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Grammer successful in 2017 with record revenue and improved profitability
- Growth in revenue to a new record of EUR 1.79 billion
- 18 percent increase in Group operating EBIT to EUR 80.2 million
- Dividend of EUR 1.25 per share proposed despite exceptional expenses in 2017
- Forecast for 2018: Further growth in revenue and profitability
The Grammer Group’s business performance faced major challenges in 2017. This made it all the more remarkable that the leading international supplier of components for passenger vehicle interiors and seats for commercial vehicles was able to post further growth in revenue as well as in operating profitability over the previous year. According to the annual financial statements published today, the Grammer Group generated revenue of EUR 1.787 billion (2016: 1.696), equivalent to an increase of 5.4 percent. This top-line growth was particularly underpinned by gains in the Americas and APAC regions thanks to Grammer’s good position in these markets. This confirms the preliminary figures already announced in February.
Further improvement in profitability
The Grammer Group’s operating EBIT outpaced revenue, widening by 17.8 percent over the previous year to EUR 80.2 million in 2017 (2016: 68.1). This translated into an improvement of 0.5 percentage points in the operating EBIT margin, which increased to 4.5 percent (2016: 4.0). This encouraging operating performance and improved profitability are the result of the successful corporate strategy aimed at expanding the Group’s international footprint simultaneously with the measures implemented to boost efficiency.
Strong growth in the Commercial Vehicles Division
The gratifying business performance was underpinned by both divisions. The Commercial Vehicles Division in particular achieved strong growth in all regions, benefiting from high revenue in the offroad and material handling segments as well as growing demand for truck seats. This was joined by the recovery in Brazil. Accordingly, Grammer achieved a 14.1 percent increase in revenue to EUR 540.2 million (2016: 473.6), thus substantially exceeding the original forecast for the year. Operating EBIT rose by 32.7 percent to EUR 47.5 million (2016: 35.8), resulting in a likewise substantially improved margin of 8.8 percent (2016: 7.6).
Improved revenue and earnings in the Automotive Division
With revenue up 1.6 percent, the Automotive Division also continued the sharp growth in business achieved in earlier years. After the high growth rates of previous years, revenue in this division returned to normal growth rates in 2017 in line with expectations, coming to EUR 1.29 billion (2016: 1.27). Operating EBIT in the Automotive Division also increased by 11.0 percent to EUR 45.4 million (2016: 40.9). The operating EBIT margin came to 3.5 percent (2016: 3.2). This division’s consistently good performance is especially due to the steady growth in console business. The division posted higher revenue in the Americas and APAC regions in particular.
Encouraging revenue growth in all regions
With its good international footprint and the focus on the premium segment, Grammer recorded growth in sales volumes in all core regions. At EUR 1.2 billion (2016: 1.2), EMEA (Europe, Middle East, Africa) again accounted for the largest share of revenue in 2017.
The highest growth rates were registered in the Americas region (North, South and Central America). After coming to 1.2 percent in 2016, growth picked up substantially to 13.8 percent in 2017, underpinned by the favorable economic environment in the NAFTA region as well as new automotive product launches at the new plants in Tupelo, United States, as well as the plants in Mexico. This was joined by the economic recovery in Brazil.
Revenue in APAC grew at a similar rate, rising by 11.9 percent to EUR 280.9 million (2016: 251.0). The main growth driver in this region was the Commercial Vehicles Division with growth of 54.9 percent. At the same time, the joint venture in China with truck OEM Shaanxi exceeded expectations and the truck business gained substantial market share.
“In the business year 2017 we achieved further substantial growth globally, while at the same time improving operating profitability significantly despite the special circumstances prevailing last year. This clearly shows that we have successfully implemented our strategic measures for achieving greater growth and profitability over the last few years,” says Hartmut Müller, CEO of Grammer AG. “Looking forward, we will continue to pursue this successful course. In addition, we want to give our shareholders a share of our success this year once again. For this reason, we will be proposing an almost unchanged dividend of EUR 1.25 per share at the annual general meeting on June 13, 2018. We want to make sure that the exceptional expense arising last year is not passed onto the shareholders.”
Development of IFRS EBIT
Within earnings before interest and taxes (EBIT), the favorable operating performance was unable to compensate for the extraordinary expense and currency-translation influences in the total amount of EUR -13.7 million (2016: +4.9). As expected, IFRS-EBIT thus fell by 8.9 percent over the previous year to EUR 66.5 million (2016: 73.0).
Consequently, consolidated net profit came to EUR 32.4 million, falling short of the previous year (2016: 45.2). Basic earnings per share amounted to EUR 2.67 (2016: 4.01).
As of December 31, 2017, the GRAMMER Group had total assets of EUR 1,107.0 million (2016: 1,050.6). This marks an increase of 5.4 percent over the previous year, reflecting the increased business as well as plant expansion activities. Group equity stood at EUR 337.7 million as of the reporting date (2016: 271.2), accompanied by a substantial improvement in the equity ratio to 31 percent (2016: 26).
Outlook: Further growth of revenues and profitability
Grammer assumes that the economic environment will remain challenging in 2018, with the relevant markets exhibiting disparate conditions. For the total year 2018 Grammer expects revenues to rise to EUR 1.85 billion and a further improvement of operating profitability above previous year’s level.
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