EANS-Adhoc: ElringKlinger with positive net income in Q1 2009 despite slump in automobile markets
-------------------------------------------------------------------------------- ad-hoc disclosure pursuant to section 15 of the WpHG transmitted by euro adhoc with the aim of a Europe-wide distribution. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------------
quarterly report
07.05.2009
Dettingen/Erms, May 7, 2009 +++ In the first quarter of 2009, the dramatic downturn in the international automobile markets led to a decline in consolidated sales of 20.3% to EUR 129.7 (162.8) million within the ElringKlinger Group. The Swiss SEVEX Group, which was included in the consolidated Q1 accounts for the first time in 2009, as well as the expanded ownership interest in ElringKlinger Marusan Corporation, Japan, contributed an aggregate amount of EUR 17.6 million to sales. Despite adverse market conditions, the Group recorded a positive operating result and net income after minorities (profit attributable to owners of the parent) of EUR 2.0 (18.9) million. At EUR 22.7 (26.1) million, net cash from operating activities was 13.0% down on the substantial figure posted in the same quarter a year ago.
Within the Original Equipment segment, which supplies vehicle manufacturers, sales declined by 24.0 % in the first quarter of 2009 to EUR 87.3 (114.8) million. The aftermarket business contracted just slightly by 5.8% to EUR 24.6 (26.2) million. In contrast to the weak markets in Europe and North America, ElringKlinger achieved revenue growth of 16.5% in Asia as a whole, taking sales within this region to EUR 16.4 (14.1) million.
The ElringKlinger Group invested EUR 9.4 (7.9) million in the development of new products and technologies, including fuel cells and battery components, which was 19.0% more than in the same quarter a year ago. By contrast, capital expenditure on property, plant and equipment as well as intangible assets in the first quarter of 2009 was scaled back by EUR 1.8 million year on year to EUR 22.8 (24.6) million.
Positive impact from lower commodity prices yet to materialize The incipient reduction in raw material prices has yet to have a significant positive impact on the Group's gross profit margin, as material used in the first quarter of 2009 was mainly sourced from existing inventories. As a result, the ElringKlinger Group has not yet benefited from the general decline in prices associated with nickel-based alloy surcharges. Owing to settlement payments to be made in connection with commodity price hedging, material expenses rose by another EUR 4.0 million in the first quarter of 2009. Due to their more material-intensive operations, the inclusion of the former SEVEX Group and ElringKlinger Marusan Corporation within the consolidated group contributed to the decline in the Group's gross profit margin to 22.6% (33.0%), too.
Positive operating result despite severe market weakness Earnings before interest, taxes, depreciation and amortization (EBITDA) were down 42.6% on last year's first-quarter result. Owing to substantial investments, depreciation and amortization rose by EUR 5.0 million in the first quarter of 2009 to EUR 16.4 (11.4) million. In particular, lower capacity utilization in the majority of the divisions as well as more extensive depreciation/amortization led to a disproportionately large reduction in the operating result in the first quarter of 2009, down 87.2% to EUR 3.7 (29.0) million. Despite this, ElringKlinger succeeded in reaching positive territory from an operating perspective, having benefited from the timely implementation of measures such as the non-extension of temporary employment contracts, the introduction of short-time work at its German sites as well as the reduction of material- and equipment-related expenses and cutbacks in capital expenditure. Earnings before interest and taxes (EBIT), which include EUR 3.1 million in foreign currency gains, amounted to EUR 6.8 (29.2) million. Thus, the EBIT margin was 5.2%.
Despite the rise in interest expense by EUR 1.8 million to EUR 3.4 (1.6) million, the net finance result improved by EUR 1.1 million in total and stood at EUR -0.3 (-1.4) million. This was attributable mainly to positive foreign exchange effects. The recognition of liabilities in connection with purchase-related funding of the Swiss SEVEX Group as at the reporting date contributed EUR 1.2 million to finance income. Earnings before taxes declined by 87.7% year on year, to EUR 3.4 (27.6) million. The inclusion of the former SEVEX Group, Switzerland, contributed EUR 1.1 million to earnings before taxes, while the proportionate consolidation of ElringKlinger Marusan Corporation produced a charge of EUR 0.4 million.
