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PRESS RELEASE

from KAUFMAN & BROAD (EPA:KOF)

Kaufman & Broad SA: 1ST HALF 2023 RESULTS

Kaufman & Broad SA
Kaufman & Broad SA: 1ST HALF 2023 RESULTS

12-Jul-2023 / 18:11 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.

S Press release

  Press release

 Paris, 12 July 2023

 

1st Half 2023 Results

 

 

 

  • 1st half year 2023 results in line with expectations
  • Outlook for 2023:
    • Net income Group share expected to increase by approximately 20%
    • Very solid financial structure, with a positive net cash outlook(b) of around €50M at the end of 2023
    • Expected revenue growth of 6 to 10%

 

 

  • Main elements of Business activity (H1 2023 vs. H1 2022)

 

  • Global orders:

527.7 vs €653.2M (incl. VAT)

O/w housing: 503.2 vs €624.7M (incl. VAT)

O/w Commercia property: 24.5 vs €28.5M (incl. VAT)

 

  • Take-up rate period Housing:

5.3 vs. 4.4 months (rolling 12 months)

 

  • Main financial items (H1 2023 vs. H1 2022 unless otherwise specified)

 

  • Revenue:

848.8 Vs €574.4M

 O/w housing: 461.0 vs. €481.6M

  • Gross margin: 141.7 vs. €99.6M
  • EBIT margin(a):   8.0 % vs. 7.5%
  • COI (EBIT) : 67.7 vs. €42.8M
  • Attributable income:

38.5 vs. €22.7M

  • Net cash (b ) : €101.7M
  • Financial capacity: €517.1M

 

  • Main development indicators (end of May 2023 vs. end of May 2022)

 

  • Global backlog: 2,814.0 Vs €3402.4M

 Of which housing: €2,148.9 vs. €2,326.3M

 

  • Land portfolio Housing: 

34,694 vs. 35,037 units at the end of May 2022

 

Kaufman & Broad SA today announces its results for the 1st half of fiscal year 2023 (from December 1st to 31 May 2023). Nordine Hachemi, Chairman and Chief Executive Officer of Kaufman & Broad, said:

 

" The commercial and financial results for the 2nd quarter of 2023 are in line with those of the 1st quarter.

 

Housing reservations in volume were down 11.4% in the first half, compared to an estimated decline to date of around 40%(c) for the market as a whole.

 

Kaufman & Broad continued to favor bulk sales to institutional investors, which represented 76% of its reservations in volume during the 1st half, compared to 44% in the 1st half of 2022.

 

In addition, the group has tightened its already high requirements in terms of pre-marketing rates in order to better secure the margins of its operations. This will result in probable delays in the purchase of land - and therefore in activity - from the 2023 financial year to the 2024 financial year, which leads to a revenue growth forecast for the fiscal year of between 6 and 10%.

 

Finally, the group still relies on a land reserve which remains at high levels and a Housing Backlog of around two years of activity.

 

On the other hand, the financial results reflect the launch of the works of the A7/A8 operation of Austerlitz, which continue to proceed according to the schedule and thus contribute to the significant increase in the turnover of Kaufman & Broad and its results.

 

The very solid financial structure is strengthening with a net cash position(b) of €101.7 million as of May 31, 2023 after payment of €49,5 million dividends.

 

The year 2023 presents itself as a period of adjustment of the parameters of the housing market due to the very rapid increase in rates observed over the last twelve months, which is reflected in a drop in the volumes of short-term reservations.

However, structurally unsatisfied demand continues to accumulate, fueled by demographic and sociological fundamentals. Added to this are the consequences of the energy transition on the planned reduction of the stock of lower thermal quality housing.

 

In this context, Kaufman & Broad relies on its ability to adapt its offer to new market conditions, its very strong balance sheet as well as the high level of its Backlog and its property portfolio to get through the coming period and, beyond that, take full advantage of the recovery in a healthier market.

