RETURN TO ORGANIC SALES GROWTH
RESILIENT PROFITABILITY
FULL-YEAR 2014 TARGETS CONFIRMED
RETURN TO ORGANIC SALES GROWTH: +0.4% ON A CONSTANT AND SAME-DAY BASIS (including negative copper effect of 1.0 percentage point)
RESILIENT PROFITABILITY WITH ADJUSTED EBITA MARGIN OF 4.5%
FULL-YEAR 2014 TARGETS CONFIRMED
Q1 2014 key figures1 | YoY change | |
Sales | €3,067.3m | |
On a reported basis | -2.7% | |
On a constant and actual-day basis | +0.4% | |
On a constant and same-day basis | +0.4% | |
Adjusted EBITA | €136.9m | -2.4% |
As a percentage of sales | 4.5% | |
Change in bps as a % of sales | -10bps | |
Reported EBITA | €134.2m | -6.2% |
Operating income | €111.3m | -13.2% |
Net income | €43.2m | +9.3% |
Free cash flow before interest and tax | €(82.7)m | vs. €(4.2)m |
Net debt at end of period | €2,405.3m | -12.0% |
1 See definition in the Glossary section of this document
Rudy PROVOOST, Chairman of the Management Board and CEO, said:
"In the first quarter, Rexel's organic sales growth returned to positive territory, mainly driven by a number of countries in Europe, which more than offset the adverse effect of unfavorable weather conditions in North America. As a result of this negative impact and gross margin pressure in some key markets, Rexel's overall profitability decreased slightly in the quarter but remains resilient thanks to tight cost control and disciplined execution. Considering our first-quarter performance, we confirm our targets for the year as well as our medium-term ambitions.
We remain committed to our operational action plans and our strategy focusing on high-growth initiatives and value-added customer propositions."
FINANCIAL REVIEW FOR THE PERIOD ENDED MARCH 31, 2014
SALES
In Q1 2014, Rexel posted organic sales growth of 0.4%, thanks to a return to growth in Europe combined with a strong performance in China and despite a significant negative impact from weather conditions in North America.
In Q1 2014, Rexel posted sales of €3,067.3 million, up 0.4% on a constant and same-day basis and down 2.7% on a reported basis.
Excluding the 1.0% negative impact due to the change in copper-based cable prices, sales were up 1.4% on a constant and same-day basis, a further sequential improvement after declines of 3.1%, 2.3%, 2.0% and 0.1% respectively in each of the quarters of 2013.
The 2.7% drop in sales on a reported basis reflected:
Europe (57% of Group sales): +1.6% on a constant and same-day basis
In the first quarter, sales in Europe increased by 1.6% both on a reported and on a constant and same-day basis.
North America (32% of Group sales): -2.7% on a constant and same-day basis
In the first quarter, sales in North America were down 9.1% on a reported basis including a significant negative currency effect of €62.7m (from the American and the Canadian dollars against the euro) and down 2.7% on a constant and same-day basis. Both the US and Canada were impacted by extremely severe weather conditions.
Asia-Pacific (9% of Group sales): +3.8% on a constant and same-day basis
In the first quarter, sales in Asia-Pacific were down 2.1% on a reported basis, including a significant negative effect of €30.0m from currencies (primarily the Australian dollar against the euro) and a positive effect of €12.6m from the acquisition of Lenn International in Singapore and Quality Trading in Thailand.
On a constant and same-day basis, sales were up 3.8%.
Latin America (2% of Group sales): +3.0% on a constant and same-day basis
In the first quarter, sales in Latin America were down 14.6% on a reported basis, including a negative currency effect of €13.1m (mainly attributable to the depreciation of the Brazilian real and Chilean peso against the euro).
On a constant and same-day basis, sales increased by 3.0%, reflecting contrasted performances:
PROFITABILITY
Resilient profitability thanks to strict cost control
In the quarter, adjusted EBITA margin stood at 4.5%, down 10 basis points year-on-year (vs. 4.6 % in Q1 2013). This resilient margin was achieved despite a 20 basis point decline in gross margin and thanks to continued strict cost control, as distribution and administrative expenses grew by only 0.2% in the quarter, while sales grew by 0.4% on a constant and actual-day basis.
