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ElringKlinger AG, DE0007856023

ElringKlinger AG, DE0007856023

06.11.2019 - 07:35:41

ElringKlinger confirms positive cash flow development in third quarter

ElringKlinger confirms positive cash flow development in third quarter

- Revenue expands by 6.4% to EUR 431.9 million in third quarter and by 3.1% to EUR 1,307.1 million after first nine months

- EBIT margin before purchase price allocation up quarter by quarter from 1.6% (Q1) and 2.5% (Q2) to 4.8 % (Q3); total after nine months at 2.9% - EBIT before purchase price allocation at EUR 20.8 million (Q3) and EUR 38.4 million (9M)

- Cash flow optimization program on track: operating free cash flow at EUR 30.8 million in third quarter and EUR 110.1 million in first nine months

- Outlook reaffirmed within challenging market environment

Dettingen/Erms (Germany), November 6, 2019 +++ ElringKlinger AG maintained its trajectory of growth in the third quarter of 2019: despite a downturn in global vehicle production, Group revenue was lifted by 6.4% year on year in the period from July to September 2019, taking the total to EUR 431.9 million. Organic revenue growth, i.e., the figure adjusted for currency effects and M&A activities, stood at 4.0%. Thus, ElringKlinger yet again outpaced the vehicle industry as a whole by a significant margin, with the latter experiencing a global downturn in production of 3.6% in the same period.

North America continues to drive revenue growth Persistently strong demand in the region of North America continues to be a key revenue driver for ElringKlinger. Here, the Group recorded year-on-year growth of 25.0% in the third quarter of 2019. This above-average expansion in revenue was attributable to a number of new product rollouts as well as the sustained buoyancy in demand for Group products fitted to particularly successful vehicle models. Despite an economic slowdown of around 6% within the market, ElringKlinger also managed to increase revenue by 4.7% in the Asia-Pacific region. Sales revenue was also up in the Rest of Europe, rising by 4.3% in the third quarter of 2019. Growth was attributable primarily to the aftermarket business in Eastern Europe. By contrast, ElringKlinger had to contend with a decline in revenue by 6.3% in Germany as a result of the economic climate.Operating result improved quarter on quarter Earnings before interest and taxes (EBIT) and before purchase price allocation amounted to EUR 20.8 million in the third quarter and EUR 38.4 million in the first nine months of 2019. ElringKlinger thus managed to increase its EBIT margin before purchase price allocation quarter by quarter over the course of the year: after 1.6% and 2.5% respectively in the first two quarters it stood at 4.8% in the third quarter. In this context, the internal cost-reduction program proved successful, as did the operational improvements made at sites with a high level of capacity utilization. In addition, the Group received reimbursements with regard to tariffs that had adversely affected earnings in the previous quarters.

Program to optimize cash flow on track Key financial performance indicators continued to improve within the ElringKlinger Group over the course of the third quarter of 2019. The cash flow optimization program initiated by the Management Board took further effect, as a result of which operating free cash flow was lifted to EUR 30.8 million in the third quarter and to EUR 110.1 million in the first nine months of 2019. This was driven in particular by a further reduction in net working capital. In addition, the Group continues to pursue its disciplined approach to capital expenditure. Consequently, it managed to scale back net debt by EUR 114.0 million in the last two quarters. "Our results for the first nine months illustrate that ElringKlinger continues to perform well despite the market downturn experienced by the automobile industry. This is a testament to our innovative product portfolio and our efficiency program," says Dr. Stefan Wolf, CEO of ElringKlinger AG. "Based on revenue growth, we by far exceeded the performance of the global vehicle industry as a whole, in addition to further improving our profitability in the course of the year with the help of cost-reduction measures implemented within the Group."Improvement in order intake and order backlog Despite the general market malaise, ElringKlinger's order books remained very robust. In the third quarter of 2019, the Group recorded an order intake of EUR 437.6 million. This represents an increase of EUR 25.8 million or 6.3% compared with the same quarter a year ago. Adjusted for currency effects, the increase amounted to EUR 3.2 million or 0.8%. At EUR 1,068.7 million, order backlog was up by EUR 41.5 million or 4.0% year on year. If exchange rates had remained unchanged, the figure would still have been up by EUR 19.8 million or 1.9%.

Sustained weakness of global automobile production The market environment continues to be exposed to a number of political and economic uncertainties. Influencing factors such as trade disputes, various Brexit scenarios, and geopolitical conflicts in the Middle East may have an impact on the economy as a whole. This is compounded by the economic downturn within the global automotive industry. The key markets around the globe - China, North America, and Europe - in particular are showing signs of a slowdown, in some cases severe. Over the course of the year, projections issued by banks, industry associations, and information services have gradually been revised downward for 2019. Based on these figures, global vehicle production is now expected to fall by -6% to -4% in 2019, although it remains difficult to be precise about the extent of the contraction given the numerous political and economic uncertainties and the volatile and strained environment.

Outlook reaffirmed in challenging market environment Despite this situation, based also on its robust order books, ElringKlinger is still of the opinion that its performance in terms of revenue will be better than that seen within the market as a whole. Against this background, the Group remains confident that it can outpace the expansion in global automobile production by 2 to 4 percentage points in terms of organic revenue growth. Assuming persistently strong demand in the NAFTA region, revenue growth may also be slightly higher.

