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Record levels in revenue and profitability since the founding of the company underscoring Grammer's successful strategy
- High revenue growth to a new record of EUR 1.7 billion
- 71 percent increase in EBIT to EUR 73.0 million
- Record dividend of EUR 1.30 per share proposed
- Outlook for 2017: Further growth accompanied by rising profitability
- Grammer asks shareholders to attend the annual general meeting
The Grammer Group, a leading international supplier of interior components for passenger cars and seats for commercial vehicles, has today published its annual financial statements for 2016. The Grammer Group achieved record revenue and profit of its corporate history, thereby underscoring the success of its global growth and innovation strategy. For the sixth consecutive year, it posted record revenue of EUR 1.696 billion (2015: 1.426), an increase of 18.9 percent. This strong top-line growth was particularly underpinned by the integration of Grammer Interior Components (the former Reum companies) and the sustained strong growth and expansion of the Group's global presence in center console business in particular. The Seating Systems Division also posted a slight increase in revenue despite the persistent market weakness in Brazil and in agricultural machinery business. Earnings before interest and taxes (EBIT) rose by a disproportionately strong 71 percent to EUR 73.0 million (2015: 42.7 million) thanks to the positive effects from the systematic implementation of cost- and processoptimization measures. Consequently, profitability improved substantially, with the EBIT margin reaching 4.3 percent (2015: 3.0). Consolidated net profit after tax almost doubled to EUR 45.2 million (2015: 23.8). As a result, earnings per share also climbed significantly to EUR 4.01 (2015: EUR 2.10).
Increased dividend of EUR 1.30 per share proposed
On the strength of the Group's very favorable performance last year, the Executive Board and the Supervisory Board of Grammer AG will be proposing at the annual general meeting on May 24, 2017 a dividend of EUR 1.30 per share, which is substantially higher than in earlier years. This means that Grammer AG will be paying a record dividend of EUR 14.6 million to its shareholders, equivalent to a distribution ratio of over 32 percent of consolidated net profit after tax. With this record dividend, Grammer is sending out a clear signal highlighting its strong financial and strategic basis and the upbeat outlook for future business.
"2016 was a very good year for us. We were able to continue growing substantially all over the world and further improve our competitive position despite the ongoing challenges in a number of markets. On a particularly gratifying note, we significantly improved the Grammer Group's profitability as expected. We are now reaping the benefits of the focused implementation of the international growth strategy of the past years," explains Hartmut Müller, Chief Executive Officer of Grammer AG. "We want to continue on this trajectory in the interests of our shareholders, our more than 12,000 employees and also our customers. Over the last few years, the Grammer Group has very successfully evolved into a real global player in the supplier industry in strategic, operating and also organizational terms and, looking forward, we plan to continue on this course."
Growth in all regions
Grammer posted higher revenue in all regions in 2016. The greatest growth was again achieved in EMEA region (Europe, Middle East, Africa), where revenue reached EUR 1,197.9 million (2015: 971.7), an increase of 23.3 percent. This growth was primarily due to the first-time full consolidation of the GRAMMER Interior Components companies as well as the persistently strong growth in console business. Seating Systems revenue also rose by 4.1 percent in Europe despite the still muted demand in the important agricultural machinery segment.
Grammer registered an increase of 19.5 percent in APAC (Asia and Pacific) revenue to EUR 251.0 million (2015: 210.1) despite the slower economic growth in China and Japan. The Automotive Division in particular expanded considerably in all segments in this region thanks to strong order intake in the premium segment and further market share gains.
Despite the persistent economic crisis afflicting Brazil, Grammer recorded slight revenue growth in the Americas region to EUR 246.6 million (2015: 243.9 million).
The strong Automotive Division was able to more than make up for the decline in revenue sustained by the Seating Systems Division thanks to new products for models made by international and local passenger vehicle OEMs.
Dynamic growth and improved profitability in the Automotive Division
The Automotive Division was once again the GRAMMER Group's strongest growth driver in 2016. The first-time consolidation of the GRAMMER Interior Components companies, the sustained strong growth in console business as well as the superb international presence caused revenue to climb by 26.1 percent to EUR 1.27 billion (2015: 1.01).
Underpinned by the positive effects of the efficiency-boosting measures, the planned reduction in upfront costs for the expansion of the Group's international position and the first-time consolidation of Grammer Interior Components, EBIT climbed very sharply by 78.6 percent to EUR 42.5 million (2015: 23.8). Although the EBIT margin continued to be influenced by trailing costs in connection with the implementation of the global growth strategy, it improved substantially, widening to 3.3 percent (2015: 2.4).
Moderate growth in the Seating Systems Division together with substantially improved profitability despite still challenging market conditions
Last year, the Seating Systems Division was faced with continued difficult market conditions and contraction in the Brazilian truck market as well as the agricultural machinery business in particular. Even so, revenue rose by 3.3 percent over the previous year to EUR 473.6 million (2015: 458.4).
Despite still muted demand in important core markets of Grammer, the division EBIT rose substantially to EUR 39.1 million (2015: 27.8) thanks to systematic cost optimization at the Brazilian plant in particular. As a result, the EBIT margin widened sharply to 8.3 percent (2015: 6.1).
Further capital spending on global growth strategy
Under its international growth strategy, Grammer increased capital spending to EUR 56.2 million in 2016 (2015: 47.9) including the first-time inclusion of Grammer Interior Components. Of this, EUR 42.8 million was spent in the Automotive Division and EUR 9.3 million in the Seating Systems Division. Capital spending primarily focused on plant expansion particularly outside Germany as well as innovation and process optimization projects and activities.
As of December 31, 2016, the GRAMMER Group had total assets of EUR 1,050.6 million. This marks an increase of 5.9 percent over the previous year (2015: 992.1), reflecting the increased business as well as plant development and expansion activities. As of the reporting date, consolidated equity stood at EUR 271.2 million (2015: 253.4), while the equity ratio improved slightly to 25.8 percent (2015: 25.5). Net financial liabilities dropped substantially to EUR 139.1 million as of December 31, 2016 (2015: 155.5) thanks to the positive cash flow development.
Outlook for 2017: Moderate revenue growth and continued improvement in profitability expected
Grammer assumes that the economic and political environment will remain challenging this year, with the relevant markets exhibiting disparate conditions.
Looking forward to 2017, it projects moderate growth in its core business and, provided that exchange rates remain stable, is expecting revenues of more than EUR 1.75 billion. Operating EBIT in 2017 should exceed the figure for 2016, with the EBIT margin set to rise again to around 5 percent. At this stage, it is not possible for the Company to assess possible consequences arising from potential changes in Grammer AG's supervisory and management bodies. Accordingly, these are not factored into the current outlook for 2017.
Planned continuation of the successful corporate strategy endangered by Cascade International's intentions
In December 2016, Cascade International Investment GmbH served on Grammer a request to convene an extraordinary shareholder meeting, subsequently lodging a corresponding petition with the court. In doing so, Cascade sought to have five of the six Supervisory Board members of the shareholder representatives dismissed and new members elected as well as a vote of no-confidence in Chief Executive Officer Hartmut Müller. The petition was rejected by the local court of Amberg at the beginning of March 2017 on the grounds that it constituted an abuse of law and was therefore unsubstantiated. Cascade International Investment GmbH has since announced that it will be pursuing its goals at the Annual General Meeting on May 24, 2017.
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