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Grammer AG asserting itself in a challenging automotive environment: substantial growth in Group revenue and EBIT
Strong rise of 13.4 percent in revenue to over EUR 1.0 billion in the first half of 2019
Revenue from TMD more than compensated for the muted business as a result of challenging market conditions in the traditional Automotive Division
Positive development in all regions in the Commercial Vehicles Division
Half-year EBIT of EUR 50.2 million substantially up on the previous year
New Executive Board lineup now complete: Thorsten Seehars appointed CEO and Jurate Keblyte CFO
With market conditions deteriorating in the automotive industry and global passenger vehicles sales declining, Grammer AG asserted itself successfully. In the first half of 2019, the global supplier of interior components and seating systems posted substantially higher revenue and operating earnings: Revenue rose by 13.4 percent to EUR 1,051.5 million (2018: EUR 927.6 million). This substantial increase was underpinned by higher revenue in both Divisions.
Group earnings before interest and taxes (EBIT) were also well up on the previous year, climbing by 19.8 percent to EUR 50.2 million (2018: EUR 41.9 million). The EBIT margin widened to 4.8 percent (2018: 4.5 percent) despite the strain coming from the cost of integrating the TMD Group.
Adjusted for currency translation and exceptional effects, operating EBIT climbed by a 15.7 percent to EUR 50.1 million (2018: EUR 43.3 million). Like the Group EBIT margin, the operating EBIT margin came to 4.8 percent (2018: 4.7 percent). Group net profit increased by 9.5 percent over the previous year to EUR 27.6 million (2018: EUR 25.2 million).
Higher revenue in both Divisions
Both Divisions reported substantially higher revenue and EBIT in the first half of 2019. The Automotive Division posted a 15.2 percent increase in revenue to EUR 745.0 million (2018: EUR 646.7 million) as a result of the successful acquisition of US automotive components supplier Toledo Molding & Die Inc. (TMD) in October 2018. Division EBIT climbed to EUR 28.4 million, accompanied by an EBIT margin of 3.8 percent, i.e. up on the previous year’s figure of 3.5 percent.
The Commercial Vehicles Division continued to perform well in the first six months of the year, with sales growth in important core markets producing an increase of 7.8 percent in revenue to EUR 332.2 million (2018: EUR 308.3 million). Division EBIT also widened slightly by 4.2 percent to EUR 32.5 million (2018: EUR 31.2 million) in tandem with an EBIT margin of 9.8 percent, which was virtually unchanged over the previous year (2018: 10.1 percent).
Revenue doubled in the Americas, persistently difficult market situation exerting strain on revenue in Europe
Regionally, the Americas retained their leading position in terms of revenue growth. Revenue more than doubled in the period under review particularly as a result of the acquisition of the TMD Group but also organically following the ramp-up of new projects. All in all, revenue in the Americas rose to EUR 304.6 million (2018: EUR 139.0 million). In its domestic EMEA region, Grammer sustained a substantial decline in revenue to EUR 595.2 million (2018: EUR 636.7 million) in view of the persistently difficult situation in the European automotive industry. At EUR 151.7 million, revenue in APAC was in line with the previous year (2018: EUR 151.9 million).
Construction of new technology center together with new accounting standards resulting in higher capital expenditure in 2019
At EUR 56.0 million, the Grammer Group’s capital expenditure was twice as high in the first half of 2019 compared with the previous year (2018: EUR 23.0 million). This increase is primarily due to capital expenditure for the new Grammer Technology Center and the new Group headquarters in Ursensollen near Amberg, work on which began in 2018. The first phase of construction is to be completed by the end of 2019. In addition, there was investment in the newly acquired TMD Group. As well as this, new non-current leases valued at EUR 9.4 million were included in capital expenditure under the accounting guidance contained in IFRS 16, which was applied for the first time from January 1, 2019.
All positions on the Grammer Executive Board filled as of August
In the first half of the year, all the vacancies that had arisen on the Executive Board at the end of 2018 were filled. In March 2019, the Supervisory Board of Grammer AG appointed Jurate Keblyte to the position of CFO. In addition, Thorsten Seehars was appointed new CEO of Grammer AG in April. The two new members of the Executive Board commenced their duties at the beginning of August. As planned, Executive Board member Manfred Pretscher will be leaving the Company effective August 31, 2019. Jens Öhlenschläger had previously assumed the position of COO effective January 1, 2019. With these new appointments, GRAMMER AG’s new long-term Executive Board lineup is now complete.
Full-year forecast for 2019
Grammer’s Executive Board expects macroeconomic conditions to remain very challenging in 2019 as a whole. In particular, conditions in the automotive market as well as the impact of other geopolitical problems may have an adverse impact on Grammer’s business and earnings situation.
Group revenue is expected to reach around EUR 2.1 billion in 2019, underpinned by the additional revenue from the acquisition of the TMD Group and growth in the Commercial Vehicles Division. Correspondingly good absolute EBIT are expected for 2019 which will be clearly higher than in 2018 (EUR 48.7 million).
The Grammer Group’s full interim report on the first half of 2019 is available from the corporate website at the following link:
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