ElringKlinger sees growth in revenues and orders in third quarter

PRESS RELEASE

ElringKlinger sees growth in revenues and orders in third quarter

- Revenue up by 2.2% to EUR 374.2 million and by 2.5% in organic terms

- EBIT before purchase price allocation down year on year at EUR 32.6 million

- Favorable business conditions reflected in substantial order intake (+14.0%) and comfortable order backlog (+18.2%)

- Outlook for FY 2016 put in more precise terms: EBIT pre PPA more likely to be at the lower end of the EUR 140 to 150 million range targeted by the Group

Dettingen/Erms (Germany), November 8, 2016 +++ ElringKlinger remained on track for growth in the third quarter of 2016. Despite a downturn in production output in the core European markets of Germany, France, and Spain, the Group succeeded in expanding its sales revenue by EUR 8.1 million, or 2.2%, to EUR 374.2 (366.1) million. In this context, foreign currency translation - primarily attributable to the Mexican peso, the Chinese yuan, and the Swiss franc - had a dilutive effect on the overall volume of sales revenue. Excluding currency effects, revenue growth was as high as EUR 12.2 million or 3.3%. Fully consolidated since 2016, Hug Engineering B.V. and Maier Formenbau GmbH contributed a total of EUR 2.8 million, or 0.8%, to this expansion in revenue.

"Our performance in terms of revenue growth was visibly better than that of the market in general within our principal core regions," said Dr. Stefan Wolf, CEO of ElringKlinger AG. "The buoyancy in orders illustrates that ElringKlinger products continue to be in high demand." The Group managed to secure new orders worth EUR 383.7 million in the third quarter, which corresponds to growth of EUR 47.1 million, or 14.0%. FX adjusted, growth within this area was as much as 17.1%. This increase was also reflected in order backlog, which was up EUR 138.0 million, or 18.2%, year on year at EUR 894.7 (756.7) million. Accounting for currency effects, the increase in order backlog was as much as 19.4%.

Group EBIT before purchase price allocation amounted to EUR 32.6 (36.7) million in the third quarter, which was down 11.2% on the figure for the same period a year ago. Alongside higher depreciation/amortization, this was attributable mainly to the substantial fixed operating costs recorded by the Swiss entity faced with capacity constraints. Over the course of the year, improvements seen during the first quarter were eroded to some extent by delays in transferring machinery to the new site in Hungary. While progress was made in the third quarter, the measures put in place have not yet led to a tangible improvement in cost structures. If the migration of manufacturing operations to Hungary is completed by the end of the year to the extent planned by ElringKlinger, the Group will be in a position to exploit its new maneuvering room at the Swiss facility for the purpose of improving cost structures. Exceptional costs, e.g., for external sorting inspections, were scaled back as planned to a negligible level, having previously amounted to as much as approx. EUR 11 million in the first half of the financial year.

The net finance result for the third quarter was slightly better (EUR +2.0 million) than for the same period a year ago, while tax expenses were marginally lower (EUR -1.3 million). As a consequence, earnings per share stood at EUR 0.30, only slightly down on the prior-year figure of EUR 0.32.

ElringKlinger remained largely on track with regard to its other key financial indicators. Although the Group continued to use funds for the purpose of financing its growth and global positioning, capital expenditure (on property, plant, and equipment) in the third quarter was EUR 5.7 million, or 11.7%, down on the figure recorded in the same period a year ago. The figure for the annual period as a whole is still expected to be on a par with the previous year's level. Net working capital rose by EUR 9.8 million, or 1.8%, to EUR 541.1 million. At EUR 1.8 million, the Group generated positive operating free cash flow again in the third quarter. As a result, at EUR -4.1 million, the figure for the first nine months was just slightly negative. It is still expected to be just marginally into negative territory - at a low to mid-double-digit figure in the million euro range - in the financial year as a whole.

Associations representing the automobile industry and economic research institutes anticipate that global vehicle markets will grow by 2 to 3%. On this basis, ElringKlinger continues to see organic revenue growth for the Group at 5 to 7% in the current financial year. Due in particular to the situation at the Swiss-based entity faced with capacity constraints, it would appear unlikely that EBIT before purchase price allocation for the annual period as a whole will move noticeably above the prior-year level. Instead, it is expected to be positioned toward the lower end of the guidance range of EUR 140 to 150 million.