 

All of these factors led the Group to specify the outlook announced at the end of last January for the whole of 2023:

  • Attributable net income is expected to increase by around 20%,
  • The Current operating income (COI) rate is expected to be around 8%,
  • Revenue is expected to grow by 6 to 10%,
  • Positive net cash(b ) is expected to be around 50 million euros. ‘

 

 

  • Sales Activity

 

  • Housing Division

 

In the 1st half of 2023, home reservations amounted to 503.2 million euros (including VAT), down 19.4% from 624.7 million euros in 2022. In volume terms, they stood at 2,235 units in 2023, down 11.5% from 2,525 in 2022.

 

The programme run off period was 5.3 months as of 31 May 2023 (on a rolling twelve-month basis), up 0.9 months from the same period in 2022 (4.4 months).

 

The commercial offering, with 95% of housing units located in tight areas (A, ABIS and B1), amounted to 2,618 units at the end of May 2023 (2,265 units at the end of May 2022).

 

 

Customer Breakdown

 

First time buyers' reservations accounted for 12% of sales in the 1st half of 2023, compared with 17% in 2022. First time buyers accounted for 6% of sales, compared with 12% in 2022.

Reservations made to investors accounted for 13% of sales (of which 5% for Pinel alone), compared with 39% in May 2022. Block sales accounted for 70% of reservations in value (including VAT), compared with 31% over the same period in 2022. 

 

  • Commercial Property

 

In the 1st half of 2023, the commercial property division recorded net orders of €24.5 million including VAT, compared with €28.5 million including VAT in the 1st half of 2022.

 

Kaufman & Broad currently has about 106,800 m ² of office space and about 178,100 sq.m of logistics space on the market or under study. In addition, 136,350 sq.m. of office space is currently under construction or start up in the coming months, as well as nearly 21,400 sq.m. of logistics space. Finally, there are still 20,300 sq.m of office space to be signed.

 

 

  • Leading indicators of business activity and growth

 

As of May 31, 2023, Backlog housing stood at €2,148.9 million (exclusive of tax) compared to €2,326.3 million (exclusive VAT) for the same period in 2022, i.e., 22.8 months of activity compared to 26.1 months of activity at the end of May 2022. In the 1st half of 2023, Kaufman & Broad had 145 housing programs under marketing, representing 2,618 housing units (154 programs and 2,265 housing units in the 1st half of 2022).

 

The land portfolio represents 34,694 units, up 2.0% compared to the end of November 2022 (34,009 units). At the end of May 2023, it represented over 6 years of business activity.

 

In addition, 85% of the housing portfolio is located in tight areas, representing 29,591 housing units at the end of May 2023.

 

In third quarter of 2023, the group plans to launch 21 new programs, including 2 in the Paris area representing 157 units and 19 in the regions representing 1,140 units.

 

In the 1st half of 2023, the Backlog of the Commercial Division was €665.1 million excluding tax compared to €1,076.4 million excluding tax for the same period in 2022.

 

  •  Financial results

 

  • Activity 

 

Total sales amounted to €848.8 million (excluding Vat) at May 31, 2023, compared with €574.4 million in 2022.

 

Housing revenue amounted to €461.0 million (excluding VAT), compared to 481.6 million euros (excluding VAT) in 2022. It represents 54.3% of the group's total revenue.

 

Revenue from the Apartments business was €428.4 million (excluding VAT) (vs. €461.7 million (excluding VAT) at the 1st half of 2022).

Revenue for the Commercial property division was €381.0 million (excluding Vat), compared to €87.3 million (excluding VAT) over the same period in 2022.

Other activities generated revenues of €6.9 million (excluding VAT) (of which €3.7 million related to the operation of student managed residences compared to €3.2 million in 2022) and €5.5 million at May 31, 2022.

 

 

  • Profitability data 

 

Gross profit amounted to €141.7 million in the 1st half of 2023, compared to €99.6 million in 2022. The gross margin was 16.7% compared to 17.3% in 2022.

 

Current operating expenses amounted to 7€3.9 million (8.7% of revenue), compared to €56.8 million in the same period in 2022 (9.9% of revenue). Current operating income amounted to €67.7 million, compared to €42.8 million in 2022. Current operating income margin stood at 8.0%, compared with 7.5% in 2022.

 

In the 1st half of 2023, consolidated net income amounted to €46.0 million, compared with €31.4 million in 2022. Non-controlling interests amounted to €7.5 million in the 1st half of 2023 compared to €8.7 million in 2022.

