Announcements

• Group revenue falls by 10.2% between January and March to EUR 396.2 million due to economic slowdown in Europe and effects of coronavirus in Asia
• Global automobile production down by 23% in first quarter
• Measures aimed at raising efficiency levels take effect: EBIT up from EUR 6.4 million to EUR 16.0 million
• Net debt scaled back by almost EUR 200 million within twelve months
• Guidance for 2020 amid persistently poor visibility

Dettingen/Erms (Germany), May 7, 2020 +++ ElringKlinger AG felt the effects of economic cooling and the initial fallout from the coronavirus pandemic in its revenues over the course of the first quarter of 2020, which fell by 10.2% to EUR 396 million. The organic change in revenue, i.e., adjusted for currency effects and M&A activities, amounted to -9.8%. This was far better than the performance of the global vehicle industry as a whole, which saw production output fall by 23% during the same period. On the back of strong growth recorded during fiscal 2019, the Group managed to expand its revenue by a further 4.1% in North America in the period from January to March 2020, whereas Europe saw revenue fall by EUR 30 million or 12.4% year on year as a result of a more lethargic economy. Revenue generated from sales in Asia-Pacific, where the economic effects of the coronavirus pandemic were already palpable during the first quarter, contracted by 21.7%.

Operating profit with strong start to year
Consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to EUR 45.8 million in the first quarter of 2020 (Q1 2019: EUR 34.8 million), which was up markedly on the prior-year figure. Earnings before interest and taxes (EBIT) also improved, expanding by EUR 9.6 million to EUR 16.0 million. Successful optimization measures at the North American site, which had been adversely affected by capacity bottlenecks in the previous year, had a strong bearing on earnings performance. In addition, the Group-wide program implemented by the Management Board for the purpose of raising efficiency levels had a positive impact on the cost of sales as well as selling and general and administrative expenses. This more than compensated for the negative effects on earnings that were attributable to restrictions to production in Asia during the first quarter as a result of the coronavirus pandemic. The Group's Aftermarket business benefited from an increase in volumes requested by customers as part of their production scheduling, which was due to the demand-side optimization of inventories in response to the imminent crisis. Thus, in particular, earnings relating to the Aftermarket segment rose by EUR 5.5 million in total year on year.

Net finance costs, which increased by EUR 8.8 million to EUR -9.8 million, were impacted primarily by the direction taken by the Mexican peso during the first quarter of 2020. By contrast, income tax expenses fell by EUR 2.0 million to EUR 4.5 million. Having deducted this item, net income for the period from January to March 2020 stood at EUR 1.6 million (Q1 2019: EUR -1.1 million). This corresponds to earnings per share of EUR 0.03, compared with EUR -0.02 in the previous year.

Continued focus on cash flow optimization
ElringKlinger maintained its disciplined approach to capital expenditure between January and March 2020, as a result of which the ratio of investments in property, plant, and equipment and investment property totaled 3.1% of Group revenue - well below the prior-year figure (6.5%). With the help of targeted optimization measures, net working capital was also scaled back substantially year on year by EUR 154.3 million. As a result, operating free cash flow improved from EUR -19.3 million in the first quarter of 2019 to EUR -2.2 million in the quarter under review. The direction taken by cash flow in recent quarters had a positive impact on the Group's financial situation. Net debt, for instance, was reined back by almost EUR 200 million in just twelve months, taking the figure to EUR 603.1 million as of March 31, 2020.

Order intake and order backlog down markedly
The interruptions to production, first in Asia and later in Europe as well as North and South America and South Africa, were reflected in the order situation in the first quarter, as was the slowdown in the economy as a whole. Order intake fell by 28.8% compared to the same quarter a year ago, while order backlog dipped by 8.2%.

Guidance for 2020
Having adjusted output at its plants in line with demand at the end of March, the ElringKlinger Group began to ramp up production again step by step in Germany and at its other European sites towards the end of April. North America and Brazil will follow with a time lag. With the exception of India, the Asian plants continued to stabilize and put in a positive performance.

