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ElringKlinger sees strong expansion in revenue during second quarter of 2018

  • Organic revenue growth of 8.4% in first half and as much as 11.6% in second quarter
  • EBIT margin before purchase price allocation of 7.5% in first half
  • Order backlog of EUR 1,038 million at record level

Dettingen/Erms (Germany), August 7, 2018 +++ Automotive supplier ElringKlinger recorded strong revenue growth in the second quarter of 2018. Compared to the same quarter a year ago, revenue was expanded by EUR 23.0 million, or 5.6%, to EUR 430.8 (407.8) million. This includes a dilution of revenue by EUR 10.9 million, or 2.7 percentage points, due to the disposal of Hug. Revenue was also dampened by currency effects equivalent to EUR 13.6 million or 3.3 percentage points. In this context, the direction taken by the Swiss franc, the Mexican peso, and the US dollar was a key factor. Adjusted for the effects of currency translation and the sale of Hug, revenue in the reporting quarter was up by EUR 47.5 million or 11.6% in organic terms. Thus, the Group outpaced growth in global automobile production (+6.6%) by 5 percentage points.

Revenue growth was evident in all sales regions covered by the Group. In South America and Rest of the World, for instance, ElringKlinger managed to expand its business by 9.4% in the second quarter of 2018, while it grew by 5.6% in its core market of Europe (incl. Germany). The Asia-Pacific region also recorded slight growth of 0.8%. ElringKlinger's sales performance in the NAFTA region was particularly striking. Here, Group revenue rose by a vigorous 9.4% year on year in the second quarter of 2018, despite the fact that vehicle production in this region was down slightly (-0.8%) during the same period. Calculated on the basis of revenue growth in the NAFTA region, ElringKlinger outperformed general market expansion by more than 10 percentage points.

"We are advancing in all core segments, which clearly illustrates the strong demand for our products worldwide," said Dr. Stefan Wolf, Chief Executive Officer of ElringKlinger AG. "This buoyant demand is also reflected in our order book situation. We have received new orders amounting to EUR 459 million, which takes us to a level that is up 11% on the prior-year figure. In addition, our order backlog in excess of EUR 1 billion represents a new record for ElringKlinger."

Despite the strong demand, the persistently high levels of capacity utilization and the increased commodity prices, the Group managed to limit the impact on earnings in the second quarter when compared with the first three months of the financial year. In total, the Group recorded an EBIT figure of EUR 26.3 (37.2) million before purchase price allocation in the period from April to June. Adjusted for one-off proceeds from the sale of Hug, the EBIT margin before purchase price allocation improved from 4.0% in the first three months to 6.1% (9.1%) in the second quarter. In the first half the margin stood at 7.5% (9.1%).

ElringKlinger's growth trajectory is also reflected in other key financial indicators. Compared to the end of 2017, net working capital, for example, rose by 9.5% to EUR 605.9 million as of June 30, 2018. This was attributable mainly to a revenue-driven increase in trade receivables. The Group's disciplined approach to investment spending in property, plant, and equipment and investment property proved beneficial. It amounted to EUR 67.7 (72.0) million in the first half, down EUR 4.3 million on the prior-year figure. The investment ratio stood at 7.9%. Due to payments scheduled for the second half, however, it is expected to be within a range of around 9 to 10% in respect of the annual period as a whole. Operating free cash flow totaled EUR -42.2 (-21.8) million in the first half of 2018.

After a three-month period in which the automotive industry delivered a strong performance, the second half of the year will see more pronounced economic and political uncertainties. The business-related effects associated with the WLTP certification process for new vehicles may also have an impact on ElringKlinger. At the same time, it is impossible to predict the future direction taken by international trade tariffs and the extent to which these tariffs will influence key corporate financials in general. Operating within this increasingly ambivalent business environment, ElringKlinger at present still anticipates that global automobile production will expand by 2 to 3% in 2018 and remains confident that it can exceed this figure by around 2 to 4 percentage points in terms of revenue growth. Additionally, the Group can confirm its 2018 EBIT margin target of around 7%, before purchase price allocation, as revised in June.

ElringKlinger has positioned itself very well in strategic terms to engage in the process of transition within the global automotive industry. In view of its highly sought-after and technologically advanced products, the Group remains confident that it can continue to expand faster in the medium term than automobile production, calculated on the basis of its revenue growth, and that it can gradually improve profitability levels in terms of its EBIT margin before purchase price allocation.

Key Financials for Q2 and H1 of 2018

EUR million H1
2018
H1
2017
∆ abs. ∆ rel. Q2
2018
Q2
2017
∆ abs. ∆ rel.
Order intake 932.8 907.6 +25.2 +2.8 % 458.6 413.3 45.3 +11.0 %
Order backlog 1,038.2 999.1 +39.1 +3.9 % 1,038.2 999.1 +39.1 +3.9 %
Revenue 861.5 841.1 +20.4 +2.4 % 430.8 407.8 +23.0 +5.6 %
of which FX effects     -35.2 -4.2 %     -13.6 -3.3 %
of which acquisitions     -15.1 -1.8 %     -10.9 -2.7 %
of which organic     +70.7 +8.4 %     +47.5 +11.6 %
EBITDA 110.4 123.1 -12.7 -10.3% 49.3 60.5 -11.2 -18.5%
EBIT before purchase price allocation 64.6* 76.3 -11.7 -15.3 % 26.3 37.2 -10.9 -29.3 %
EBIT margin before purchase price allocation (in %) 7.5* 9.1 -1.6 PP - 6.1 9.1 -3.0 PP -
Purchase price allocation 1.9 2.6 -0.7 - 1.0 1.4 - 0.4 -
EBIT 62.7* 73.7 -11.0 -14.9 % 25.3 35.8 -10.5 -29.3 %
Net finance cost -10.3 -11.2 +0.9 +8.0 % -5.0 -7.8 +2.8 +35.9 %
EBT 52.4* 62.5 -10.1 -16.2 % 20.3 28.0 -7.7 -27.5 %
Taxes on income 16.7 17.2 -0.5 -2.9 % 10.9 8.7 +2.2 +25.3 %
Effective tax rate
(in %)
31.9 27.5 +4.4 PP - 53.7 30.9 +22.8 PP -
Net income (after non-controlling interests) 34.2* 43.5 -9.3 -21.4 % 8.5 18.4 -9.9 -53.8 %
Earnings per share
(in EUR)
0.54* 0.69 -0.15 -21.7 % 0.13 0.29 -0.16 -55.2 %
Investments (in property, plant, and equipment) 67.7 72.0 -4.3 -6.0% 38.4 42.4 -4.0 -9.4 %
Operating free cash flow -42.2 -21.8 -20.4 -93.6 % -19.0 -10.2 -8.8 -86.3 %
Net working capital 605.9 570.6 +35.3 +6.2 %        
Equity ratio (in %) 42.8 44.4 -1.6 PP -        
Net financial liabilities 682.6 614.6 +68.0 +11.1 %        
Employees
(as of June 30)
9,954 9,012 +942 +10.5 %        

* Incl. gain from sale of Hug subgroup


Reprinting free of charge. File copy requested.
For further information please contact:

ElringKlinger AG 
Dr. Jens Winter 
Strategic Communications 
Max-Eyth-Straße 2 
D-72581 Dettingen/Erms
Phone +49 7123 724-88335 
Fax +49 7123 724-85 8335 
E-mail jens.winter@elringklinger.com