EUR million	Q3 2016	Q3 2015	∆ abs.	∆ rel.
Order intake	383.7	336.6	+47.1	+14.0%
Order backlog	894.7	756.7	+138.0	+18.2%
Revenue	374.2	366.1	+8.1	+2.2%
of which FX effects			-4.1	-1.1%
of which acquisitions			+2.8	+0.8%
of which organic			+9.4	+2.5%
EBITDA	55.1	56.7	-1.6	-2.8%
EBIT before purchase price allocation	32.6	36.7	-4.1	-11.2%
EBIT margin before purchase price allocation (in %)	8.7	10.0	-1.3PP	-
Purchase price allocation	1.4	1.3	+0.1	-
EBIT	31.2	35.4	-4.2	-11.9%
Net finance cost	-3.6	-5.6	+2.0	+35.7%
EBT	27.6	29.8	-2.2	-7.4%
Income tax expense	7.8	9.1	-1.3	-14.3%
Effective tax rate (in %)	28.2	30.4	-2.2PP	-
Net income (after non-controlling interests)	19.0	20.0	-1.0	-5.0%
Earnings per share (in EUR)	0.30	0.32	-0.02	-6.3%
Investments (in property, plant, and equipment)	43.0	48.7	-5.7	-11.7%
Operating free cash flow	1.8	-18.1	+19.9	+109.9%
Net working capital	541.1	531.3	+9.8	+1.8%
Equity ratio (in %)	46.9	46.7	+0.2PP	-
Net financial liabilities	528.8	461.0	+67.8	+14.7%
Employees (as of Sept. 30)	8,433	7,742	+691	+8.9%
EUR million	9M 2016	9M 2015	∆ abs.	∆ rel.
Order intake	1,248.9	1,185.7	+63.2	+5.3%
Order backlog	-	-	-	-
Revenue	1,150.3	1,117.2	+33.1	+3.0%
of which FX effects			-27.5	-2.5%
of which acquisitions			+9.3	+0.8%
of which organic			+51.3	+4.7%
EBITDA	166.8	172.6	-5.8	-3.4%
EBIT before purchase price allocation	100.8	112.9	-12.1	-10.7%
EBIT margin before purchase price allocation (in %)	8.8	10.1	-1.3PP	-
Purchase price allocation	3.6	3.9	-0.3	-
EBIT	97.2	109.0	-11.8	-10.8%
Net finance cost	-12.5	-8.6	-3.9	-45.3%
EBT	84.7	100.5	-15.8	-15.7%
Income tax expense	23.4	28.5	-5.1	-17.9%
Effective tax rate (in %)	27.6	28.4	-0.8PP	-
Net income (after non-controlling interests)	58.8	69.2	-10.4	-15.0%
Earnings per share (in EUR)	0.93	1.09	-0.16	-14.7%
Investments (in property, plant, and equipment)	116.6	124.6	-8.0	-6.4%
Operating free cash flow	-4.1	-40.4	+36.3	+89.9%

 

The full quarterly report can be accessed from the ElringKlinger website at
http://www.elringklinger.de/investor/2016-Q3-en.pdf

For further information, please contact:
ElringKlinger AG
Dr. Jens Winter
Investor Relations / Corporate PR
Max-Eyth-Straße 2
D-72581 Dettingen/Erms
Phone: +49 7123 724-88335
Fax: +49 7123 724-85 8335
E-mail: jens.winter[at]elringklinger.com

About ElringKlinger AG
ElringKlinger has focused its efforts on developing forward-looking green technologies. These are designed not only to reduce CO₂ emissions but also to scale back the level of harmful nitrogen oxides, hydrocarbons, and soot particles. ElringKlinger is one of the few automotive suppliers worldwide with the capabilities of developing and producing high-tech components for all types of drive system - whether for downsized combustion engines or for electric vehicles driven by batteries or fuel cells. Drawing on its expertise in lightweight engineering, ElringKlinger can make a decisive contribution to efforts aimed at further reducing vehicle weight and thus fuel consumption. The company's portfolio centered around emissions reduction also includes particulate filters and end-to-end exhaust gas purification systems used in ships, commercial vehicles, construction machinery and stationary engines as well as in power stations. This is complemented by products made of the high-performance plastic PTFE supplied by ElringKlinger Kunststofftechnik, which are marketed to a wide range of industries - also to those operating beyond the vehicle manufacturing sector. Applying its abilities as an innovator, ElringKlinger is committed to sustainable mobility and earnings-driven growth. These efforts are supported by a dedicated workforce of more than 8,400 people at 45 ElringKlinger Group locations around the globe.