"The true scale of the economic impact caused by the coronavirus pandemic is impossible to predict in concrete terms. It will be seen primarily in the second and probably also in the third quarter of 2020. What is crucial is how quickly economic activity in the key industrial nations will resume and how sustainable demand will be in the coming quarters," says Dr. Stefan Wolf, CEO of ElringKlinger AG. "We responded swiftly to the downturn in demand by embracing greater cost discipline, and yet we still have to assume that the anticipated shortfalls in revenue will also have an impact on earnings."

Operating against this backdrop and emphasizing the many uncertainties that exist, the Group anticipates a change in organic revenue that will be slightly more favorable compared to that relating to global automobile production (currently expected to be -22%). Despite the measures implemented to streamline costs, it can be assumed from the current perspective that it will not be possible to fully offset the expected revenue shortfalls. Therefore, the Group anticipates that its EBIT margin will be visibly lower compared to the previous year. As a result, the net debt/EBITDA ratio is likely to be above the prior-year figure at the end of 2020. ElringKlinger remains committed to its disciplined approach to capital expenditure and will continue to optimize net working capital, on the basis of which the Group expects to achieve positive operating free cash flow in 2020 as a whole.

Key financials for Q1 2020

* Less current time deposits and securities totaling EUR 10.2 million

Due to the ongoing coronavirus pandemic, ElringKlinger AG has decided to host the upcoming Annual General Meeting on July 7, 2020 virtually, as protecting the health of shareholders, employees and service providers is a top priority for the Group. This is also in line with the contact restrictions and the resulting ban on major events, which is to apply until at least 31 August 2020.

Dettingen/Erms (Germany), April 23, 2020 +++ In the wake of the coronavirus pandemic, ElringKlinger AG decided early in March to postpone the Annual General Meeting, originally scheduled for May 19, 2020, to the later date of July 7, 2020. In mid-April, the Federal Government agreed with the state governments to extend the ban on major events until at least August 31, 2020. In addition, with the law on COVID-19 measures, the legislator made it possible for annual general meetings to be held virtually at short notice.

In order to protect the health of shareholders, employees and involved service providers, and in accordance with the state regulation, ElringKlinger AG will therefore refrain from the physical presence of shareholders and their proxies and hold the Annual General Meeting on July 7, 2020 as a purely virtual event. After registering in due time, shareholders can participate in the Annual General Meeting via the Internet and exercise their voting rights by proxy designated by the company or by postal vote. Questions regarding the agenda can be submitted in advance.

Further details will be included in the invitation to the Annual General Meeting, which will be published in the electronic Federal Gazette no later than May 29, 2020.

Dettingen/Erms (Germany), April 17, 2020 +++ Based on the preliminary results, Group revenue generated by ElringKlinger AG (ISIN DE 0007856023 / WKN 785602) was lower in the first quarter of 2020. At EUR 396 million, revenues were noticeably down on the figure of EUR 441 million posted for the first quarter of 2019. The decline by EUR 45 million or 10 % is attributable primarily to the economic downturn in Europe and the impact of the coronavirus pandemic in Asia, where the Chinese plants, in particular, were affected by the extended New Year vacation and state-ordered closures.

Earnings before interest and taxes (EBIT) for the ElringKlinger Group appear to have remained unaffected by the impact of the global coronavirus pandemic in the first quarter of 2020. At EUR 16 million, the figure is well above the prior-year total of EUR 6.4 million. Based on an initial analysis, the reason for this is that the measures implemented by the Management Board to raise efficiency levels at the North American and European plants are taking effect. This more than compensated for the negative earnings effects of the coronavirus pandemic in Asia. It should also be noted that the result for the first quarter of 2019 had been affected by charges attributable to US countervailing and anti-dumping duties.

Although the performance of the first quarter of 2020 illustrates that the Group as a whole is on the right track, it must be assumed that Group revenues and earnings will be significantly impacted in the second quarter of 2020 due to the current interruptions to production in Europe and North America. Substantial charges are expected.