Alongside the market slowdown, elevated commodity prices, and the costs associated with trade disputes, persistently strong demand in the NAFTA region and start-up costs relating to a new plant in the United States will have an impact on earnings performance in 2019. ElringKlinger was quick to take countermeasures during the current financial year and introduced a far-reaching program aimed at streamlining its costs. ElringKlinger is also set to generate income in the high single-digit million-euro range in the fourth quarter from a real estate sale. Taking into account these factors and challenging market conditions, the Group continues to expect to achieve its target of an EBIT margin before purchase price allocation of around 4% to 5% for the 2019 financial year. This assumes that no further significant externalities emerge as a drag on earnings and that markets do not weaken any further than already anticipated.

Key Financials for Q3 and 9M of 2019

EUR million 9M2019 9M2018 ? abs. ? rel. Q32019 Q32018 ? abs. ? rel. Order intake 1,355.7 1,344.6 +11.1 +0.8% 437.6 411.8 +25.8 +6.3% Order backlog 1,068.7 1,027.2 +41.5 +4.0% 1,068.7 1,027.2 +41.5 +4.0% Revenue 1,307.1 1,267.2 +39.9 +3.1% 431.9 405.8 +26.1 +6.4% of which FX effects     +19.8 +1.6%     +9.9 +2.4% of which M&A     -6.2 -0.5%     +0.0 +0.0% of which organic     +26.3 +2.0%     +16.2 +4.0% EBITDA 123.6 158.8 -35.2 -22.2% 49.8 48.4 +1.4 +2.9% EBIT before purchase price allocation 38.4 88.5* -50.1 -56.6% 20.8 23.8 -3.0 -12.6% EBIT margin before purchase price allocation (in %) 2.9 7.0* -4.1PP - 4.8 5.9 -1.1PP - Purchase price allocation 1.5 2.9 -1.4 - 0.5 1.0 -0.5 - EBIT 36.9 85.6* -48.7 -56.9% 20.3 22.9 -2.6 -11.4% Net finance cost -14.7 -11.4 -3.3 - -5.0 -1.0 -4.0 - EBT 22.2 74.2* -52.0 -70.1% 15.3 21.8 -6.5 -29.8% Taxes on income 24.8 26.2 -1.4 -5.3% 8.2 9.5 -1.3 -13.7% Net income (after non-controlling interests) -3.4 45.0* -48.4 >-100% 6.7 10.8 -4.1 -38.0% Earnings per share (in EUR) -0.05 0.71 -0.76 >-100% 0.11 0.17 -0.06 -35.3% Investments (in property, plant, and equipment and investment property) 74.9 121.6 -46.7 -38.4% 25.4 53.9 -28.5 -52.9% Operating free cash flow 110.1 -88.8 +198.9 >+100% 30.8 -46.5 +77.3 >+100% Net working capital 478.3 613.8 -135.5 -22.1%         Equity ratio (in %) 40.7 42.1 -1.4PP -         Net financial liabilities 681.5 728.5 -47.0 -6.5%         Employees (as of Sep. 30) 10,492 10,231 +261 +2.6%        

* incl. gain from sale of Hug subgroup (EUR 21.1 million before taxes)

For further information, please contact: ElringKlinger AG Dr. Jens Winter Strategic Communications Max-Eyth-Straße 2 72581 Dettingen/Erms (Germany) Phone: +49 7123 724-88335 Fax: +49 7123 724-85 8335 E-mail: jens.winter@elringklinger.com

About ElringKlinger AG As an independent and globally positioned supplier, ElringKlinger is a powerful and reliable partner to the automotive industry. Be it passenger car or commercial vehicle, equipped with an optimized combustion engine, with hybrid technology, or with an all-electric motor - we offer innovative solutions for all types of drive system. In doing so, we are making a committed contribution to sustainable mobility. Our lightweighting concepts help to reduce the overall weight of vehicles. As a result, vehicles powered by combustion engines consume less fuel and emit less CO2, while those equipped with alternative propulsion systems benefit from an extended range. Developing cutting-edge battery and fuel cell technology as well as electric drive units, we were among the frontrunners when it came to positioning ourselves as a specialist in the field of e-mobility. At the same time, we are committed to evolving our sealing technology for a wide range of applications. Our shielding systems are designed to ensure high-end temperature and acoustics management throughout the vehicle. Dynamic precision parts developed by ElringKlinger can be used in all types of drive system. Additionally, the Group's portfolio includes engineering services, tooling technology, and products made of high-performance plastics, which are also marketed to industries beyond the automotive sector. These efforts are supported by a dedicated workforce of more than 10,000 people at 45 ElringKlinger Group locations around the globe.

Disclaimer This release contains forward-looking statements. These statements are based on expectations, market evaluations and forecasts by the Management Board and on information currently available to them. In particular, the forward-looking statements shall not be interpreted as a guarantee that the future events and results to which they refer will actually materialize. Whilst the Management Board is confident that the statements as well as the opinions and expectations on which they are based are realistic, the aforementioned statements rely on assumptions that may conceivably prove to be incorrect. Future results and circumstances depend on a multitude of factors, risks and imponderables that can alter the expectations and judgments that have been expressed. These factors include, for example, changes to the general economic and business situation, variations of exchange rates and interest rates, poor acceptance of new products and services, and changes to business strategy.

06.11.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de

Language: English Company: ElringKlinger AG Max-Eyth-Straße 2 72581 Dettingen/Erms

Germany Phone: 071 23 / 724-0 Fax: 071 23 / 724-9006 E-mail: jens.winter@elringklinger.com Internet: www.elringklinger.de ISIN: DE0007856023 WKN: 785602 Listed: Regulated Market in Frankfurt (Prime Standard), Stuttgart; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Tradegate Exchange EQS News ID: 905609   End of News DGAP News Service

905609  06.11.2019 

@ dgap.de