintained
    • H1 2022 Results:
       
    • Revenue of €986.7 million up 17.0% (organic (1) up 8.6%)
    • Operating profit2 of €97.1 million up 21.0% (organic up 10.2%)
    • Operating profit (2) margin of 9.8% (9.5% H1 2021)
    • Earnings per share of €0.38, up 26.9% o Reported net profit €21.8 million (€14.7m H1 2021)
    • Free cash flow of €71.5 million (up 72%)
    • Net debt/EBITDA (3) ratio of 2.7x and liquidity of €494 million

    1. Organic is at constant exchange rates
    2. Adjusted for Other results, amortisation of acquisition intangibles and impairment (page 4)
    3. Excluding IFRS 16

    Joan Amigó, Chief Executive Officer of Applus+:

    “We have had a strong first half of the year with all divisions growing well, benefiting from good execution and the accelerated portfolio evolution of the past 18 months that has aligned us more closely towards key global megatrends of energy transition, electrification and connectivity, that we highlighted in the Strategic Plan presentation last year.

    The operating profit margin performance was also strong, increasing 30 basis points year on year, coming from positive operating leverage and improved efficiencies, as well as some price increases to offset cost inflation and the benefit of the higher margin acquisitions. The operating profit increase in the period has translated down the income statement delivering an adjusted net profit increase of 23%, which along with the fewer number of shares following the share buyback exercise that completed during the first half, has resulted in an adjusted earnings per share accretion of a further 4% for a total increase of 27%.

    The profit increase, coupled with a lower working capital outflow than for the comparative period, also resulted in a significant increase in cash flow for the first half, maintaining leverage levels whilst supporting the investments in acquisitions and the share buyback.

    The outlook for the full year remains unchanged. Whilst the current level of global political and economic uncertainties is weighing on sentiment, we remain confident of the defensive nature of our business and of its continued good performance. We expect to compensate for the ending of the vehicle concession in Costa Rica with continued strong growth in businesses across the Group and the implementation of new efficiency plans. We continue to focus on improving the quality of our portfolio through selected divestments of some non-strategic operations and further acquisitions of high growth and margin businesses. We expect organic revenue to increase mid to high-single digit and for the adjusted operating profit margin to improve year on year, with this margin improvement expected to be between 30 and 40 basis points.

    I am extremely pleased to have taken on the role of CEO and am fully committed to delivering on the three-year Strategic Plan that we presented last November. My initial focus is on driving operational excellence to the next level and achieving cost efficiencies, with the aim of increasing the focus on margin improvement and return on capital employed. I am convinced that delivering on the Plan with the expected continued strong financial performance of the businesses, will unlock the shareholder value embedded within the Group.”

     

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