(News Bulletin 247) – The flooring specialist returns to profit in 2023. The market is appreciating.

The annual results season delivers its share of excellent surprises, also allowing the Parisian market to set a series of records. And among the copies which received satisfaction from the market, we find Tarkett which announced Thursday evening that it would return to profit in 2023.

The title of the floor covering specialist rose another 4% around 12:00 p.m., after having gained more than 5% in the first exchanges in reaction to the news.

In 2023, Tarkett achieved a net turnover of 3.363 billion euros, a slight increase of +0.1% compared to 2022. Organically, the growth is more pronounced, at +4.5%. The group mainly benefited from the dynamism of its sports division, which once again experienced strong growth (+20.2% organically, +17.8% reported) to see its sales reach a record level of 1.025 billion euros.

“The market was very dynamic, particularly for artificial turf fields and athletics tracks in North America. The segment also benefited from price increases which more than offset inflation in raw material costs,” comments the company from the Sommer-Allibert group. .

No dividend on the program

A little further down in the accounts, the company’s profitability has appreciated. Adjusted Ebitda (gross operating surplus) increased by 22.5% year-on-year to reach 287.8 million euros. The corresponding margin is also increasing, going from 7% in 2022 to 8.6% of turnover in 2023.

The group, listed on the stock exchange since 2013, explains that it benefited from a decline in the prices of raw materials, energy and transport, particularly in the second half of the year, which enabled it to obtain a net positive effect over the year of 76 million euros compared to 2022. The sales price increases deployed during the 2022 financial year also lead to a positive effect of 131 million euros in 2023.

As a result, Tarkett generated positive free cash flow for the financial year of 147.1 million euros, which marks a very strong increase compared to the 148.3 million euros consumed in 2022. Good news related to the improvement of Ebitda and the significant reduction in working capital requirements.

Regarding this last point, the group explains that it has implemented significant actions to reduce the volume of inventories which represent 80 days at the end of December 2023 compared to 86 days at the end of December 2022. Main information from this publication, Tarkett returned to profit in 2023 to the tune of 20.4 million euros, where the company had suffered a loss of around 27 million euros in 2022.

However, the company opts for caution and has decided not to pay dividends for the past year. Tarkett justifies this decision by an “uncertain macroeconomic and market context, and with the perspective of preserving cash flow in 2024”. The company also wants to “consolidate the recovery initiated in 2023”.

Blurred perspectives

Regarding its prospects, Tarkett does not provide any figures. The flooring specialist says it does not expect any improvement in market conditions in the short term, citing “a complex and uncertain geopolitical and macroeconomic context”.

Evoking a “complex” market environment, Tarkett only indicates that it is maintaining “its operational and financial recovery roadmap initiated in 2023”.

“After the very strong cash generation in 2023, the group continues to aim for positive cash generation and a reduction in debt thanks to the rigorous control of working capital requirements and costs, as well as the control of investments allocated as a priority to innovative, growth and productivity projects”, concludes the group.

A long-awaited delisting

If on the accounts side the year 2023 was that of recovery for Tarkett, on the stock market on the other hand, the title lost 20% over the previous stock market vintage. The share price of floor covering specialist Tarkett is currently moving close to 10 euros.

And that’s a far cry from the 20 euros per share proposed by the Deconinck family with the support of the investment company Wendel to delist the company in spring 2021.

At the end of this simplified public purchase offer, the Deconinck family accompanied by Wendel only managed to collect 85.89% of the capital and 84.98% of the voting rights of the floor coverings specialist. Which was insufficient to carry out a public withdrawal offer, since this concert had to reach the success threshold of 90% of the capital.

In the meantime, the concert has managed to cross this threshold on the wire, and to date holds 90.005% of the capital of Tarkett. But since September 2021, it has not expressed its intention to file a public withdrawal offer, followed by a compulsory withdrawal.