Weather conditions in North America weighed for €7.0 million on adjusted EBITA in the quarter (net impact of lower sales and increased operating expenses). Excluding this impact, the adjusted EBITA margin would have been 4.6%, stable year-on-year.
Reported EBITA stood at €134.2 million, down 6.2% year-on-year.
NET INCOME
Reported net income up 9.3% to €43.2m
Operating income stood at €111.3 million, down 13.2% year-on-year.
Net financial expenses amounted to €46.3 million in the quarter (vs. €68.9 million in Q1 2013 that included a one-off cost of €23.5 million relating to refinancing operations). The average effective interest rate was reduced year-on-year: it stood at 5.1% on gross debt (vs. 6.0% in Q1 2013) and at 6.3% on net debt (vs. 6.4% in Q1 2013).
Income tax represented a charge of €21.9 million. The effective tax rate was 33.7% (vs. 32.2% in Q1 2013). This expected rise mainly reflects increased tax pressure in France.
Net income was up 9.3%, at €43.2 million (vs. €39.5 million in Q1 2013).
Recurring net income amounted to €58.6 million, down 7.0% year-on-year, mainly reflecting the drop in EBITA (see appendix 2).
NET DEBT
Net debt of €2.4bn, down 12.0% year-on-year
In the quarter, free cash flow before interest and taxwas an outflow of €82.7 million (vs. an outflow of €4.2 million in Q1 2013, which included the disposal of the Runcorn warehouse in the UK). This net outflow included:
At March 31, 2014, net debt stood at €2,405.3 million, down 12% year-on-year (vs. 2,734.3 million at March 31, 2013).
It took into account:
ACQUISITION
At the end of March, Rexel acquired the Peruvian company, AMP Ingenieros, based in Arequipa, the second-largest and most industrialized city in Peru.
Founded in 1991, this company distributes international branded electrical supplies, panel building and engineering services with a strong presence in the industrial end-market and a solid expertise in serving mining companies through specialized contractors.
This acquisition strengthens Rexel's presence in the fast-growing Peruvian market, where Rexel generated sales of €24 million in 2013 (through the acquisitions of V&F Tecnologia and Dirome in 2012), and expands its footprint in the South of the country. It will also increase Rexel's penetration of the industrial end-market and mining segment.
OUTLOOK
Rexel confirms that it aims at delivering in 2014:
CALENDAR
May 22, 2014 Shareholders' Meeting in Paris
July 30, 2014 Second-quarter and Half-year results
October 29, 2014 Third-quarter and 9-month results
FINANCIAL INFORMATION
The financial report for the period ended March 31, 2014 is available on the Group's website (www.rexel.com), in the "Regulated information" section, and has been filed with the French Autorité des Marchés Financiers.
A slideshow of the first-quarter 2014 results is also available on the Group's website.
ABOUT REXEL GROUP
Rexel, a global leader in the professional distribution of products and services for the energy world, addresses three main markets - industrial, commercial and residential. The Group supports customers around the globe, wherever they are, to create value and run their businesses better. With a network of some 2,300 branches in 38 countries, and c. 30,000 employees, Rexel's sales were €13 billion in 2013.
Rexel is listed on the Eurolist market of Euronext Paris (compartment A, ticker RXL, ISIN code FR0010451203). It is included in the following indices: SBF 120, CAC Mid 100, CAC AllTrade, CAC AllShares, FTSE EuroMid, STOXX600. Rexel is also part of the following SRI indices: DJSI Europe, FTSE4Good Europe & Global, EURO STOXX Sustainability, Euronext Vigeo Europe 120 and ESI Excellence Europe. Finally, Rexel is included on the Ethibel EXCELLENCE Investment Registers in recognition of its performance in corporate social responsibility (CSR). For more information, visit Rexel's web site at www.rexel.com
CONTACTS
FINANCIAL ANALYSTS / INVESTORS
Marc MAILLET | +33 1 42 85 76 12 | marc.maillet@rexel.com |
Florence MEILHAC | +33 1 42 85 57 61 | florence.meilhac@rexel.com |
PRESS
Pénélope LINAGE | +33 1 42 85 76 28 | penelope.linage@rexel.com |
Brunswick: Thomas KAMM | +33 1 53 96 83 92 | tkamm@brunswickgroup.com |
GLOSSARY
REPORTED EBITA (Earnings Before Interest, Taxes and Amortization) is defined as operating income before amortization of intangible assets recognized upon purchase price allocation and before other income and other expenses.
