2015: Newfound growth
Operating profit (EBIT)
Newfound momentumIn 2015, the drop in oil prices and very obliging monetary policies were not enough to improve world economic growth, which contracted slightly compared with 2014 (3.0% as against 3.3%). Volatility in the currency markets appeared while the economic readjustments in favour of developed countries continued.
The main source of worry for the year was the slowdown in China, which has affected many emerging economies.
The US, with GDP of 2.5%, continued to drive global business activity, while Europe saw newfound growth of 1.5%, which, though moderate, was at least consistent. Growth in France’s economy also grew modestly at 1.1%.
In this context, SOCOMEC saw the best performance in its history with sales turnover of 467 M€, up 9% (+40 M€) which was helped, admittedly, by favourable exchange rates.
Geographically, our business activity in Europe grew by 5%, in Africa and Middle East by 12%, Asia by 14% and North America by 56%. Europe was led by the UK (+20%) owing to the effects of the exchange rate and by Germany (+16%); France on the other hand has been slightly sluggish (+1%). The Middle East and Africa are back on track to growth after the previous year’s decline but in a complicated geopolitical context. Asia benefitted the most from the favourable exchange rates in 2015. And finally, the upswing of business turnover in North America reflects the strength of the world’s largest market and the Group’s efforts to strengthen it.
In terms of our business lines, Critical Power Conversion, which now includes the Solar Power business, has progressed by 9% with recovery in product sales (+8%) especially in Northern Europe and Asia Pacific, with the Services side of the equation enjoying an increase of 13%. Power Control & Safety has grown by 13% with commercial successes in North America (+53%). Finally, Energy Efficiency increased by 5%, mainly in Europe and China.
The relevance of the measures adopted in 2014 and continued in 2015 has therefore been reinforced.
In addition, the external growth levers, underutilised for several years, have been kick-started with the acquisition of a Swiss distributor at the end of 2015. This trend will be intensified in 2016 and new acquisitions have already been made.
An increasingly solid financial positionIn last year’s financial review, we reported that if the emerging economic upturn was sustained, “operational profitability should be restored very appreciably”. This is indeed what can be observed in 2015, with growth of 13% in our EBIT, excluding exchange rate effects (and by 38 % with the exchange rates!). This brings the rate of EBIT to 8.5% of sales turnover as against 6.7% in 2014. SOCOMEC’s equity capital, including minority interests, reached 189 M€ and a net cash surplus of 51 M€ as at 31 December 2015.