ElringKlinger AG: Preliminary financial results for FY 2013 characterized by one-time effects - Adverse foreign exchange effects

Dettingen / Erms, (PresseBox) - .
• Projected one-time gain of EUR 16-18 million following assumption of control of Japanese joint venture
• Revenue for 2013 up 4.3%; organic growth of 6.1%
• EBIT estimated at EUR 160-162 million; adjusted EBIT expected to be around EUR 146 million
• Outlook 2014: Revenue growth of 7-9% (5-7% organically), adjusted EBIT expected to rise to EUR 160-165 million

Automotive supplier ElringKlinger will generate a one-time gain of an estimated EUR 16-18 million having assumed control of the 50:50 joint venture ElringKlinger Marusan Corporation effective from December 31, 2013. This item will be included in its operating result for the 2013 financial year.

Based on preliminary key financials, the ElringKlinger Group achieved sales revenue of EUR 1,176.2 (1,127.2) million. Revenue growth was impacted by the strength of the euro and came in at 4.3%. Organically, i.e. taking into account the effects of foreign currency translation, revenue increased by 6.1% despite the extreme weakness of European vehicle markets and a downturn in new car registrations in Russia, Brazil and India.

The marked appreciation of the euro, especially in the second half of 2013, also had an impact on earnings before interest and taxes (EBIT), which in the case of ElringKlinger's business include foreign exchange effects. The automotive supplier anticipates that EBIT will amount to EUR 160-162 (136.0) million in total. This figure includes the estimated one-time gain of EUR 16-18 million mentioned above. Adjusted for non-recurring items, EBIT rose by around 7% to approx. EUR 146 (136.0) million in 2013, based on preliminary figures. This was roughly 3% below the original target of at least EUR 150 million.

In 2013, one-off restructuring charges attributable to the French site in Nantiat (EUR 1.8 million) as well as exceptional expenses associated with efforts to further penetrate the aftermarket sector (EUR 1.5 million) exerted some downward pressure on earnings. By contrast, the one-off gain from the step acquisition of Korean joint venture ElringKlinger Korea Co., Ltd. (EUR 1.4 million) and, as outlined above, the effects associated with the assumption of control of ElringKlinger Marusan Corporation (EUR 16-18 million) had a positive impact.

The adjusted EBIT margin thus improved slightly, up from 12.1% in the previous year. The company's operating result, which unlike EBIT contains no foreign exchange effects, will be visibly higher.

Control obtained over ElringKlinger Marusan as part of expansion in Asia ElringKlinger concluded a contractual agreement with its joint venture partner as regards the exercise of control over the 50:50 joint venture ElringKlinger Marusan Corporation. As of December 31, 2013, ElringKlinger AG thus has economic control over the Marusan Group. Under IFRS, the assumption of control necessitates full inclusion of the entity within the scope of consolidation of the ElringKlinger Group. As outlined above, this transition will produce a one-time gain of an estimated EUR 16-18 million for 2013. There was no effect on sales in 2013.

Having previously been included in the Group's scope of consolidation at a proportionate rate of 50%, the joint venture is to be fully consolidated as from 2014. As a result, Group sales revenue will increase by around EUR 25 million in 2014 compared to the preceding financial year, while earnings before taxes will expand by approx. EUR 1.5 million year on year. Write-downs of intangible assets resulting from purchase price allocation and amounting to an estimated figure of around EUR 1.5 million will have a contrary effect in 2014.

The Japanese joint venture is of particular importance to the Asian strategy adopted by the ElringKlinger Group, especially in the rapidly expanding ASEAN region. Including exports, the ElringKlinger Group already generates more than 20% of its revenue within the Original Equipment segment in Asia, a trend that is rising. The Group saw another significant increase in the number of ongoing development contracts with Asian manufacturers in 2013.

Further revenue and earnings growth expected for 2014

Based on the assumption that global car production will expand by 2 to 3%, the ElringKlinger Group anticipates that its revenue will grow by 5 to 7% organically in 2014, thus outpacing the market as a whole. Full consolidation of ElringKlinger Marusan Corporation will additionally contribute around EUR 25 million in sales. The Group's EBIT margin is expected to improve slightly compared to 2013. Adjusted for non-recurring items, EBIT is to rise for the fifth consecutive year, reaching a level of EUR 160 to 165 (around 146) million.

The full announcement of the final, audited results for fiscal 2013 is scheduled for March 28, 2014.

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