2024 financial year: ElringKlinger meets annual operating targets amid challenging market conditions

• Group revenue at EUR 1,803 billion; organic change of -0.9% at market level
• Adjusted EBIT at EUR 87.6 million, adjusted EBIT margin at 4.9%, further significant improvement in operating free cash flow, net financial liabilities scaled back to long-term low
• Continuity in dividend payment: proposal of EUR 0.15 per share
• Guidance for 2025: organic revenue roughly on a par with the previous year, adjusted EBIT margin of around 5%, operating free cash flow of approx. 1 to 3% of Group revenue
• CEO Thomas Jessulat: “Against the backdrop of difficult market conditions, we managed to bring the 2024 financial year to a successful conclusion. We were fully in line with our guidance, having recorded an adjusted EBIT margin of 4.9% and operating free cash flow of EUR 58 million. In addition, we succeeded in driving forward our transformation with a strategic package of measures."

ElringKlinger AG (ISIN DE0007856023 / WKN 785602) has published its definitive, audited results for the 2024 financial year as part of its 2024 annual report. Amid challenging conditions, the Group recorded Group revenue of EUR 1,803 billion in the financial year just ended (2023: EUR 1,847 billion) and was thus roughly in line with the market with an organic change of -0.9%. In this context, global light vehicle production fell by 1.1% in 2024, based on industry data from S&P Global Mobility. The adjusted EBIT margin amounted to 4.9% (2023: 5.4%), while operating free cash flow totaled EUR 58.4 million. The consolidated result was therefore in line with the annual targets of around 5% or slightly within positive territory. Earnings were adversely affected by the introduction of a strategic package of measures, which resulted in the Group recognizing non-cash impairment losses and restructuring expenses of EUR 238 million.

"Against the backdrop of difficult market conditions, we managed to bring the 2024 financial year to a successful conclusion. We were fully in line with our guidance, having recorded an adjusted EBIT margin of 4.9% and operating free cash flow of EUR 58 million. As a result, we were also able to scale back net financial liabilities to a 13-year low of EUR 246 million. At the same time, we succeeded in driving forward our transformation with a strategic package of measures focused on the goal set out in our SHAPE30 Group strategy: Our aim is to improve the Group's profitability and generate sustainable cash flow so that we can continue to respond to market requirements at all times as we move forward,” said Thomas Jessulat, CEO of ElringKlinger AG. “Our transformation is also reflected in revenue growth in the area of e-mobility. In the financial year just ended, we more than doubled revenue in the E-Mobility business unit to EUR 102 million."

Significant revenue growth in E-Mobility business unit

Within the strongest revenue-generating segment, Original Equipment, which saw a 5.4% decline in revenue against the backdrop of sluggish market momentum, the E-Mobility business unit recorded the most pronounced expansion at EUR 102.5 million (2023: EUR 48.3 million). The business unit more than doubled its revenue compared to the previous year, with a large-scale series production order for cell contacting systems making a significant contribution to growth. The Aftermarket segment, whose successful growth strategy continues to take effect, also recorded a strong year-on-year increase. In the financial year just ended, revenue was up 12.1% at EUR 336.3 million, compared to EUR 300.1 million in 2023. Despite weaker economic momentum, the Engineered Plastics segment proved robust in the reporting year, partly due to its broad industry mix. With revenue totaling EUR 130.0 million (2023: EUR 132.3 million), the segment was roughly on a par with the previous year.

Revenue growth in Germany and in the South America and Rest of the World region

In the region covering Germany, ElringKlinger recorded significant growth of 11.9%, taking the total to EUR 410.1 million (2023: EUR 366.3 million), due in part to the ramp-up of a high-volume order for cell contacting systems and revenue growth in the Aftermarket segment. The Group also recorded revenue growth in the region encompassing South America and the Rest of the World, posting an increase of 6.5% to EUR 103.3 million in 2024 (2023: EUR 97.1 million). Although the region covering the Rest of Europe saw a decline in revenue in the 2024 financial year in line with market developments, the Group slightly outperformed the market here with a change of -3.8%, taking the total to EUR 558.8 million (2023: EUR 580.9 million). The North America and Asia-Pacific regions declined.