ADJUSTED EBITA is defined as EBITA excluding the estimated non-recurring net impact from changes in copper-based cable prices.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is defined as operating income before depreciation and amortization and before other income and other expenses.
RECURRING NET INCOME is defined as net income adjusted for non-recurring copper effect, other expenses and income, non-recurring financial expenses, net of tax effect associated with the above items.
FREE CASH FLOW is defined as cash from operating activities minus net capital expenditure.
NET DEBT is defined as financial debt less cash and cash equivalents.
APPENDICES
Appendix 1: Segment reporting - Constant and adjusted basis*
* Constant and adjusted = at comparable scope of consolidation and exchange rates, excluding the non-recurring effect related to changes in copper-based cables price and before amortization of purchase price allocation; the non-recurring effect related to changes in copper-based cables price was, at the EBITA level a loss of €1.1 million in Q1 2013 and a loss of €2.7 million in Q1 2014.
GROUP | ||||
Constant and adjusted basis (€m) | Q1 2013 | Q1 2014 | Change | |
Sales | 3,053.6 | 3,067.3 | +0.4% | |
on a constant basis and same days | +0.4% | |||
Gross profit | 768.9 | 766.8 | -0.3% | |
as a % of sales | 25.2% | 25.0% | -20bps | |
Distribution & adm. expenses (incl. depreciation) | (628.7) | (630.0) | +0.2% | |
EBITA | 140.2 | 136.9 | -2.4% | |
as a % of sales | 4.6% | 4.5% | -10bps | |
Headcount (end of period) | 30,561 | 29,883 | -2.2% |
EUROPE | ||||
Constant and adjusted basis (€m) | Q1 2013 | Q1 2014 | Change | |
Sales | 1,724.6 | 1,759.4 | +2.0% | |
on a constant basis and same days | +1.6% | |||
o/w | France | 613.5 | 611.3 | -0.4% |
on a constant basis and same days | -0.4% | |||
United Kingdom | 245.3 | 251.2 | +2.4% | |
on a constant basis and same days | +0.8% | |||
Germany | 193.8 | 197.7 | +2.0% | |
on a constant basis and same days | +1.2% | |||
Scandinavia | 197.9 | 213.5 | +7.9% | |
on a constant basis and same days | +6.7% | |||
Gross | profit | 479.1 | 483.6 | +0.9% |
as a % of sales | 27.8% | 27.5% | -30bps | |
Distribution & adm. expenses (incl. depreciation) | (380.0) | (379.9) | -0.0% | |
EBITA | 99.0 | 103.6 | +4.6% | |
as a % of sales | 5.7% | 5.9% | +20bps | |
Headcount (end of period) | 17,054 | 16,694 | -2.1% |
NORTH AMERICA | ||||
Constant and adjusted basis (€m) | Q1 2013 | Q1 2014 | Change | |
Sales | 1,006.9 | 972.0 | -3.5% | |
on a constant basis and same days | -2.7% | |||
o/w | United States | 745.9 | 720.4 | -3.4% |
on a constant basis and same days | -1.9% | |||
Canada | 261.0 | 251.6 | -3.6% | |
on a constant basis and same days | -5.1% | |||
Gross | profit | 221.9 | 215.4 | -2.9% |
as a % of sales | 22.0% | 22.2% | +20bps | |
Distribution & adm. expenses (incl. depreciation) | (177.7) | (181.9) | +2.3% | |
EBITA | 44.1 | 33.5 | -24.2% | |
as a % of sales | 4.4% | 3.4% | -100bps | |
Headcount (end of period) | 8,584 | 8,527 | -0.7% |
ASIA-PACIFIC | ||||
Constant and adjusted basis (€m) | Q1 2013 | Q1 2014 | Change | |
