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ElringKlinger records organic growth of 5.6% in second quarter of 2016
Revenue up by 2.9% to EUR 391 million, organically by as much as 5.6%
EBIT before purchase price allocation down by EUR 3.4 million or 8.6% quarter on quarter to EUR 36.2 million
This figure includes trailing exceptional costs of EUR 4 million in the Original Equipment segment
Guidance for FY 2016: 5 to 7% organic revenue growth and EBIT pre PPA of EUR 140 to 150 million expected
The ElringKlinger Group maintained its trajectory of revenue growth in the second quarter. Revenues increased by EUR 11.2 million or 2.9% compared to the same quarter a year ago, taking the figure to EUR 390.9 (379.7) million. In this context, currency translation – primarily with regard to the Mexican peso, Swiss franc, and Chinese yuan – had an adverse effect on figures for the reporting quarter equivalent to EUR 11.7 million or 3.1%. Additionally, revenues include a contribution of EUR 1.6 million from COdiNOx Beheer B.V., which has been fully consolidated within the Group since April 11, 2016. Taking into account the aforementioned factors relating to foreign exchange rates and the corporate acquisition, revenue showed organic growth of EUR 21.3 million or 5.6%.
"Our growth in revenue in particular is indicative of the success of recent efforts to internationalize our business," says Dr. Stefan Wolf, Chief Executive Officer of ElringKlinger AG. "We have continued to invest in Germany, while also expanding our network of sites worldwide. This is a key factor in strategic terms, as our global presence in particular has allowed us to evolve into a partner for pioneering supply-side projects, as evidenced by the recent order we received for door module carriers."
The situation in terms of ElringKlinger's order books also remains encouraging. In the second quarter, the Group recorded incoming orders encompassing a volume of EUR 441.2 million. Thus, order intake rose by EUR 6.1 million or 1.4% compared to the prior-year figure. FX-adjusted, order intake was up by as much as EUR 16.4 million or 3.8%. Order backlog improved by 12.6% to EUR 885.2 (786.2) million. Taking into account the effects of foreign exchange rates, order backlog increased by 15.8% to EUR 910.2 million. This provides the foundation for further organic growth in the future.
In the second quarter, Group EBIT before purchase price allocation amounted to EUR 36.2 (39.6) million, up EUR 4.2 million on the figure posted for the first quarter of 2016 (EUR 32.0 million). However, it was EUR 3.4 million or 8.6% lower compared to the second quarter of 2015. At EUR 4 million, the additional costs associated with the business unit impacted by capacity constraints in 2015 were only slightly above the figure of around EUR 3 million originally anticipated. However, the improvements in earnings seen at the Swiss site during the first quarter failed to progress as planned in the second quarter. As a result, EBIT for the first half as a whole fell well short of original expectations.
By contrast, compared to the prior-year figure (EUR 31.8 million), earnings before taxes (EBT) were slightly better in the second quarter at EUR 32.6 million. This was attributable primarily to the significant reduction in net finance cost to EUR 2.6 (6.5) million, an item influenced favorably by foreign exchange gains. As a consequence, earnings per share stood at EUR 0.36, slightly up on the prior-year figure of EUR 0.33.
The Group's other key performance indicators also proved slightly more positive. Operating free cash flow improved by EUR 4.4 million to EUR -6.6 (-11.0) million, while investments in property, plant, and equipment fell by EUR 4.6 million to EUR 36.1 (40.7) million. Net working capital rose only marginally by 3.4% to EUR 541.6 million, which was due in part to the slight reduction in inventories by the Group.
ElringKlinger anticipates moderate growth of 2 to 3% within the global automobile market in the current financial year. As the Group had fallen short of expectations in terms of earnings in the first two quarters, the outlook for the full fiscal year was adjusted towards the end of July. While a figure of 5 to 7% in organic revenue growth was reaffirmed by the Group, its guidance for EBIT before purchase price allocation currently stands at EUR 140 to 150 million (previously: EUR 160 to 170 million).
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