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Grammer with record revenue for the fifth consecutive year and sets course for sustainable value generation
Revenue of EUR 1.43 billion, reaching the fifth consecutive record
Forecast for 2016: Further growth and higher profitability
Dividend of EUR 0.75 per share proposed
The Grammer Group, a leading supplier of components for passenger-vehicle interiors and seats for commercial vehicles, is presenting its financial statements for 2015 today. With a 4.4 percent increase to EUR 1.426 Billion (2014: 1.366), the Group achieved record revenue for the fifth consecutive time. The substantial growth in Group revenue, despite the challenging conditions in the commercial vehicle markets resulted primarily from the strong performance of the Automotive Division with encouraging expansion in all regions. Consolidated operating profit was influenced last year by muted conditions in the commercial vehicle markets, up-front costs for the Group's ongoing internationalization and very strong growth in the Automotive Division. The Grammer Group generated earnings before interest and taxes (EBIT) of EUR 42.7 million in 2015 (2014: 57.0). Accordingly, EBIT ultimately exceeded the adjusted forecast slightly, with the EBIT margin coming to 3.0 percent (2014: 4.2). Reflecting the development of the operating profit, consolidated net profit after tax came to EUR 23.8 million (2014: 33.6) and earnings per share EUR 2.10 (2014: 3.09).
Stable dividend with higher distribution ratio
The solid global footprint and the high level of confidence in the further successful development of the Grammer Group are also reflected in the dividend proposal for 2015 announced by the Executive Board and the Supervisory Board. The stable dividend of EUR 0.75 per share means that the shareholders of Grammer AG will again receive an attractive share of the Company's profit and a higher pay-out ratio of 35 % of consolidated net profit (2014: 24).
"Despite the challenging market conditions, we generally performed well in 2015. In addition to the encouraging revenue growth, we were again able to reach important operating and strategic milestones, thus laying the foundations for profitable growth and increases in enterprise value in the future. Our dividend proposal is a clear signal to our shareholders that, as planned, we have achieved the progress in the implementation of our global growth strategy and see further strong potential for the Grammer Group", says Hartmut Müller, Chief Executive Officer of Grammer AG.
Worldwide growth driven by broad global presence
The Grammer Group recorded appreciable growth in all regions in 2015, achieving the greatest expansion in the region Americas (North, Central and South America), where revenue rose by 7.8 percent to EUR 243.9 million (2014: 226.3). In the NAFTA region double-digit growth rates could be achieved. On the other hand, revenue in Brazil was down again substantially due to further market contraction. Revenue also rose in EMEA (Europe, Middle East and Africa) by 3.8 percent to EUR 971.7 million (2014: 936.0). Grammer additionally registered an increase of 3.2 percent in APAC (Asia and Pacific) to reach revenue of EUR 210.1 million (2014: 203.6).
Automotive Division continues to drive growth
The generally favorable performance of the automotive industry and the high number of new products again spurred revenue in the Automotive Division very substantially and resulted in a wider market share. Business in headrests, armrests and center consoles for passenger vehicles was very dynamic, with revenue in the Automotive Division rising by 10.6 percent to EUR 1.008 billion (2014: 0.912). The consoles segment in particular again exhibited very strong growth of 20 percent in 2015 and continues to be the growth driver for Grammer Automotive in all markets. Regionally, Grammer Automotive recorded the most dynamic growth of almost 25 percent in the region Americas and was thus able to additionally strengthen its market position with German premium OEMs and increasingly also with local manufacturers in North America.
At EUR 23.8 million, EBIT in the Automotive Division was lower than the previous year (2014: 28.9) as expected due to expenditure required to generate the very strong growth as well as for the ongoing internationalization and optimization of the division's global structures. Reflecting the substantial increase in revenue, the EBIT margin contracted to 2.4 percent (2014: 3.2).
Good profitability in the Seating Systems Division despite challenging market conditions
In the Grammer Group's Seating Systems Division, which produces suspended seating systems for trucks, agricultural and construction machinery and railway trains, the persistently difficult conditions in individual regions and sub-markets caused revenue to contract by 4.2 percent to around EUR 458.4 million (2014: 478.7). Revenue in the core segment Offroad particularly came under pressure as a result of the substantial drop of global demand for agricultural machinery, resulting in impacts on earnings. The truck segment further contracted primarily as a result of the repeated unexpected slump in the Brazilian market and the sharp decline in China. On the other hand, material handling and aftermarket business were encouraging.
Regionally, revenue in all markets contracted in the Seating Systems division in the previous business year
Overall, it was not possible to offset the effects of this substantial market contraction of the profitable segments and the expenses arising in the Division for adjusting capacity and fixed costs in the light of softer demand. Therefore, divisional EBIT came to EUR 27.8 million (2014: 36.2). Despite these negative factors, the EBIT margin still reached 6.1 percent (2014: 7.6), highlighting the strong potential which this Division will be able to address once the markets have recovered.
Investments for expansion of the international footprint
Capital spending by Grammer AG came to EUR 47.9 million in 2015, 7.5 percent down on the previous year (2014: 51.5). At EUR 31.9 million, the Automotive Division accounted for the bulk of capital spending, with the Seating Systems Division attracting a smaller amount due to market conditions. As part of ongoing efforts to implement the Group's growth strategy, most of the capital spending in both segments was for the establishment and expansion of international facilities and production capacity as well as the optimization of existing locations and processes.
Continued solid equity ratio accompanied by increased net financial liabilities due to the acquisition of Reum
As of December 31, 2015, the Grammer Group had total assets of EUR 992.0 million (2014: 836.5). This increase of 18.6 percent reflects the larger business volumes last year, further production expansion and the consolidation of the Reum Group. Equity rose to EUR 253.4 million (2014: 231.8), with the equity ratio remaining at a solid 26 percent (2014: 28). Net financial liabilities rose over the previous year primarily as a result of the acquisition of the Reum Group, coming to EUR 155.5 million as of the reporting date (2014: 86.7), accompanied by an increase in gearing to 61 percent (2014: 37). Adjusted for the acquisition of Reum, gearing would have remained virtually unchanged over the previous year's low level.
Acquisition of the Reum Group successfully completed
On December 28, Grammer AG successfully completed the acquisition of plastics and metals specialist Reum. The acquisition of 100% of Reum's capital was financed via Grammer AG's existing credit facilities. Grammer is now able to additionally expand its own technological skills in innovative production and process technologies and widen its range of interior components.
Forecast for 2016: Further increase in revenue and rising profitability
Grammer expects a continuation of the volatile and challenging market conditions in 2016, particularly in the relevant commercial vehicle markets. Even so, it is confident of being able to successfully address these challenges thanks to its global footprint and further improvements in its processes.
For the current year, the Grammer Group expects a small organic increase in revenue from its core business. Including the Reum Group, which will be consolidated for the first full year, Group revenue should rise to over EUR 1.6 billion in 2016.
Driven by the higher revenue in the Automotive Division and the positive effects of last year's numerous optimization measures and the resultant improvement in profitability, both Divisions should make increased contributions to earnings again this year. Against this backdrop, Grammer expects to be able to report higher EBIT compared with the previous year in 2016, accompanied by slight growth in the operating margin.
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