Sales | 261.5 | 272.9 | +4.4% | |
on a constant basis and same days | +3.8% | |||
o/w | China | 69.1 | 85.6 | +23.9% |
on a constant basis and same days | +25.9% | |||
Australia | 130.9 | 123.4 | -5.7% | |
on a constant basis and same days | -7.3% | |||
New Zealand | 28.4 | 27.9 | -1.7% | |
on a constant basis and same days | -3.3% | |||
Gross | profit | 53.0 | 53.9 | +1.7% |
as a % of sales | 20.3% | 19.7% | -60bps | |
Distribution & adm. expenses (incl. depreciation) | (45.8) | (46.8) | +2.4% | |
EBITA | 7.2 | 7.0 | -2.3% | |
as a % of sales | 2.8% | 2.6% | -20bps | |
Headcount (end of period) | 2,931 | 2,864 | -2.3% |
LATIN AMERICA | ||||
Constant and adjusted basis (€m) | Q1 2013 | Q1 2014 | Change | |
Sales | 60.6 | 62.9 | +3.8% | |
on a constant basis and same days | +3.0% | |||
o/w | Brazil | 37.3 | 36.3 | -2.7% |
on a constant basis and same days | -2.7% | |||
Chile | 18.0 | 21.0 | +16.6% | |
on a constant basis and same days | +14.7% | |||
Peru | 5.3 | 5.6 | +6.0% | |
on a constant basis and same days | +2.7% | |||
Gross | profit | 15.0 | 13.9 | -6.9% |
as a % of sales | 24.7% | 22.1% | -260bps | |
Distribution & adm. expenses (incl. depreciation) | (14.8) | (14.4) | -3.0% | |
EBITA | 0.2 | (0.4) | n.a. | |
as a % of sales | 0.3% | -0.7% | -100bps | |
Headcount (end of period) | 1,776 | 1,564 | -11.9% |
Appendix 2: Extract of Financial Statements
Consolidated Income Statement
Reported basis (€m) | Q1 2013 | Q1 2014 | Change | |
Sales | 3,153.9 | 3,067.3 | -2.7% | |
Gross profit | 787.1 | 764.1 | -2.9% | |
as a % of sales | 25.0% | 24.9% | ||
Distribution & adm. expenses (excl. depreciation) | (624.4) | (610.1) | -2.3% | |
EBITDA | 162.6 | 154.0 | -5.3% | |
as a % of sales | 5.2% | 5.0% | ||
Depreciation | (19.5) | (19.8) | ||
EBITA | 143.1 | 134.2 | -6.2% | |
as a % of sales | 4.5% | 4.4% | ||
Amort. of intang. resulting from purchase price allocation | (4.7) | (4.1) | ||
Operating income bef. other inc. and exp. | 138.5 | 130.1 | -6.0% | |
as a % of sales | 4.4% | 4.2% | ||
Other income and expenses | (10.2) | (18.7) | ||
Operating income | 128.3 | 111.3 | -13.2% | |
Financial expenses (net) | (68.9) | (46.3) | ||
Share of profit (loss) in associates | (0.7) | 0.0 | ||
Net income (loss) before income tax | 58.6 | 65.1 | +11.0% | |
Income tax | (19.1) | (21.9) | ||
Net income (loss) | 39.5 | 43.2 | +9.3% | |
Net income (loss) attr. to non-controlling interests | (0.2) | 0.1 | ||
Net income (loss) attr. to equity holders of the parent | 39.7 | 43.1 | +8.6% |
Bridge Between Operating Income Before Other Income And Other Expenses And Adjusted EBITA
in €m | Q1 2013 | Q1 2014 |
Operating income before other income and other expenses | 144.1 | 130.1 |
Adoption of IFRIC 21 | -5.7 | |
Change in scope effects | 0.4 | |
Foreign exchange effects | -4.4 | |
Non-recurring effect related to copper | 1.1 | 2.7 |
Amortization of intangibles resulting from PPA | 4.7 | 4.1 |
Adjusted EBITA on a constant basis | 140.2 | 136.9 |
Recurring Net Income
In millions of euros | Q1 2013 | Q1 2014 | Change |
Reported net income | 39.5 | 43.2 | +9.3% |
