MERSEN: IMPROVEMENT IN SALES IN THE THIRD QUARTER OF 2020
COMPARED TO THE SECOND QUARTER OF 2020
TARGETED ADAPTATION PLANS LAUNCHED
* Sales of EUR208 million in the third quarter of 2020, up 4% on the previous
quarter thanks to a good performance in Asia and North America
* Decrease of 12% in organic sales for the first nine months of the year vs
2019 (-9.8% in the third quarter)
* Robust performance in sustainable development markets (renewable energies,
electronics, green transportation)
* Strong drop in the aeronautics and chemicals markets and poor visibility
regarding the process industries market, requiring targeted adaptation plans
* Full-year 2020 guidance, based on the current health situation:
o Organic sales evolution of between -12% and -14%
o Operating margin before non-recurring items of between 7% and 8%
o Recognition of around EUR55 million in non-recurring expenses net of tax
savings, including EUR30 million with no impact on cash flow
PARIS, OCTOBER 28, 2020 - Mersen (Euronext FR0000039620 - MRN), a global expert
in electrical power and advanced materials, has reported consolidated sales of
EUR638 million for the first nine months of 2020.
Luc Themelin, Chief Executive Officer, commented: "Mersen continues to navigate
the current and unprecedented economic environment with agility and resilience.
We have succeeded in containing the impact of the economic crisis since the
beginning of the year thanks to the good performance of our markets in Asia.
Moreover, the resilience shown by the sustainable development markets we have
developed, and which now represent over half of our sales, is clear proof of
the validity of our strategic choices. The third quarter of 2020 still bears
the scars of the global economic crisis brought about by the health measures
introduced in countries around the world. We have implemented government
part-time working schemes to secure jobs at the peak of the crisis since April
and will continue to do so for as long as it is necessary. For certain markets,
however, like aeronautics and chemicals, the sharp slowdown in activity shows
no sign of abating and there is no prospect of a return to normal in the coming
years. This means that we need to adapt to maintain our competitiveness and
prepare as best we can for 2021 despite very limited visibility. To ensure
this, adaptation plans will be implemented in certain sites in full
consultation with the teams in place and in line with our values as a Group. I
would like to take this opportunity to thank all Mersen employees for their
hard work and commitment during this difficult period and reiterate my
confidence in our company's prospects."
THIRD-QUARTER 2020 SALES
Mersen reported consolidated sales of EUR208 million for the third quarter of
2020, down 9.8% at constant scope and exchange rates. Including the positive
scope effect linked to the integration of AGM Italy and GAB Neumann and the
negative currency effect primarily linked to the depreciation of the US dollar,
sales decreased by 11.2% over the period.
This performance is an improvement of around 4% on the second quarter, when
organic sales dropped 18%, mostly due to the Electrical Power segment.
Like-for- Scope Currency Reported
In millions of euros Q3 2020 Q3 2019 like growth effect effect growth
Advanced Materials 112.1 134.0 -16.3% 3.3% -3.9% -16.4%
Electrical Power 96.0 100.4 -1.2% -3.1% -4.3%
Europe 66.1 77.6 -19.6% 5.3% -0.6% -14.8%
Asia-Pacific 62.5 65.1 -0.6% 0.5% -3.8% -4.0%
North America 72.2 83.0 -8.4% -5.1% -13.0%
Rest of the World 7.3 8.6 -1.2% -14.5% -15.6%
Group 208.1 234.3 -9.8% 1.9% -3.6% -11.2%
PERFORMANCE BY SEGMENT
Advanced Materials sales totaled EUR112 million, down by more than 16% on an
organic basis over the period. The renewable energies and electronics markets
remained well oriented, while the process industries, aeronautics and chemicals
markets contracted sharply.
Electrical Power sales came in at EUR96 million for the quarter, with an
organic decrease limited to 1.2% on the same period in 2019. Electrical
distribution in the United States showed a clear improvement, while the number
of power electronics projects decreased.
PERFORMANCE BY REGION
Activity in Europe suffered a marked decline, much in line with the second
quarter. Business for the Electrical Power segment picked up slightly, while
the aeronautics and process industries markets were more impacted.
In Asia, Group sales were in line with last year's levels. China enjoyed
double-digit growth and India also enjoyed strong growth, powered by the
chemicals market, after a very weak second quarter hampered by the pandemic.
Lastly, in North America, the situation improved after a downturn in the second
quarter, thanks notably to the Electrical Power segment and electrical
distribution market. The chemicals market continued its sharp slowdown.
NINE-MONTH 2020 SALES
Mersen's consolidated sales for the first nine months of 2020 totaled EUR638
million, down 12.2% on an organic basis on 2019. Excluding the negative impact
of exchange rates for more than EUR8 million, on the one hand, and the
first-time consolidation of AGM Italy and GAB Neumann, on the other hand, sales
fell by 11.1%.