Strategic package of measures to hone the Group's profile

In response to the transformation of the industry, the Management Board of the ElringKlinger Group has adopted a package of strategic measures aimed at honing the Group's profile to the largest extent possible. The purpose of these measures is to ensure that the Group is able to react to market requirements at all times as it moves forward. The emphasis is on profitable, forward-looking product groups and business units. In this context, ElringKlinger will no longer be pursuing its systems business for electric drive units in the future. The decision to sell the two plants in Sevelen, Switzerland, and Buford, GA, United States, was reached against the same background, as was the discontinuation of operations at the sites in Fremont, California, and Thale, Saxony-Anhalt, Germany. Overall, the aforementioned package of measures resulted in non-recurring exceptional items amounting to EUR 238 million. While these measures had a significant impact on the Group's earnings performance in 2024, they form the basis for achieving the goal of significantly improving the Group's profitability and cash flow, as set out in the SHAPE30 Group strategy.

Adjusted EBIT margin at target level

Despite the challenging conditions, the Group generated earnings before interest, taxes, depreciation, and amortization (EBITDA) of EUR 144.0 million (2023: EUR 200.3 million). Excluding the non-recurring items, adjusted EBITDA would have amounted to EUR 197.1 million (2023: EUR 213.5 million). Adjusted earnings before interest and taxes (adjusted EBIT) amounted to EUR 87.6 million (2023: EUR 100.1 million), which corresponds to an adjusted EBIT margin of 4.9% (2023: 5.4%). This resulted in a net loss attributable to shareholders of ElringKlinger AG for the period of EUR 137.8 million in 2024 (2023: net income of EUR 39.3 million).

Dividend proposal of EUR 0.15 per share

Due to the strategic package of measures, reported earnings per share were in negative territory at EUR minus 2.18 (2023: EUR 0.62). Excluding these exceptional factors, adjusted earnings per share amounted to EUR 0.70. In the opinion of ElringKlinger's management, this figure illustrates that the Group is well positioned from an operational perspective and, essentially, remains successful. On this basis, the Management Board, in consultation with the Supervisory Board, will propose to the upcoming Annual General Meeting that an unchanged dividend of EUR 0.15 (2023: EUR 0.15) per share be paid out in the interests of dividend continuity. In addition, the Supervisory Board approved the Management Board's proposal to hold the upcoming Annual General Meeting on May 16, 2025, in a virtual format.

Increase in operating free cash flow and low net debt-to-EBITDA ratio

In the 2024 financial year, operating free cash flow increased significantly compared to the previous year and amounted to EUR 58.4 million (2023: EUR 36.7 million). As a result, the Group was able to scale back its net financial liabilities by EUR 77.3 million to a long-term low of EUR 245.9 million (2023: EUR 323.2 million). This provides a solid foundation for the continued transformation of the Group. Accordingly, the net debt-to-EBITDA ratio is low at 1.7. Calculated on the basis of adjusted EBITDA, the figure stands at 1.2.

Guidance for 2025: organic revenue at prior-year level, adjusted EBIT margin of around 5%

Looking ahead to the current financial year, the global automotive industry will again be exposed to conflicting forces driven by geopolitical and trade policy developments as well as macroeconomic uncertainties. At the same time, the market is not evolving at a particularly dynamic pace, especially in Europe and North America.

Against this backdrop, ElringKlinger anticipates that organic revenue in 2025 will be roughly on a par with the previous year. In this context, the baseline is group revenue excluding that attributable to the two divested entities. The Group's medium term projection is for moderate revenue growth, taking into account market forecasts and based on its high-volume series production nominations. Despite a multitude of influencing factors, some of which may be considered detrimental, the Group is once again aiming for an adjusted EBIT margin of around 5%. The prerequisite for this is continued stringent cost management while preparations are made for the ramp-up of further series production nominations. In the medium term, the Group anticipates an adjusted EBIT margin of around 7 to 8%. Operating free cash flow is driven primarily by operating profitability, investments, and the development of net working capital. Based on the projections for these key performance indicators, the Group expects operating free cash flow to correspond to around 1 to 3% of Group revenue in 2025. In the medium term, this metric is expected to improve further; the Management Board is targeting a figure of around 2 to 4%. The target with regard to the net debt-to-EBITDA ratio is around 2 for 2025 and a range of 1.0 to 2.0 in the medium term.
 

Final, audited figures for FY2024 and Q4 2024

*For comparison purposes, excluding the order backlog of the two sold plants (Sevelen and Buford)
**Proposal to the 2025 Annual General Meeting

The 2024 annual report is available online at: https://ar2024.elringklinger.de