Non-recurring copper effect | 1.2 | 2.7 | |
Other expense & income | 10.2 | 18.7 | |
Financial expense | 21.3 | 0.0 | |
Tax expense | -9.2 | -5.9 | |
Recurring net income | 63.0 | 58.6 | -7.0% |
Sales And Profitability By Segment
Reported basis (€m) | Q1 2013 | Q1 2014 | Change | |
Sales | 3,153.9 | 3,067.3 | -2.7% | |
Europe | 1,731.8 | 1,759.4 | +1.6% | |
North America | 1,069.6 | 972.0 | -9.1% | |
Asia-Pacific | 278.8 | 272.9 | -2.1% | |
Latin America | 73.7 | 62.9 | -14.6% | |
Gross profit | 787.1 | 764.1 | -2.9% | |
Europe | 476.2 | 480.9 | +1.0% | |
North America | 234.4 | 215.2 | -8.2% | |
Asia-Pacific | 58.3 | 53.9 | -7.6% | |
Latin America | 18.2 | 14.0 | -23.0% | |
EBITA | 143.1 | 134.2 | -6.2% | |
Europe | 98.4 | 101.0 | +2.6% | |
North America | 47.1 | 33.4 | -29.0% | |
Asia-Pacific | 7.9 | 7.0 | -10.7% | |
Latin America | 0.1 | (0.4) | n.a. |
Consolidated Balance Sheet
Assets (€m) | December 31, 2013 | March 31, 2014 |
Goodwill | 4,111.2 | 4,123.3 |
Intangible assets | 1,038.3 | 1,037.6 |
Property, plant & equipment | 278.1 | 277.9 |
Long-term investments(1) | 51.7 | 37.6 |
Deferred tax assets | 161.6 | 153.8 |
Total non-current assets | 5,640.9 | 5,630.2 |
Inventories | 1,389.5 | 1,417.0 |
Trade receivables | 2,062.8 | 2,173.9 |
Other receivables | 486.1 | 462.2 |
Assets classified as held for sale | 3.4 | 3.4 |
Cash and cash equivalents | 957.8 | 655.5 |
Total current assets | 4,899.6 | 4,712.0 |
Total assets | 10,540.5 | 10,342.2 |
Liabilities (€m) | December 31, 2013 | March 31, 2014 |
Total equity | 4,227.1 | 4,266.1 |
Long-term debt | 2,908.2 | 2,782.1 |
Deferred tax liabilities | 172.1 | 166.5 |
Other non-current liabilities | 351.4 | 341.4 |
Total non-current liabilities | 3,431.7 | 3,290.1 |
Interest bearing debt & accrued interests | 216.8 | 279.0 |
Trade payables | 2,009.9 | 1,903.0 |
Other payables | 655.1 | 604.0 |
Total current liabilities | 2,881.7 | 2,786.1 |
Total liabilities | 6,313.4 | 6,076.1 |
Total equity & liabilities | 10,540.5 | 10,342.2 |
1 Includes Debt hedge derivatives for €25.1m at December 31, 2013 and €5.0m at March 31, 2014
Change in Net Debt
€m | Q1 2013 | Q1 2014 |
EBITDA | 162.6 | 154.0 |
Other operating revenues & costs(1) | (17.1) | (20.1) |
Operating cash flow | 145.5 | 133.9 |
Change in working capital(2) | (144.5) | (192.6) |
Net capital expenditure, of which: | (5.2) | (24.1) |
Gross capital expenditure | (20.0) | (18.2) |
Disposal of fixed assets & other | 14.8 | (5.9) |
Free cash flow before interest and tax | (4.2) | (82.7) |
Net interest paid / received(3) | (42.8) | (38.0) |
Income tax paid | (22.1) | (27.6) |
Free cash flow after interest and tax | (69.1) | (148.3) |
Net financial investment | (4.7) | (6.8) |
Dividends paid | 0.0 | 0.0 |
Other | (30.6) | (63.3) |
Currency exchange variation | (30.7) | 5.1 |
Decrease (increase) in net debt | (135.1) | (213.3) |
Net debt at the beginning of the period | 2,599.2 | 2,192.0 |
Net debt at the end of the period | 2,734.3 | 2,405.3 |
1 Includes restructuring outflows of €10.5m in Q1 2013 and €12.1m in Q1 2014