EUR 2.0 million in consolidated net income after minority interests The tax rate stood at 29.4% (28.6%). On this basis, the ElringKlinger Group generated net income of EUR 2.4 million in the first quarter of 2009, compared to EUR 19.7 million in the same quarter a year ago. After minority interests, net income (profit attributable to owners of the parent) amounted to EUR 2.0 (18.9) million. Basic and diluted earnings per share - with regard to the profit attributable to owners of ElringKlinger AG - amounted to EUR 0.03 (0.33) in the first quarter of 2009.
The continued downturn in demand for automobiles over the course of the first quarter of 2009 was reflected in orders. Including the contribution made by the newly consolidated entities of the former SEVEX Group and the proportionately consolidated ElringKlinger Marusan Corporation, Japan, order intake in the first quarter of 2009 declined by 24.0% to EUR 125.4 (165.1) million. The order backlog of the ElringKlinger Group contracted by 17.5% to EUR 204.2 (247.4) million.
Outlook Since the fourth quarter of 2008, the global vehicle markets have been in a situation that provides little scope for forward planning. Owing to the historically exceptional circumstances, the issuance of forecasts remains difficult. In view of the global recession and continued significant uncertainties as to the short-term performance of the vehicle sector as a whole, the ElringKlinger Group has made preparations for several different scenarios in 2009. These range, in the best case, from matching the revenue and EBIT figures of fiscal 2008 under the assumption that the global automobile markets recover substantially by the beginning of the second half of 2009 to the scenario of a decline in vehicle production within the Northern American and European markets by 20 to 25%, coinciding with an additional contraction of vehicle sales within the emerging markets. Should this last scenario eventuate, ElringKlinger anticipates Group sales in the region of EUR 580 to 600 million and an EBIT margin of 8 to 10% for fiscal 2009 as a whole. This includes revenues from planned product ramp-ups as well as sales and earnings contributions of the newly acquired SEVEX Group and ElringKlinger Marusan Corporation, for which 2009 is the first time in which these entities have been included in consolidated Q1 accounts (in 2008 effective from April 1 and May 1 respectively). In the first three months of 2009, however, the markets declined at a more pronounced rate than previously assumed as part of the negative scenario. In January and February, aggregate vehicle sales declined by more than 22% in Europe and by 39% in the United States. The fall in vehicle production figures was even more extensive. If the very low level of vehicle sales seen in the first two months continues over 2009 as a whole, Group sales may contract in the direction of EUR 500 million. Even in this case, ElringKlinger will be targeting an EBIT margin of 5 to 8%, supported by a Group-wide streamlining program already initiated within the area of material expenses, personnel expenses and purchasing, as well as intensive working capital management.
For the purpose of stabilizing its earnings performance, ElringKlinger has launched an extensive cost reduction program at Group level and anticipates that the potential savings associated with these measures will amount to approximately EUR 10.0 million in 2009. In general, the company will not be extending temporary employment contracts. Additionally, ElringKlinger AG has made use of an option incorporated in the last collective-wage agreement, which specifies that the second phase of the wage increase of 2.1% scheduled for May 2009 may be postponed to December 2009. The Group plans to achieve further cost reductions by means of process optimization. The decline in commodity and material prices recorded for the first time in years is beginning to have a positive medium-term effect on the overall cost situation. Capital expenditure (excluding tooling) will be scaled back to approximately EUR 40 (95) million in 2009. Investments made for the purpose of company streamlining as well as expenses earmarked for research and development will remain unchanged.
Due to the significant fall in production output throughout most of the customer base - as a result of extended factory vacations and the scheduled reduction of working hours -, the ElringKlinger Group is predicting weaker business performance in the first six months of 2009 than in the second half of the year. The fact that production figures for the majority of vehicle manufacturers again remained significantly below the sluggish sales figures in the first three months of 2009 and unsold stock has thus been reduced to a certain extent would appear to suggest, in the medium term, a gradual return to a more normal level of customer delivery scheduling at ElringKlinger over the course of the second half of 2009.
end of announcement euro adhoc --------------------------------------------------------------------------------
Further inquiry note:
For further information, please contact:
ElringKlinger AG Corporate Communications / Investor Relations
Stephan Haas
Max-Eyth-Straße 2
72581 Dettingen
Phone: +49 0 7123-724-137
E-mail: stephan.haas@elringklinger.de
Branche: Automotive Equipment
ISIN: DE0007856023
WKN: 785602
Index: MDAX, Classic All Share, Prime All Share
Börsen: Börse Frankfurt / regulated dealing/prime standard
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Original content of: ElringKlinger AG, transmitted by news aktuell