© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to the Q3 2019 Results Media Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Jan Jenisch, CEO; and Ms. Géraldine Picaud, CFO. Please go ahead.
Good morning, everyone, and welcome to our media call for the Q3 results 2019. Thank you for joining. We have, I would say, very good news announced this morning. We have a very good continuation of our growth momentum. No slowdown in our business, and we are also able to convert this into an over-proportional increase in profitability. So I'm a little bit excited this morning to share the news with you. I think when you look around, we have very strong results in North America. We are after -- there were some hiccups in the supply chain in the first half of the year. We had a growth of almost 10% in the third quarter. And also, Europe very strongly continued with the growth and also profitability. In India, Australia and China, we didn't have a volume growth. But here, the focus was on pricing and a significant improvement in the profit margin. And Latin America went positive after 12 months of a light decline in softer markets. We had a positive quarter 3. And the only region which is a bit slower than expected is Middle East, Africa, where we have very good action plans against these challenging market conditions, but the markets were a bit more challenging than we were hoping for. But nevertheless, overall, very strong results. We make -- especially besides the growth and the margins, we make a very significant progress in the cash conversion. So this is going to be a year of strong cash flow as announced previously, and we are here ahead of our own targets. The same for the deleveraging. We can say already that end of the year, we will be below 2x net debt to EBITDA. So you will see a very much improved balance sheet end of 2019, and that's good to start with that into 2020.For sustainability. I'm very proud that we are among the first global companies to have a Chief Sustainability Officer in the group management. So this is key for us, and we have an ideal candidate with Magali Anderson. So also this year, very good, I would say, actions we have shown.So with all this, we are obviously confident to close the year on a strong note. We don't see any negative trends. We go with good order books into the quarter 4, and we will achieve all our targets for growth, operating profit to deleveraging, and we will see a significantly higher cash conversion here for 2019.That, I would say, is my -- maybe my brief introduction, and I'm very happy now to have your comments and questions.
[Operator Instructions] The first question comes from John Revill from Reuters.
A couple of points, if I may. This year, the focus seems to be obviously on paying down debt and obviously deleveraging. And I was wondering -- and you've also made quite a few divestments. Are there any further divestments in the pipeline? Or is that completely overdone with now? And then second one is after you've done these divestments, what's the plan moving forward? Are you going to move into kind of look for any acquisitions then? Or is it going to still keep on winning the business? What's the priority after deleveraging?
Yes. Thanks. I think our strategy is we don't feel comfortable with debt ratios above 2. So we will, for the long term, be below 2. And in my view, we're going to be significantly below 2x net debt-to-EBITDA. This is, I think, what investors expect from a strong global blue-chip company, and this is what we're going to do. I'm very happy we could make this step in the deleveraging. That's not so easy. As you can see with many other companies, the trick was really that we made some divestments where we received the [Audio Gap]come in, so we have no big plans at the moment. We started our bolt-on acquisition program, so -- which we do a bit of investments, like we announced in India and a few other places. So that's not that we have now a couple of billions we want to throw at any one. We are quite happy to have now this new solid balance sheet, and we have no plans now to go back to big debt or something.
But I mean is this the divestment process, is that over now then? Or where -- or could we see any further ones in the future, do you think?
This is something management always has to do, but I have this question a lot. But I'm 2 years now with the company, and we have divested the 3 countries in Southeast Asia. So don't expect that we're going to sell 10 countries. We're looking at 1 or 2 opportunities, but it's not that significant.
So there could be a few small things but nothing major?
Yes.
[Operator Instructions] Next question comes from Johannes Ritter from FAZ.
About what you said that you are very happy with deleveraging, and does that explicitly include that it is true that you withdrew from the bidding process for BASF [ opportunity ]?
For the BASF chemical business, we have never announced anything. So not that we are interested, not that we are in it, not that we went out. Bloomberg has a lot of information, which became public. So I have to be a bit diplomatic because I don't want to make a press release on BASF construction chemicals. Let me say the following. I think that's a very attractive business. And I think anyone in the building materials sector, I think should maybe look into that business because it's obviously attractive. And also, for us, it could be a valuable part of us. However, I think it's a difficult transaction. You see that -- I think BASF announced this a year ago to be divested. That's a year ago. I feel very difficult for the employees, the customers and everything, and you can just maybe see from that, that it's maybe not an easy transaction and I like easy transactions. I like easy transactions. I like simple things. And we have this high discipline in the financials. So everything you saw from us in the last 2 years was value-creating from the company. And this is something we will not violate for something where you think it's good, but it's too complicated.
So I would take that as a yes. You are no longer in the bidding process.
You have to ask Bloomberg, they have all the information.
I'd rather ask you. I don't think you -- it's quite clear then. Okay.
[Operator Instructions] So for now, no more questions, sir.
If you have no more questions, I wish you happy writing and look forward to seeing you in the very near future. Thank you for joining this morning.
Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.