euro adhoc: ElringKlinger AG
Earnings Forecast
ElringKlinger adjusts annual
forecast for 2008 due to significant deterioration in economic conditions
-------------------------------------------------------------------------------- Disclosure announcement transmitted by euro adhoc. The issuer is responsible for the content of this announcement. --------------------------------------------------------------------------------
19.10.2008
Dettingen/Erms, October 19, 2008 +++ The significant deterioration currently witnessed in the economic arena and the lack of tangible signs that market conditions will improve in the short term within the fourth quarter of 2008 have prompted ElringKlinger AG to downgrade its sales and earnings outlook for fiscal 2008 despite the standard cautionary deductions already factored into its forecast and a business performance that is considerably better than that of the market as a whole. The decision is to be seen against the backdrop of a concurrent significant decline in vehicle production in North America and Europe as well as the recent fall in the volume of OE customer call-offs as part of their delivery schedules, a downward trend which has been significantly more severe than the usual fluctuations seen within this area. Additional downsizing of production output by vehicle manufacturers cannot be ruled out, a factor that has been accounted for in ElringKlinger's adjusted business plans. Both the Aftermarket and the Engineered Plastics (PTFE/Moldflon) segments continue to display solid growth rates.
In 2008 organic sales at Group level are forecast to again achieve last year's figure of EUR 607.8 million. Until recently, ElringKlinger had anticipated organic growth of 5.0 to 7.0%. For 2008 as a whole - including contributions from the recent acquisition of the SEVEX Group, Switzerland, and the expansion of the company's ownership interest in ElringKlinger Marusan - total Group sales are expected to rise by 9.0 to 10.0 %.
For 2008, ElringKlinger also anticipates additional costs of EUR 10 million attributable to long-term commodity price hedging of high-grade steel alloy surcharges (EUR 14 mn for 2008 as a whole), which will be accounted for as provisions. While these costs have an adverse effect on current earnings, they will guarantee more favorable procurement prices in the medium term. For 2009, the company anticipates that there will no longer be any significant hedging costs. Taking into account the SEVEX group and ElringKlinger Marusan acquisitions, which are currently displaying a weaker earnings performance, the operating Group margin adjusted for non-recurring items (excluding purchase price allocations and added value of the expansion in the ownership interest in Marusan) is to reach 13.0 to 14.0% in 2008. Excluding the costs associated with long-term commodity price hedging, the operating margin adjusted for non-recurring items is expected to come in at 15.0 to 16.0%. The Group´s consolidated net income adjusted for non-recurring effects (after minority interests) for 2008 is thus expected to reach EUR 55.0 mn to EUR 56.0 mn compared to EUR 67.2 mn a year ago. In 2007, exceptional income of EUR 3.2 million after taxes from insurance reimbursements in connection with a fire at the company's plant in Runkel, Germany, as well as one-time income from the revaluation of deferred tax items in an amount of EUR 5.5 million had contributed to consolidated net income (after minority interests) on a non-recurring basis. Until now, ElringKlinger had anticipated a more pronounced rise in consolidated net income (after minority interests) adjusted for one-offs in relation to organic growth in Group sales.
For the fiscal year 2008 the Management Board has planned an unchanged dividend payout at last year´s level of EUR 0.47 per share.
The production processes and cost structures within the Group - where necessary - will be adjusted immediately, with the express purpose of maintaining earnings performance at a consistent level. Committed to retaining a strong position in research and development, the company will continue to direct its investments at new business fields in a sustained manner.
ElringKlinger does not anticipate a significant improvement in the general economic and market climate in 2009, particularly with regard to the first half of the year, and is preparing itself for continued market weakness in North America and Europe as well as less pronounced growth in vehicle sales within the emerging markets. However, given the significant scale of product ramp-ups equivalent to approx. EUR 70 million, mainly in the United States and Asia, as well as higher contributions by the acquired SEVEX Group and ElringKlinger Marusan, ElringKlinger believes it can offset protracted market weakness in 2009.
Based on the assumption of a further downturn in the international vehicle markets, ElringKlinger for the Group as a whole expects to slightly exceed fiscal 2008 sales and consolidated net income (after minority interests) adjusted for non-recurring items in 2009. The Group´s operating margin, adjusted for non-recurring effects, is expected to reach or slightly exceed 14.0% in 2009.
Offering a portfolio of products which can contribute substantially to lower fuel consumption and CO2 reduction, the ElringKlinger Group considers itself well positioned when it comes to returning to achieve annual organic growth rates of a minimum of 5 to 7% per annum in subsequent years. Within this context, the company will be buoyed among other factors by its extensive technology pipeline centered around fuel cell components, a diesel particulate filter concept that is currently in preparation and the new, injection-moldable PTFE material Moldflon.
end of announcement euro adhoc --------------------------------------------------------------------------------
Further inquiry note:
Stephan Haas
Telefon: +49(0)7123 724 631
E-Mail: stephan.haas@elringklinger.de
Branche: Automotive Equipment
ISIN: DE0007856023
WKN: 785602
Index: CDAX, Classic All Share, Prime All Share
Börsen: Börse Frankfurt / regulated dealing/prime standard
Börse Berlin / free trade
Börse Düsseldorf / free trade
Börse München / free trade
Börse Stuttgart / regulated dealing
Original content of: ElringKlinger AG, transmitted by news aktuell