Attributable net income was €38.5 million, compared with €22.7 million in 2022.

 

 

  • Financial structure and liquidity

 

The positive net cash position (excluding IFRS 16 debt and Neoresid put debt) at the end of May 2023 was 1€01.7 million, compared with a net financial debt of €67.8 million at the end of November 2022. Cash and cash equivalents amounted to €267.1 million at the end of May 2023, compared with €101.0 million at November 30, 2022. Financial capacity amounted to €517.1 million at May 31, 2023, compared with €351.0 million at the end of November 2022.

 

Working capital requirements amounted to €24.7 million at the end of May 2023, or 1.6% of revenue, compared to 177.0 million euros at the end of May 2022 (or 14.2% of revenue) and €190.0 million at November, 30 2022 (or 14.5% of revenue).

 

 

  • Outlook 2023

 

The group sets out the outlook announced at the end of January for 2023 as a whole:

  • Attributable net income is expected to increase by around 20%,
  • The Current operating income (COI) rate is expected to be around 8%,
  • Revenue is expected to grow by 6 to 10%,
  • Positive net cash(b ) is expected to be around 50 million euros.

 

This press release is available at www.kaufmanbroad.fr

 

 

  • Next periodic information date:
  • Monday, 2 October 2023: Publication of the first nine months of 2023 (after trading)

 

 

Contacts

 

Chief Financial Officer

Bruno Coche -01 41 43 44 73/infos-invest@ketb.com

Press relations

PRIMATICE: Thomas de Climens -06 78 12 97 95/thomasdeclimens@primatice.fr

Kaufman & Broad: Emmeline CACITTI -06 72 42 66 24/ecacitti@ketb.com

 

About KAUFMAN & BROAD

For more than 50 years, KAUFMAN & BROAD has designed, developed, built and marketed apartments, single family homes, managed residences, shops, business premises and office buildings.

KAUFMAN & BROAD is one of the first French Builders and Builders by combining its size, profitability and the power of its brand.

Together, let us create a more virtuous city.

For more information: www.kaufmanbroad.fr   

The Kaufman & Broad Universal Registration Document was filed on 31 March 2023 with the AMF under number D.23-0210. It is available on the websites of the AMF (www.amf-france.org) and Kaufman & Broad (www.kaufmanbroad.fr). It contains a detailed description of Kaufman & Broad's business, results and outlook as well as the associated risk factors. Kaufman & Broad draws attention in particular to the risks described in Chapter 4 of the Universal Registration Document. The occurrence of one or more of these risks may have a material adverse effect on the Kaufman & Broad Group's businesses, assets, financial position, results or outlook, as well as on the market price of Kaufman & Broad shares.

This press release does not and shall not be deemed to constitute an offer to the public, an offer to sell or an offer to subscribe or to solicit an order to buy or subscribe in any jurisdiction.

 

 

GLOSSARY

 

Backlog or (order book ) : it covers, for Sales in the Future Completion Status (VEFA), undelivered reserved units for which the notarially signed deed of sale has not yet been signed and undelivered reserved units for which the notarially signed deed of sale has been signed up to the portion not yet taken into revenue (on a 30% advanced program, 30% of the revenue of a housing for which the notarially signed deed of sale has been recorded as revenue, 70% are included in the backlog). The backlog is a summary at a given point in time that makes it possible to estimate the revenue still to be recognised in the coming months and thus support the Group's forecasts - it being specified that there is an uncertain portion of the transformation of the backlog into revenue, particularly for bookings not yet recorded.

 

BEFA: the Bail in the Future Completion consists of a user renting a building even before it is built or restructured.

 

Working Capital Requirement (WCR): This arises from cash flow mismatches: disbursements and receipts corresponding to operating expenses and revenues required for the design, production and marketing of real estate programs. The resulting simplified expression for WCR is as follows: these are current assets (inventory + trade receivables + other operating receivables + advances received + prepaid income) less current liabilities (trade payables + tax and social security payables + other operating liabilities + prepaid expenses). The size of the WCR will depend in particular on the length of the operating cycle, the size and duration of storage of work-in-progress, the number of projects launched and the payment terms granted by suppliers or the profile of payment schedules granted to customers.

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