ElringKlinger's preliminary quarterly results point to sustained growth without advancement in earnings

ElringKlinger AG  / Key word(s): Preliminary Results/Change in Forecast21.07.2016 17:33Disclosure of an inside information according to Article 17 MAR,transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.---------------------------------------------------------------------------ElringKlinger's preliminary quarterly results point to sustained growthwithout advancement in earnings  - Revenue for Q2 2016 up 2.9% at EUR 390.9 million  - EBIT before purchase price allocation down by EUR 3.4 million to EUR    36.2 million  - Adjustment to guidance for 2016: EBIT before purchase price allocation    expected to be EUR 140 to 150 million; revenue target unchanged at 5 to    7% organic growthDettingen/Erms (Germany), July 21, 2016   +++  Based on preliminary figuresfor the second quarter of 2016, organic revenue growth for theElringKlinger Group stood at 5.6%, which is within the target corridor of 5to 7%. However, as earnings failed to advance at the level originallyplanned and anticipated by the company, the guidance figure for EBIT beforepurchase price allocation in respect of the current financial year has beenrevised to a range of EUR 140 to 150 million.Revenue continues to show solid growthOn the back of EUR 379.7 million in the same quarter a year ago, the Groupmanaged to lift revenue by 2.9% to EUR 390.9 million in the second quarterof 2016. Adjusted for foreign exchange movements, growth was as high as EUR22.9 million or 6.0%. This figure includes revenue of EUR 1.6 millioncontributed by COdiNOx Beheer B.V., a subsidiary that has been fullyconsolidated effective from April 11, 2016. Taking into account theaforementioned acquisition and FX effects, organic growth in the secondquarter amounted to EUR 21.3 million or 5.6%.Q2 earnings without any significant impetusAt EUR 36.2 million, second-quarter EBIT before purchase price allocationwas down by EUR 3.4 million on the figure recorded in the same quarter ayear ago. This was attributable primarily to capacity constraintsafflicting a business unit within the Original Equipment segment; itssubstantial fixed costs at an operational level offset the earningscontribution associated with additional revenue. At EUR 4 million, theadditional costs - mainly for unscheduled freight consignments and externalquality control - in the second quarter were just slightly higher than thefigure of around EUR 3 million originally budgeted. At the same time,however, the scale of improvements seen at the Swiss facility during thefirst quarter was not as pronounced as expected in the subsequent period.This was due to the fact that staffing levels had had to be increasedslightly in order to safeguard output volumes, while it had also not beenpossible to scale back external storage resources required for logistics.Migration of part of the manufacturing operations to Hungary proved slowerin the second quarter than originally planned, as it took much longer thananticipated in some cases to secure the customer approvals required in theautomotive industry with regard to such relocations; in some cases, theseauthorizations are still outstanding. While quality control activities werereintegrated as planned, these measures failed to provide the rapid boostto earnings that had previously been expected. With this in mind, theManagement Board has responded to the changed situation and will step upits measures further within this area. This will mainly involveintensifying the company's dialogue with customers to ensure fasternearshoring and more efficient internal and external quality control. Inturn, this will provide the basis for streamlining personnel costs.Adjustment of earnings expectations for current financial yearIn terms of earnings performance, the Group has fallen short of its ownexpectations in the first two quarters. Against this backdrop,ElringKlinger anticipates, at most, a slight year-on-year improvement inearnings for the transitional year of 2016 and has now set a guidance EBIT,before purchase price allocation, of EUR 140 to 150 million (previously:EUR 160 to 170 million). As regards revenue, the Group has reaffirmed itsoutlook of organic growth in the range of 5 to 7%."Naturally, we are disappointed at our loss in forward momentum with regardto earnings," said Dr. Stefan Wolf, Chief Executive Officer ofElringKlinger AG. "At the same time, we are confident that partialrelocation to a more cost-effective site and optimization of the facilityin Switzerland are incisive adjustments when it comes to ensuring thesustained development of the entire unit in question," as Dr. Wolf went onto explain.ElringKlinger's medium-term outlook remains unchanged: the Group will belooking to achieve annual revenue growth of 5 to 7% at an organic level andan EBIT margin of 13 to 15% before purchase price allocation.The full financial report for the second quarter and first half of 2016will be published on Thursday, August 4, 2016.In connection with this announcement, a conference call will be arrangedwith CEO Dr. Stefan Wolf and CFO Thomas Jessulat on Friday, July 22, 2016,at 10:00 hrs (CET) for the purpose of elucidating the points presentedabove.EUR million             H1 2016      H1 2015     Dif. abs.     