2024 first-half results positive in a contracted market
Reims, Wednesday September 11, 2024 - 5:45 pm
The LANSON-BCC Group, a Champagne pure player, is reporting €3.71m of net income for the first half of 2024. The positive effects of the improvement in the product mix were not sufficient to offset the negative impact of the contraction in volumes linked to the general economic environment and the increase in stock financing costs. The market reflects a global drop in consumption and the active management of destocking by retailers, which are also exposed to the increase in financing costs. Despite the geopolitical and economic uncertainty, LANSON-BCC is still firmly committed to its long-term value creation strategy and would like to highlight that historically revenues for the first half of the calendar year represent only one third of sales for the full year.
Global Champagne wine market
During the first half of 2024, the Champagne industry shipped 106.7 million bottles, with volumes down -15.2% versus the same period in 2023 (125.8 million bottles). This comparison is even more significant as the first half of 2023 had been particularly dynamic (42.1% of 2023 shipments), supported by the exceptional level of export sales. The French market, which represents 40.5% of the volumes shipped, is down -10.2%. Export markets (59.5% of volumes) show a sharper contraction of -18.2% (source: CIVC).
Our Maisons
In this context, the Lanson-BCC Group recorded a higher contraction in its volumes than the market, both in France and for exports. However, the premiumization policy launched in 2019 is continuing to move forward with determination and helping drive a continued improvement in the price-product mix.
Consolidated income statement
IFRS (€m) | H1 2024 | H1 2023 | Change (%) |
Revenues | 87.79 | 109.07 | -19.5% |
Gross margin | 50.44 | 57.81 | -12.7% |
% of revenues | 57.5% | 53.0% | +4.5 pts |
Income from ordinary operations | 12.35 | 19.25 | -35.9% |
% of revenues | 14.1% | 17.7% | -3.6 pts |
Finance costs | -7.26 | -3.88 | +87.1% |
Net income | 3.71 | 11.57 | -67.9% |
Consolidated revenues for the first half of 2024 totaled €87.79m, down -19.5% from the first half of 2023. Exports generated 56.8% of revenues at June 30, 2024, compared with 60.7% at June 30, 2023. This change primarily reflects the lower level of shipments to the United Kingdom, Germany and Japan, as well as their stagnation over this period for the United States and Australia, with these markets continuing to show surplus inventory.
EBITDA(income from ordinary operations before depreciation and provisions, net of reversals) came to €16.54m, down -29.3% from €23.38m linked primarily to the lower level of volumes shipped, particularly for exports, despite a favorable price-product mix effect.
After €4.2m of net depreciation and provisions, income from ordinary operations totaled €12.35m, compared with €19.25m for the first half of 2023.
EBIT came to €12.28m, compared with €19.32m for the first half of 2023, without any significant impact for non-current items.
Finance costs, linked primarily to interest on Champagne wine stocks, represent -€7.26m, compared with -€3.88m for the first half of 2023. This change reflects the direct impact of the higher interest rates, which is increasing the cost of our aging credit facilities each time they renew.
Following an effective corporate income tax rate of 25.7%, net income totaled €3.71m, compared with €11.57m for the first half of 2023 (effective rate of 25.1% at June 30, 2023).
Consolidated balance sheet
Group shareholders’ equityis up to €354.72m, compared with €329.75m at June 30, 2023.
Consolidated net financial debtcame to €533.65m, compared with €494.13m at June 30, 2023. €462.0m (+€39.5m) correspond to credit facilities for aging the stock of Champagne wines, representing a volume of 4.4 years of sales, with a book value of €561.31m, compared with €503.44m at June 30, 2023. Other financial debt, linked to investments in our Maisons and vineyards, totaled €71.7m (versus €71.6m at June 30, 2023). Gearing is still reasonable at 1.49, compared with 1.48 at June 30, 2023.
Outlook
Considering the strong seasonality of Champagne sales, the results for the first half of 2024 cannot be extrapolated over the full year. Traditionally, around one third of sales are recorded during the first half of the year, which is also subject to half of fixed costs for the whole year. While this ratio has not been verified in the last few years, a better level of activity over the second half of the year is expected to enable 2024 to move closer to it again. However, in an uncertain economic and political context, with a lack of visibility over the end of the year, LANSON-BCC is not releasing full-year forecasts.
As a family-owned Champagne pure player, LANSON-BCC is still firmly committed to its long-term development strategy focused on value. The Group’s ambition to further strengthen its position in the high-end wines segment is still one of its core priorities. This approach is particularly crucial faced with the continued increase in grape prices and the rapid rise in the cost of stock financing.
Additional information
The half-year financial report, approved by the Board of Directors on September 11, 2024, is available on the Group website: www.lanson-bcc.com.
2024 full-year revenueswill be released on Thursday January 30, 2025 (after close of trading).