2 Working Capital adjustment to reflect suppliers payments scheduled on Dec. 31, 2013 and executed only on Jan. 2nd, 2014 for €51.9m
3 Excluding settlement of fair value hedge derivatives
Appendix 3: Working Capital Analysis
Constant basis | March 31, 2013 | March 31, 2014 |
Net inventories | ||
as a % of sales 12 rolling months | 10.8% | 11.1% |
as a number of days | 53.3 | 53.7 |
Net trade receivables | ||
as a % of sales 12 rolling months | 16.6% | 17.4% |
as a number of days | 56.0 | 56.4 |
Net trade payables | ||
as a % of sales 12 rolling months | 13.9% | 14.8% |
as a number of days | 60.1 | 62.2 |
Trade working capital | ||
as a % of sales 12 rolling months | 13.5% | 13.7% |
Total working capital | ||
as a % of sales 12 rolling months | 12.3% | 12.8% |
Appendix 4: Headcount and branches by geography
FTEs at end of period | 31/03/2013 | 31/12/2013 | 31/03/2014 | Year-on-Year Change |
comparable | ||||
Europe | 17,054 | 16,750 | 16,694 | -2.1% |
USA | 6,190 | 6,234 | 6,165 | -0.4% |
Canada | 2,394 | 2,379 | 2,362 | -1.3% |
North America | 8,584 | 8,613 | 8,527 | -0.7% |
Asia-Pacific | 2,931 | 2,883 | 2,864 | -2.3% |
Latin America | 1,776 | 1,552 | 1,564 | -11.9% |
Other | 217 | 232 | 235 | 8.3% |
Group | 30,561 | 30,029 | 29,883 | -2.2% |
Branches | 31/03/2013 | 31/12/2013 | 31/03/2014 | Year-on-Year Change |
comparable | ||||
Europe | 1,347 | 1,306 | 1,306 | -3.0% |
USA | 398 | 401 | 396 | -0.5% |
Canada | 216 | 216 | 214 | -0.9% |
North America | 614 | 617 | 610 | -0.7% |
Asia-Pacific | 270 | 265 | 266 | -1.5% |
Latin America | 94 | 90 | 88 | -6.4% |
Group | 2,325 | 2,278 | 2,270 | -2.4% |
Appendix 5: Calendar, scope and change effects on sales
To be comparable to 2014 sales, 2013 sales must take into account the following impacts:
Q1 actual | Q2e | Q3e | Q4e | FYe | |
Calendar effect | 0.0% | -0.6% | -0.3% | +1.1% | 0.0% |
Scope effect (1) | €12.6m | c. €10m | c. €10m | c. €10m | c. €43m |
Change effect (2) | -3.6% | -3.8% | -2.2% | -0.9% | -2.6% |
(1) Based on acquisitions made in 2013 (mainly Lenn in Singapore and Quality Trading in Thailand)
(2) Based on following main assumptions:
Appendix 6: Changes due to the enforcement of IFRIC 21 as from January 1, 2014
IFRIC Interpretation 21 "Levies" clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. IFRIC Interpretation 21 applies for accounting period starting from January 1, 2014 with retrospective application as of January 1, 2013. In 2013, the Group reviewed the impact of applying IFRIC Interpretation 21 and estimated the adjustment to be an increase in shareholders' equity of € 2.6 million after tax (€3.9 million before tax) as of January 1, 2013 as a result of a timing difference in the liability recognition. In addition, IFRIC Interpretation 21 prohibits the progressive recognition of a liability for tax levies over the fiscal year and rather requires the one-time recognition of the liability when the obligating event for the payment of the levy is met. As a result of this guidance, the Group expects that 2014 interim financial statements will be impacted by timing differences in the recognition of tax levies due to the adoption of IFRIC Interpretation 21.