Dif. rel.Revenue                   776.1        751.1         +25.0         +3.3%of which FX                                          -23.4         -3.1%effectsof which                                              +6.5         +0.9%acquisitionsof which organic                                     +41.9         +5.6%Adjusted EBIT              68.2         76.3          -8.1        -10.6%beforepurchase priceallocationAdjusted EBIT              8.8%        10.2%        -1.4PP             -margin beforepurchase priceallocation (in %)Purchase price              2.3          2.6          -0.3             -allocationEBIT                       66.0         73.7          -7.7        -10.4%EUR million             Q2 2016      Q2 2015     Dif. abs.    Dif. rel.Revenue                   390.9        379.7         +11.2        +2.9%of which FX                                          -11.7        -3.1%effectsof which                                              +1.6        +0.4%acquisitionsof which organic                                     +21.3        +5.6%Adjusted EBIT              36.2         39.6          -3.4        -8.6%beforepurchase priceallocationAdjusted EBIT              9.3%        10.4%        -1.1PP            -margin beforepurchase priceallocation (in %)Purchase price              1.0          1.3          -0.3            -allocationEBIT                       35.2         38.3          -3.1        -8.1%For further information, please contact:ElringKlinger AGDr. Jens WinterInvestor Relations / Corporate PRMax-Eyth-Straße 2D-72581 Dettingen/ErmsGermanyPhone: +49 7123 724-88335Fax: +49 7123 724-85 8335E-mail: jens.winter@elringklinger.comAbout ElringKlinger AGElringKlinger has focused its efforts on developing forward-looking greentechnologies. These are designed not only to reduce CO2 emissions but alsoto scale back the level of harmful nitrogen oxides, hydrocarbons, and sootparticles. ElringKlinger is one of the few automotive suppliers worldwidewith the capabilities of developing and producing high-tech components forall types of drive system - whether for downsized combustion engines or forelectric vehicles driven by batteries or fuel cells. Drawing on itsexpertise in lightweight engineering, ElringKlinger can make a decisivecontribution to efforts aimed at further reducing vehicle weight and thusfuel consumption. The company's portfolio centered around emissionsreduction also includes particulate filters and end-to-end exhaust gaspurification systems used in ships, commercial vehicles, constructionmachinery, and stationary engines as well as in power stations. This iscomplemented by products made of the high-performance plastic PTFE suppliedby ElringKlinger Kunststofftechnik, which are marketed to a wide range ofindustries - also to those operating beyond the vehicle manufacturingsector. Applying its abilities as an innovator, ElringKlinger is committedto sustainable mobility and earnings-driven growth. These efforts aresupported by a dedicated workforce of more than 8,200 people at 45ElringKlinger Group locations around the globe.21.07.2016 The DGAP Distribution Services include Regulatory Announcements,Financial/Corporate News and Press Releases.Archive at www.dgap.de--------------------------------------------------------------------------- Language:     EnglishCompany:      ElringKlinger AG              Max-Eyth-Straße 2              72581 Dettingen/Erms              GermanyPhone:        071 23 / 724-0Fax:          071 23 / 724-9006E-mail:       jens.winter@elringklinger.comInternet:     www.elringklinger.deISIN:         DE0007856023WKN:          785602Indices:      SDAXListed:       Regulated Market in Frankfurt (Prime Standard), Stuttgart;              Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg,              Hanover, Munich, Tradegate Exchange; Terminbörse EUREX End of Announcement                             DGAP News-Service ---------------------------------------------------------------------------