The detailed results and the report on the first quarter will be published as planned on May 7, 2020.

Disclaimer
This release contains forward-looking statements. These statements are based on expectations, market evaluations and forecasts by the Management Board and on information currently available to them. In particular, the forward-looking statements shall not be interpreted as a guarantee that the future events and results to which they refer will actually materialize. Whilst the Management Board is confident that the statements as well as the opinions and expectations on which they are based are realistic, the aforementioned statements rely on assumptions that may conceivably prove to be incorrect. Future results and circumstances depend on a multitude of factors, risks and imponderables that can alter the expectations and judgments that have been expressed. These factors include, for example, changes to the general economic and business situation, variations of exchange rates and interest rates, poor acceptance of new products and services, and changes to business strategy.

• Revenue up by 1.6% to EUR 1,727 million in 2019 contrary to market trend
• EBIT before purchase price allocation at EUR 63.2 million; steady improvement over course of the year
• Measures aimed at raising efficiency levels lead to marked improvement in operating free cash flow; net debt scaled back
• Dividend suspended to strengthen internal financing
• Group refrains from giving outlook at present for the current year due to the strong dynamics of the coronavirus pandemic 

Dettingen/Erms (Germany), March 30, 2020  +++ Market conditions within the automotive industry were far from favorable even before the coronavirus pandemic. Global automobile production contracted by 5.6% in the 2019 financial year. Operating against this challenging backdrop, the ElringKlinger Group managed to expand its revenue by 1.6% to EUR 1,727 million in total (2018: EUR 1,699 million). Without the effects of currencies and acquisitions, revenue was up by 0.5%. Thus, the Group clear-ly achieved its goal of outperforming the market by 2 to 4 percentage points in terms of organic growth. This was driven primarily by the region comprising North America, which saw revenue expand by 25.1%. Revenue generated from sales in the Asia-Pacific region, by contrast, was down just slightly year on year at -1.4%. However, this market as a whole was significantly weaker at -8.2%. In Germany and the Rest of Eu-rope revenue was also lower at -7.8% and -4.2% respectively. 

As Dr. Stefan Wolf, CEO of ElringKlinger AG, points out, "Market conditions as a whole were not favorable in 2019, but we continued to grow with the help of our innovative products. At the same time, we implemented a package of measures to raise efficiency levels, which led to a noticeable improvement in our key financial indicators. Thanks in particular to the substantial increase in cash flow, we were able to significantly reduce net financial debt and strengthen the Group for the future.

Implementation of measures to raise efficiency levels
In addition to a disciplined approach to capital expenditure, the package of measures primarily included improvements in net working capital. Receivables were scaled back, payment terms for liabilities extended, and inventories optimized. The Group made targeted investments in property, plant, and equipment and investment property, as a result of which the ratio of 5.3% of revenue was significantly lower than the prior-year figure of 9.6%  Investments included the new technology center for battery and fuel cell technology in Dettingen/Erms and the establishment of series production for com-plete battery systems at the site in Thale, Saxony-Anhalt. The success of these compre-hensive measures was illustrated by the particularly favorable direction taken by operating free cash flow in 2019, which improved by EUR 262 million to EUR 176 million (2018: EUR -86 million).

The program aimed at delivering efficiency gains also began to show its first positive effects with regard to earnings. Additional charges attributable to elevated commodity prices, US anti-dumping and countervailing duties, and higher staff costs were coun-teracted by the Group with the help of cost savings made from the beginning of 2019 onward. In addition to reductions in non-personnel costs, management focused on optimization at the sites in North America, which had recorded particularly high levels of capacity utilization. As a result, earnings margins were gradually increased over the course of the year from 1.6% in the first quarter to 5.9% in the fourth quarter of 2019. This includes the sale of an industrial park in Hungary, which resulted in other operating income of EUR 8.6 million in the fourth quarter. 