€m | Q1 | Q2 | Q3 | Q4 | FY |
2013 EBITA as reported on Feb. 13, 2014 | 148.8 | 172.4 | 175.9 | 189.7 | 686.9 |
IFRIC 21 restatement | (5.7) | c. 2 | c. 2 | c. 2 | c. 0 |
2013 EBITA as proforma for 2014 accounts | 143.1 | c. 174 | c. 178 | c. 192 | c. 687 |
DISCLAIMER
The Group is exposed to fluctuations in copper prices in connection with its distribution of cable products. Cables accounted for approximately 15% of the Group's sales, and copper accounts for approximately 60% of the composition of cables. This exposure is indirect since cable prices also reflect copper suppliers' commercial policies and the competitive environment in the Group's markets. Changes in copper prices have an estimated so-called "recurring" effect and an estimated so called "non-recurring" effect on the Group's performance, assessed as part of the monthly internal reporting process of the Rexel Group: i) the recurring effect related to the change in copper-based cable prices corresponds to the change in value of the copper part included in the sales price of cables from one period to another. This effect mainly relates to the Group's sales; ii) the non-recurring effect related to the change in copper-based cables prices corresponds to the effect of copper price variations on the sales price of cables between the time they are purchased and the time they are sold, until all such inventory has been sold (direct effect on gross profit). Practically, the non-recurring effect on gross profit is determined by comparing the historical purchase price for copper-based cable and the supplier price effective at the date of the sale of the cables by the Rexel Group. Additionally, the non-recurring effect on EBITA corresponds to the non-recurring effect on gross profit, which may be offset, when appropriate, by the non-recurring portion of changes in the distribution and administrative expenses.
The impact of these two effects is assessed for as much of the Group's total cable sales as possible, over each period. Group procedures require that entities that do not have the information systems capable of such exhaustive calculations to estimate these effects based on a sample representing at least 70% of the sales in the period. The results are then extrapolated to all cables sold during the period for that entity. Considering the sales covered, the Rexel Group considers such estimates of the impact of the two effects to be reasonable.
This document may contain statements of future expectations and other forward-looking statements. By their nature, they are subject to numerous risks and uncertainties, including those described in the Document de Référence registered with the French Autorité des Marchés Financiers (AMF) on March 21, 2014 under number D.14-0181. These forward-looking statements are not guarantees of Rexel's future performance. Rexel's actual results of operations, financial condition and liquidity as well as development of the industry in which Rexel operates may differ materially from those made in or suggested by the forward-looking statements contained in this release. The forward-looking statements contained in this communication speak only as of the date of this communication and Rexel does not undertake, unless required by law or regulation, to update any of the forward-looking statements after this date to conform such statements to actual results, to reflect the occurrence of anticipated results or otherwise.
The market and industry data and forecasts included in this document were obtained from internal surveys, estimates, experts and studies, where appropriate, as well as external market research, publicly available information and industry publications. Rexel, its affiliates, directors, officers, advisors and employees have not independently verified the accuracy of any such market and industry data and forecasts and make no representations or warranties in relation thereto. Such data and forecasts are included herein for information purposes only.
This document includes only summary information and must be read in conjunction with Rexel's Document de Référence registered with the AMF March 21, 2014 under number D.14-0181, as well as the consolidated financial statements and activity report for the 2013 fiscal year, which may be obtained from Rexel's website (www.rexel.com).