ElringKlinger with preliminary results for fiscal 2018, outlook for 2019, and proposal for dividend suspension
Dettingen/Erms (Germany), February 19, 2019 +++ Based on preliminary, unaudited figures, the ElringKlinger Group saw a significant improvement in revenue during the financial year just ended. At EUR 1,697.0 million, revenue was up by EUR 33.0 million or 2.0 % in 2018. Organic revenue growth, i.e., adjusted for the effects of currencies and consolidation, stood at EUR 121.8 million or 7.3 %. Thus, the company has exceeded its target of outperforming market growth organically by 2 to 4 percentage points.
EBIT before purchase price allocation amounted to EUR 100.4 million, which corresponds to a margin of 5.9 %. The Group had originally anticipated a margin of around 7%. In the fourth quarter, too, several factors contributed to the lower-than-expected EBIT margin: commodity prices - also due to tariffs on steel and aluminum - remained high. In addition, although the Group succeeded in further implementing optimization measures in the NAFTA region, the positive effects on earnings fell short of expectations so far. In total, revenue generated in the fourth quarter of 2018 amounted to EUR 429.8 (419.3) million (+2.5 %, organically +7.1 %); EBIT before purchase price allocation stood at EUR 11.9 (30.7) million, which corresponds to a margin of 2.8 % (7.3 %).
Based on the Group's preliminary figures, the Management Board will put forward a proposal for a dividend suspension in respect of the 2018 financial year, the aim being to further strengthen internal financing - also in conjunction with the successful conclusion of a syndicated loan agreement for EUR 350 million - for the Group's transformation process.
For 2019, ElringKlinger anticipates that it will again exceed in terms of organic growth - by 2 to 4 percentage points - the rate of expansion in global automobile production, which is currently estimated at 0 to +1 %. However, as regards earnings performance, it is unlikely that the proceeds generated from the sale of the Hug subgroup, which contributed to earnings in 2018, can be fully compensated for in fiscal 2019. Efforts aimed at cost streamlining in Switzerland will be completed in 2019 and measures implemented in the NAFTA region are expected to advance significantly. However, difficult market conditions in many regions of the world, the political and economic uncertainty, and the unpredictable repercussions of increasingly severe trade disputes - especially with regard to commodity prices and vehicle-specific tariffs - may limit the earnings effect of the aforementioned measures. Therefore, the Group will be looking to achieve an EBIT margin, before purchase price allocation, of 4 to 5% for the 2019 financial year. Based on the range of measures implemented, the Group also anticipates that its cash flow situation can be decisively improved as early as 2019 - with the prospect of positive operating free cash flow. The Group has confirmed its medium-term targets.
ElringKlinger will publish its full and definitive results for the 2018 financial year on March 27, 2019.
For further information please contact:
Dr. Jens Winter
Phone +49 7123 724-88335
Fax +49 7123 724-85 8335