Grammer asserting itself in a difficult market environment

(PresseBox) ( Amberg, )

Group revenue up 14 percent in the first nine months, rising to EUR 1.5 billion
Operating EBIT at EUR 59.2 million slightly above the previous year
Overall market conditions and operational topics impact the profitability in the third quarter
Global efficiency enhancement program initiated to optimize operational processes and cost structures


The third quarter of Grammer AG's current fiscal year was dominated by the major challenges facing the automotive industry. These primarily entailed declining sales figures in the automotive sector as well as the downswing in the global economy as a whole. Added to this were the typical retarding factors of a third quarter such as summer holidays and factory closures on the part of many customers. Nevertheless, Group revenue continued to increase year-on-year, primarily due to the first-time consolidation of the U.S. automotive components supplier TMD, which had been acquired in October 2018. Between January and September of the current fiscal year, the Grammer Group increased its revenue by 14 percent to EUR 1.5 billion (2018: EUR 1.4 billion).

Despite the weak third quarter, Group earnings before interest and taxes (EBIT) came to EUR 61.9 million in the period under review, up EUR 34.0 million on the previous year's figure of EUR 27.9 million. However, it should be noted that the previous year had been burdened by heavy non-recurring extraordinary costs. The EBIT margin doubled, rising to 4.0 percent (2018: 2.1 percent). Net profit thus amounted to EUR 28.4 million, compared with EUR 14.9 million in the same period of 2018.

Adjusted for currency-translation and non-recurring effects, operating EBIT came to EUR 59.2 million in the first nine months, only slightly above the previous year's figure of EUR 56.6 million. The operating EBIT margin declined from 4.2 to 3.8 percent due to the difficult market environment and various operational topics.

"Conditions in the automotive and commercial vehicle sectors have deteriorated significantly worldwide. The Grammer Group is also feeling the effects of these rising challenges, but we have been able to assert ourselves relatively well so far," says Thorsten Seehars, CEO of Grammer AG, commenting on the current situation.

"Nevertheless, we must do our homework now in order to prepare for a possibly prolonged period of market weakness. We will be evaluating and implementing further appropriate measures to enhance our operational processes and review Grammer's strategic priorities with the global management team."

Growth in the Americas and Asia, revenue down in Europe

Regionally, Grammer's sales development was quite mixed. The decline of 5.9 percent in revenue to EUR 863.8 million (2018: EUR 918.2 million) in the EMEA region was more than compensated for by further growth in the Americas and APAC.

As a result of the TMD acquisition and further organic growth, revenue in the Americas doubled to EUR 457.4 million compared with the same period in the previous year (2018: EUR 215.0 million). In the APAC region, Grammer achieved a slight increase in revenue to EUR 228.4 million (2018: EUR 226.0 million) despite the reduced volumes in the Chinese automotive industry, thus gaining additional market shares for Grammer.

Topline growth in both divisions

Revenue in the Commercial Vehicles Division rose by 4.1 percent or EUR 18.6 million over the previous year to EUR 474.6 million in the period under review. The decline in the third quarter resulted in an overall smaller sales increase for the first nine months.

The revenue reduction as well as some special operational topics such as relocations and new product ramp-ups led to a lower operating EBIT of EUR 38.9 million compared with the previous year (2018: EUR 43.5 million).

In the Automotive Division, revenue climbed by 18.0 percent or EUR 169.6 million to EUR 1,112.3 million. The increase resulted primarily from the acquisition of the TMD Group, which had been consolidated for the first time in October 2018. As a result, operating EBIT increased to EUR 31.7 million (2018: EUR 24.6 million).

Global efficiency enhancement program initiated

In response to the weakened conditions in the industry and the cautious outlook of leading automotive and commercial vehicle OEMs for the coming years, the Grammer Group needs to be prepared for a potentially longer lasting period of reduced demand. The Executive Board has therefore decided to set up a comprehensive worldwide program to optimize operating processes and cost structures in all areas.

The priorities of the corporate strategy are currently also being reassessed in order to safeguard the long-term and continued success of the company in its different product markets

Full-year outlook

Looking forward to the final months of 2019, Grammer's Executive Board still expects macroeconomic conditions to remain challenging, with the markets addressed by the company presenting divergent developments. In view of the muted market conditions, volatile conditions in the world markets and the complex political situation, the overall outlook for the GRAMMER Group in 2019 is mixed, although the company is in general cautiously optimistic. Accordingly, the forecast for the current year has been only slightly adjusted. Group revenue of around EUR 2.0 billion (previously around EUR 2.1 billion) is projected for fiscal year 2019 on the basis of unchanged exchange-rate parities.

In the absence of any further significant exceptional expenses in 2019, the Executive Board expects to be able to report EBIT well in excess of the 2018 figure of EUR 48.7 million in absolute terms. EBIT amounted to EUR 61.9 million as of September 30, 2019. The operating EBIT margin (adjusted for exceptional expenses and currencytranslation effects) will remain at the current level of 3.8 percent in 2019 as a whole (previously above 4.1 percent).

The Grammer Group's full quarterly statement on the first nine months is available from the corporate website at the following link: https://www.grammer.com/investor-relations/publikationen/finanzberichte.html
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