In total, EBIT before purchase price allocation amounted to EUR 63.2 million (2018: EUR 100.2 million), while the margin stood at 3.7% (2018: 5.9%), which was at the lower end of the target range of around 4 to 5%. In this context, however, the prior-year figure had included proceeds from the sale of two subsidiaries. Due to the reduc-tion in the net finance result by EUR 5 million, earnings before taxes fell to EUR 41.7 million (2018: EUR 81.4 million). In conjunction with slightly higher taxes on income, net income declined to EUR 5.0 million (2018: EUR 47.9 million). Net income attribut-able to shareholders amounted to EUR 4.1 million in total (2018: EUR 43.8 million). Correspondingly, earnings per share were down sharply year on year at EUR 0.06 (2018: EUR 0.69).

Suspension of dividend
Against the background of the Group's earnings performance in 2019 and the econom-ic impact of the coronavirus crisis, the dividend has been suspended for the 2019 financial year. In taking this approach, the Group is also looking to strengthen its inter-nal financing for the ongoing transformation process.

Robust financial position
The optimization measures aimed at improving operating free cash flow had a positive impact on the financial position as a whole. In the fourth quarter, the Group was able to reduce net debt for the third time in succession to EUR 595 million (2018: EUR 724 million). At the end of the first quarter, net debt had stood at EUR 796 million. The equity ratio of 42% (2018: 43%) also reflects the robust condition of the balance sheet and is within the long-term target range of 40 to 50%.

Outlook for 2020
Even without current developments relating to the coronavirus pandemic, 2020 had been expected to be a challenging year due to the general slowdown in the economy. The situation has deteriorated as a result of the far-reaching measures taken by gov-ernments around the world to contain and slow down the spread of the virus, and the pandemic will have a significant economic impact, particularly in the automotive indus-try.

As Dr. Wolf explains: "The coronavirus has Germany, Europe, and the world fully in its grip and continues to spread dramatically. The protection of our employees and their families is our top priority. We drew up comprehensive preventive measures at an early stage. Employee protection also includes job security. With customers closing many of their plants around the globe, we have been forced to take the same approach and adapt our production in line with demand. Our goal remains to cushion the eco-nomic impact as far as possible."

The duration of plant closures by automobile manufacturers cannot be predicted at present. The same applies to potentially more extensive measures in the ensuing weeks – also from a political perspective. In view of these considerable uncertainties and significant dynamics, the economic effects on ElringKlinger cannot currently be determined with sufficient reliability and accuracy. Therefore, the Group is temporarily refraining from issuing specific revenue and earnings guidance for the 2020 financial year. 

Unlocking potential for the future
Regardless of the current crisis surrounding the coronavirus, ElringKlinger is continu-ing to drive forward its development efforts within the area of new drive technologies in order to help shape the process of transformation with innovative products and ideas. Given the results of ElringKlinger's development work and the orders already received in the areas of battery and fuel cell technology and the electric drivetrain, there is an opportunity for the Group to exploit the tremendous potential of new drive technologies.

The annual report for 2019 is available online at:
https://www.elringklinger.de/investor/2019-gb-de.pdf

Dettingen/Erms (Germany), March 23, 2020  +++ As a result of the coronavirus pandemic, a large number of automobile manufacturers have suspended production at many of their sites or have announced such stoppages. In response, the Management Board of ElringKlinger AG, Dettingen/Erms (ISIN DE 0007856023/ WKN 785602), acting in consultation with the Group works council of ElringKlinger AG, has decided to adjust Group production in Germany in line with requirements directly as of today (March 23). Among the sites primarily affected are those in Europe and North America, but also the plant in India and that in Brazil. Production will either be scaled down – in Germany, for example, all necessary preparations for short-time work are now being made – or halted temporarily. This package of measures does not include the Chinese plants, which have resumed operations following the temporary closures. At present, the sites in other regions of the world, such as South Africa, will also continue production without being affected by these measures.

It is impossible to predict the duration of plant closures by manufacturers. The same applies to potentially more extensive measures in the coming weeks – also from a political perspective. In view of these considerable uncertainties and significant dynamics, the economic effects on the Group cannot currently be determined with sufficient reliability and accuracy.