Rexel posted performance in line with guidance. Sales were slightly down 1.9%* to €13.2bn with a strong 58% increase in net income from continuing operations to €134.3m. Rexel demonstrated its resilience with an adjusted EBITA margin of 4.2% and free cash flow before interest and tax from continuing operations representing 69% of EBITA. In parallel, the Group continued to strengthen its financial structure with a drop in net debt, a stable indebtedness ratio and lower financial expenses, thanks in particular to several refinancing operations aimed at extending debt maturity while taking advantage of improved market conditions.
Our best performance was posted in the fourth quarter, with a sequential improvement in our organic sales in all three of our geographies, a first step that allows us to foresee a resumption of organic growth and increased profitability in 2017.
*On a constant and same-day basis.
Thanks to its pivotal role in the value chain between manufacturers and customers, Rexel can boast many assets enabling it to seize growth opportunities: a broad and valuable customer base, a strong footprint in key geographies, key partnerships with global and leading manufacturers, best-in-class core capabilities and an increasingly multichannel customer approach.
To capitalize on these assets, I appointed a new Executive Committee, comprising 10 members, whose composition is strongly operations-oriented. It brings together the heads of our key geographies as well as our key functional leaders. Among its members, I am delighted to welcome Laurent Delabarre, who joined us on May 15 as Group Chief Financial Officer. Together, we will implement the strategy that we presented at our Capital Markets Day on February 13, 2017 which will focus on three priorities.
First, accelerate organic growth to gain market share. To do this, we will rely on two fundamental pillars - net customer gains and increased share of wallet with each customer, summarized in a simple motto: "More customers and More SKUs" (Stock-Keeping Unit) - as well as on a customer approach that will be differentiated according to three main customer profiles: Proximity, Projects and Specialty.
Next, increase selectivity in capital allocation and strengthen financial structure. We will focus our investments on both organic growth enablers and productivity enhancers, through increasing digitization and optimization of the branch network on the one hand, and automation of logistics and back-office digitization on the other hand. At the same time, we intend to undertake a divestment program that will reduce the Group's consolidated sales by around €800m by the end of 2018 in order to focus on those geographies and market segments that offer the best profitable growth and value creation opportunities.
Rexel will continue its targeted bolt-on acquisition strategy from 2018 onwards, aiming at broadening our footprint in our key markets and segments.
Finally, improve our operational and financial performance. Rexel aims at continuously increasing its profitability through gross margin enhancement and strict cost control. The Group will also enhance its performance in key geographies, mainly the USA, Germany, the UK and Australia, which offer significant turnaround potential.
As a signatory to the United Nations Global Compact, Rexel is committed to incorporating its ten key principles into its strategy and procedures, reporting on their implementation and promoting them to all of its partners.
The technological advances in energy efficiency, smart solutions for industrial and building automation, and the empowerment of end-users to optimize their energy management will allow the Group to continue to generate sustainable growth opportunities for its customers and all its stakeholders.
Patrick Berard, 63, joined Rexel in 2003 as Chief Executive Officer of Rexel France. In 2007, he also became Manager of the southern Europe area (France, Italy, Spain, Portugal), then, in 2013, of Belgium and Luxembourg. In 2014, he was appointed Senior Vice President Southern, Central and Eastern Europe. Prior to joining Rexel, Patrick Berard served as Operations Manager of Antalis (Groupe Arjo Wiggins) from 1999 to 2002, and was later appointed Chairman and Chief Executive Officer of Pinault Bois & Matériaux (2002-2003), a company of the Kering Group (formerly PPR Group). From 1988 to 1999, he occupied various duties with Polychrome, including those of Chief Executive Officer Europe and Vice President of the Group, prior to becoming a member of the Executive Committee of Kodak Polychrome Graphics. From 1980 to 1987, Patrick Berard was a consultant with McKinsey, then Manager of Planning and Strategy of the Industry and Engineering Division of Thomson. His career started in 1978 with the Pulp and Paper Research Institute of Canada.
“With a strengthened governance structure, a new Executive Committee, committed teams and a clear strategic roadmap, our ambition is to make Rexel a company that creates value for all players in the world of energy.”