Like-for- Scope Currency Reported
In millions of euros 9m 2020 9m 2019 like growth effect effect growth
Advanced Materials 360.3 412.1 -14.9% 3.7% -1.6% -12.6%
Electrical Power 277.9 305.9 -8.6% -0.6% -9.2%
Europe 215.1 244.5 -17.3% 5.6% -0.4% -12.0%
Asia-Pacific 188.5 195.4 -2.6% 0.6% -1.6% -3.6%
North America 214.4 249.8 -13.8% 0.1% -0.4% -14.2%
Rest of the World 20.2 28.3 -20.5% 0.6% -10.8% -28.4%
Group 638.2 718.0 -12.2% 2.1% -1.2% -11.1%
Overall, the main sustainable development markets (renewable energies,
electronics and green transportation) were more resilient, with the decrease
limited to 2% over the first nine months of the year, compared with a 19% drop
for the other markets.
WORKFORCE ADAPTATION IN LIGHT OF THE CURRENT CONTEXT AND A REVIEW OF STRATEGY
Government part-time working schemes have enabled Mersen to maintain jobs
despite the slump in activity linked to the pandemic and will continue to be
deployed in countries as and when the economic situation dictates.
The Group nonetheless expects to see a sharp downturn in activity in the
aeronautics and chemicals markets in full-year 2020, with no prospect of any
tangible improvement before several years. This situation will require an
adaptation in the workforce, primarily at two Group sites in France
(Gennevilliers and Pagny-sur-Moselle) in order to maintain their
competitiveness. To adapt to the structural changes in these markets, the Group
expects to cut 25 jobs at each of these sites, with priority given to voluntary
departures, mobility programs to assist staff looking to relocate or change
careers and retirements. Part-time working arrangements will also remain in
place at both sites in order to tackle the conjunctural consequences of the
Furthermore, as announced during the presentation of Mersen's results for 2019,
the Group has also launched a review of the operational efficiency of its
Electrical Power segment. This notably includes the relocation of a unit that
manufactures fuses in China to a more modern plant, and the regrouping of the
design and manufacturing activities for capacitors at the Husum plant in
In total, the adaptation plans could lead to a reduction of around 300 jobs
across a large number of Group sites around the world.
In accordance with the procedures required for informing and consulting their
employee representative bodies, the entities concerned expect to implement
their adaptation plans between now and the end of the year and to complete them
during the first half of 2021. Employee support programs will be offered and
discussed as part of the procedures to be deployed in each entity concerned by
the plan, in compliance with legal requirements and local practices. The Group
is also committed to pursuing meaningful social dialogue, in keeping with its
standard practices and traditions.
Mersen is expected to recognize around EUR55 million in non-recurring expenses,
principally in 2020, including the EUR5 million in expenses booked in the first
half of the year. This amount will include around EUR30 million for the
impairment of equipment and of intangible assets, mainly as a result of a
morose chemicals market and the fact that certain production equipment is not
being used to full capacity in markets that are structurally weak. Cash costs
are expected to come in at around EUR20 million, the majority of which will be
restructuring costs. These expenses will not result in any tax savings at the
The plans should result in an improvement in operating income before
non-recurring items of around EUR16 million over a full year (2022).
SOLID FINANCIAL STRUCTURE
At the end of September 2020, Mersen's net financial debt came to EUR218
million, stable vs the end of December 2019 and down EUR10 million vs the end
of June 2020.
Mersen has a solid financial structure, with EUR140 million in undrawn credit
lines and more than EUR90 million in cash at the end of September 2020. It has
no major debt maturities to be met before November 2021.
The Group has not yet noted any drift in payment terms.
In light of the current economic situation and the measures announced, Mersen
expects to see a decline in organic sales of between 12% and 14% in 2020, and
an operating margin before non-recurring items of between 7% and 8%.
Non-recurring expenses are expected to stand at around EUR55 million without
any tax savings at the Group level, EUR30 million of which will have no impact
on cash flow.
The Group's positioning on sustainable development markets strengthens its
medium-term outlook. It is already involved, alongside several customers, in
major development projects for the silicon carbide (SiC) power semiconductor
market and has completed a number of key stages in the qualification of its
products for the next generation of high-power electric vehicles.
Organic growth: determined by comparing sales for the year with sales for the
previous year, restated at the current year's exchange rate, excluding
acquisitions and/or disposals.
Scope effect: contribution from companies acquired in the year in relation to
sales for the year.
* Advanced Graphite Materials Italy, a benchmark European player in finishing
for customized extruded graphite parts, has been consolidated since December
* In February 2020, the Group finalized the acquisition of GAB Neumann, a
specialist in the design, manufacture and sale of graphite and silicon
carbide(SiC) heat exchangers for the chemicals market. It has been
consolidated since March 1, 2020.
Currency effect: calculated by comparing sales for the previous year at the
exchange rate of the previous year with sales for the previous year at the
exchange rate of the current year.
2020 sales: January 28, 2021, after close of trading.
A global expert in electrical power and advanced materials, Mersen designs
innovative solutions to address its clients' specific needs to enable them to
optimize their manufacturing performance in sectors such as energy,
electronics, transportation, chemicals & pharmaceuticals and process
MERSEN IS LISTED ON EURONEXT PARIS - COMPARTMENT B