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ElringKlinger with sustained surge in revenue in Q2 2015
Dynamic revenue growth continues
ElringKlinger saw its sales revenue expand further against the backdrop of sustained consumer demand in the United States and an increasingly dynamic upturn in Europe's vehicle markets. Additionally, the Group benefited from several new product rollouts as well as significant structural growth in many of the product groups targeted at CO2 reduction. At an organic level, i.e. without the effects of consolidation and currency translation, revenue growth totaled 4.5% in the second quarter of 2015. The first-time consolidation of former M&W Manufacturing Company, Inc., Warren/USA (M&W), contributed additional revenue of EUR 8.8 million. As a result of the direction taken by the euro exchange rate, particularly in relation to the US dollar, Swiss franc and some of the Asian currencies, Group revenue was boosted by a further EUR 22.4 million in the second quarter of 2015. Total revenue generated by the ElringKlinger Group rose by 13.9% to EUR 379.7 (333.5) million in the second quarter of 2015.
In the first half of 2015, Group revenue grew by 14.2% to EUR 751.1 (657.5) million. Revenue of EUR 13.7 million was attributable to the first-time inclusion of M&W, while the direction taken by foreign exchange rates boosted the figure by EUR 46.5 million. Organic revenue growth in the first half of 2015 amounted to 5.1%.
Slight quarter-on-quarter improvement in EBIT margin in Q2
In the second quarter of 2015, adjusted Group EBIT before purchase price allocations amounted to EUR 39.6 (42.3) million, up EUR 2.9 million on the figure posted for the first quarter (EUR 36.7 million). Compared to the preceding quarter, the EBIT margin before purchase price allocation was up 0.5 percentage points at 10.4%. Adjusted Group EBIT before purchase price allocation stood at EUR 76.3 (85.3) million in the first half of 2015. This corresponds to an EBIT margin before purchase price allocations of 10.2% (13.0%).
As anticipated on the basis of developments in the first three months, business in the Original Equipment segment continued to be driven by high levels of capacity utilization over the course of the second quarter. Individual divisions within this segment again recorded a sustained surge in demand. This necessitated the introduction of extra shifts and additional freight movements, thus pushing the cost base up by around EUR 5 million in the second quarter of 2015. At the same time, the sudden appreciation of the Swiss franc against the euro had a dampening effect. ElringKlinger has already initiated measures aimed at optimizing its earnings situation and is anticipating a gradual improvement in performance by the end of the year.
What is more, the EBIT margin in the second quarter of 2015 continued to be diluted by the most recent corporate acquisitions (around 0.7 percentage points) as well as the persistently weak performance of the E-Mobility business (around 0.4 percentage points).
Net finance result for Q2 impacted by lower foreign exchange gains
The first quarter of 2015 produced net foreign exchange gains of EUR 6.5 (0.1) million in connection with financing activities. These gains were substantially lower in the second quarter, taking the figure into negative territory at EUR -3.4 (1.2) million. In total, net finance costs stood at EUR 6.5 (2.1) million in the second quarter of 2015. In the first half, net finance costs amounted to EUR 3.0 (4.7) million. As a result, earnings before taxes totaled to EUR 31.8 (39.5) million in the second quarter and EUR 70.7 (78.9) million in the first half.
Net income at EUR 22 million in Q2 - Earnings per share at EUR 0.33
At EUR 9.8 (9.7) million, tax expenses in the second quarter of 2015 remained largely unchanged on the figure posted for the same period a year ago. The Group tax rate rose to 30.8% (24.6%) as a result of smaller earnings contributions from countries with low tax rates. In the first six months tax expenses amounted to EUR 19.5 (19.9) million; the tax rate was 27.6% (25.2%).
Net income stood at EUR 22.0 (29.7) million in the second quarter and at EUR 51.2 (59.0) million in the first half of 2015. After non-controlling interests, net income was EUR 21.0 (28.5) million. In the first six months of 2015 net income after non-controlling interest totaled EUR 49.2 (56.5) million.
On this basis, earnings per share for the second quarter of 2015 stood at EUR 0.33 (0.45). In the first half of 2015, earnings per share stood at EUR 0.78 (0.89).
Order intake rises by 15% from a high base
On the back of a strong first quarter, order intake expanded at an encouraging rate in the second quarter of 2015. Compared to the same period a year ago, it rose by 14.5% to EUR 435.1 (380.0) million. Eliminating incoming orders attributable to the acquisition of the entity formally trading as M&W, order intake was still up by 11.0% at EUR 422.0 (380.0) million. Thus, order backlog reached a new all-time high of EUR 786.2 (649.1) million as of June 30, 2015.
ElringKlinger anticipates that global automobile production in 2015 will expand by a percentage figure at the lower end of the single-digit range. While growth in China is likely to weaken by a significant margin, the European markets should develop better than previously expected.
Against this backdrop, the ElringKlinger Group is targeting organic revenue growth of 5 to 7%. Additionally, the consolidation of ElringKlinger Automotive Manufacturing Inc. (formerly M&W) will contribute around EUR 30 million to Group revenue in the financial year as a whole.
The special charges outlined above, earnings contributions from acquired entities that are as yet below the Group average and sluggish demand in the E-Mobility division will have a dampening effect on ElringKlinger Group earnings in 2015. Based on the assumption that earnings improve in the second half of the year as a result of optimization measures already initiated, EBIT before purchase price allocation, adjusted for non-recurring items, is expected to be around EUR 165 million.
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