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Press release Box-ID: 594813

ElringKlinger AG Max-Eyth-Str. 2 72581 Dettingen / Erms, Germany http://www.elringklinger.de
Contact Mr Stephan Haas +49 7123 724137
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ElringKlinger AG

ElringKlinger defies market weakness with revenue growth in first quarter

(PresseBox) (Dettingen / Erms, )
The ElringKlinger Group managed to drive consolidated revenue forward in the first quarter of 2013 despite the marked slump witnessed throughout Europe's car markets. Sales revenue increased by 1.1% to EUR 286.8 (283.8) million. At EUR 35.8 (37.3) million, earnings before interest and taxes (EBIT) fell 4.0% short of the Group's buoyant earnings performance recorded in the previous year. Net income after non-controlling interests totaled EUR 23.8 (24.2) million.

Dynamic business in Asia compensates for downturn in Western Europe

Supported by new product ramp-ups and an increase in revenue from sales in Asia in excess of 20 %, ElringKlinger managed to compensate for the more than 10 % decline in car production figures over the course of the first three months of 2013 in Western Europe. Including exports, the Group generated almost half of its Original Equipment revenue in Asia as well as North and South America in the first quarter.

Performance of acquired companies - Successful turnaround at exhaust specialist Hug

Benefiting from the increase in sales, the restructuring measures already implemented and the deployment of state-of-the-art production technology, the Hug Group has seen a gradual improvement in its earnings performance. While the first quarter of the previous year had produced a pre-tax loss of EUR 2.0 million, earnings before taxes were already showing a steady improvement over the course of 2012. In the first quarter of 2013, sales revenue increased to EUR 11.0 (7.0) million, while earnings before taxes improved year on year to EUR 1.0 million.

By contrast, the protracted malaise afflicting car markets in Western Europe also took its toll on capacity utilization levels at the former Freudenberg company ElringKlinger Meillor SAS, France. Whereas the earnings contributions of the two former Freudenberg sites in Gelting (Germany) and Settimo Torinese (Italy) were well within positive territory, the earnings performance of ElringKlinger Meillor was negative. ElringKlinger is currently implementing restructuring measures at this site for the purpose of adapting capacity levels to persistently low demand within the market. In this context, other liabilities of EUR 1.8 million were recognized as early as the first quarter of 2013, which had a one-time impact on earnings. At the same time, processes are being further automated and small-scale serial production is being introduced for the aftermarket line of business. In total, the former Freudenberg sites acquired in 2011 produced revenue of EUR 13.4 (13.7) million in the first quarter of 2013 and earnings before taxes of minus EUR 1.5 (0.2) million.

Slight contraction in EBIT

Earnings before interest, taxes, depreciation and amortization (EBITDA) stood at EUR 54.3 (57.0) million. At EUR 18.5 (19.8) million, depreciation/amortization was slightly lower in the first quarter of 2013. The ongoing purchase price allocations relating to Hug Engineering AG and the Hummel-Formen Group had a negative effect of EUR 0.6 (-0.6) million in total. Despite the negative aggregate earnings contribution made by the acquired entities and the significant up-front costs associated with the E-Mobility division, the Group's operating result stood at EUR 33.3 (39.0) million. This corresponds to a 14.6% decline compared to the figure recorded in the same quarter a year ago. However, the operating result was up considerably on the figure posted in the fourth quarter of 2012 (EUR 25.8 million). The staff profit-sharing bonus of EUR 1,300 (1,150) per employee for members of the ElringKlinger AG, ElringKlinger Kunststofftechnik GmbH and Elring Klinger Motortechnik GmbH workforce, as agreed for the financial year 2012, has already been accounted for in other liabilities and resulted in additional staff costs of EUR 3.7 (3.3) million in the first quarter of 2013. While the non-recurring restructuring expenses of EUR 1.8 million attributable to the French site in Nantiat had an adverse effect on earnings, the transition to full consolidation of the newly acquired Korean joint venture ElringKlinger Korea Co., Ltd, Changwon, produced positive one-time income of EUR 1.4 million.

Earnings before interest and taxes, which in contrast to the operating result include foreign exchange gains and losses, fell by 4.0% to EUR 35.8 (37.3) million. Foreign exchange gains of EUR 2.5 (-1.7) million had a positive effect on Group EBIT in the first quarter of 2013. The as yet negative impact on Group EBIT from contributions made by the acquired Hug Group, Hummel-Formen Group and former Freudenberg companies was equivalent to EUR 0.6 (-0.6) million in total. The EBIT margin was 12.5% (13.1%). Adjusted for the dilutive effects attributable to the as yet less profitable acquisitions, the EBIT margin within the Group's core business would have reached 14.0%, despite the significant up-front costs associated with E-Mobility.

Net finance costs down due to foreign exchange effects

Net finance costs were reined back by EUR 4.7 million year on year to EUR 0.3 (5.0) million, primarily as a result of significant foreign exchange gains, but also due to lower market interest rates. In total, the Group recorded foreign exchange gains of EUR 2.5 (-1.7) million. At EUR 33.0 (34.0) million, earnings before taxes were down 2.9% compared to the previous year.

Net income remains stable year on year

Benefiting from a lower tax rate, the ElringKlinger Group was able to match last year's first-quarter performance by again posting net income of EUR 24.6 (24.6) million in the first quarter of 2013. Net income attributable to non-controlling interests rose to EUR 0.8 (0.4) million, primarily as a result of the significant improvement in earnings contributed by Hug Engineering AG, Switzerland. Correspondingly, net income attributable to the shareholders of ElringKlinger AG fell by 1.7% to EUR 23.8 (24.2) million.

Positive order intake

Incoming orders were up significantly compared to the fourth quarter of 2012, when order intake had totaled EUR 260.8 million. In the first three months of 2013 order intake increased by 23.9% year on year to EUR 333.9 (269.4) million. As of March 31, 2013, order backlog for the ElringKlinger Group stood at EUR 503.1 (434.0) million, up 15.9% on the figure recorded a year before. Thus, the ElringKlinger Group is supported by a solid order backlog when it comes to achieving sales growth targeted for the annual period as a whole.

Forecast for the full year confirmed

The company confirms its forecast for the full year. For 2013 ElringKlinger still expects global auto industry to rather stagnate or to see modest growth at best. Against this backdrop the ElringKlinger Group plans to increase sales revenue by 5 to 7% in 2013 in terms of organic growth. Should global car production merely stagnate in 2013, revenue growth is more likely to be positioned at the lower end of this range. The operating margin attributable to ElringKlinger's core business will still be diluted in 2013 as a result of the as yet below-average aggregated profit margins of the acquired entities and the associated purchase price allocations. However, the dilutive effects in 2013 are expected to be less pronounced compared to the previous year. Additionally, the substantial up-front expenses and start-up costs incurred in the E-Mobility division, which will be working on several projects as they progress through the start-up phase during the second half of the year, also have to be taken into account. Despite these factors, however, ElringKlinger believes that it will be in a position to expand its earnings before interest and taxes (EBIT), adjusted for one-time charges, at a faster rate relative to revenue growth. Adjusted EBIT for the financial year 2013 as a whole is expected to be in the range from EUR 150 to 155 million (EUR 136.0 million in 2012).
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