euro adhoc: ElringKlinger AG
quarterly or semiannual financial statement /
ElringKlinger with 13 percent sales growth and 11 percent increase in adjusted
consolidated net income after minority interests in first half-year of 2008
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6-month report
07.08.2008
The ElringKlinger Group recorded further growth in sales and earnings in the first six months of 2008. Despite sluggish automobile markets in North America and Western Europe, sales at Group level increased by 13.0% to EUR 350.2 (310.0) million. The recently acquired Swiss-based SEVEX Group as well as the 50% holding in ElringKlinger Marusan Corp., Japan, contributed to sales and earnings on a pro rata basis for the first time as from the second quarter. In the second quarter, ElringKlinger increased Group sales by 19.4% to EUR 187.4 (157.0) million.
The largest percentage gains were achieved in Asia. Demand for products designed to assist with CO2 reduction and fuel efficiency developed well. Growth rates were particularly solid within the product groups of specialty gaskets for the exhaust tract, lightweight plastic modules and thermal shielding components.
The acquisition of the Swiss-based SEVEX Group and the purchase of the equity interest in MARUSAN contributed approx. EUR 22 million to sales and around EUR 4.7 million to earnings before taxes. The operating margin of SEVEX currently lies just within the double-digit range and is to be lifted by the end of 2010 to the level generally achieved within the Group. The allocation of the cost of purchase to the acquired order backlog had an adverse effect of around EUR 1.2 million on the operating result for the second quarter. However, this accounting-specific factor will no longer be of relevance from the fourth quarter onward. By contrast, the purchase price for the interests acquired in MARUSAN, which was lower than equity, resulted in non-recurring other operating income of EUR 5.8 million.
High energy costs together with the surge in commodity prices witnessed in the first half of 2008 had an adverse effect. Lower prices for steel alloys used by the company had not yet been passed on by suppliers. Consequently, cost of sales rose by 18.1% to EUR 240.8 (203.9) million. Selling as well as general and administrative expenses rose at a slower rate than revenue. The ElringKlinger Group expended EUR 16.5 (15.2) million on research and development in the first half of 2008, a year-on-year increase of EUR 1.3 million. Other operating expenses increased by an additional EUR 4.0 million as a result of one-time provisions allocated for the purpose of hedging the price of high-grade steel as well as due to a hedging contract relating to raw materials.
Within this context, it should be noted that earnings for the second quarter of 2007 had included non-recurring income from an insurance payout in connection with fire damage of EUR 4.7 million for the fire at one of the company's operating facilities and additional income from the sale of a raw materials hedge. In the second quarter of 2008, the company accorded one-time income of EUR 0.8 million from insurance payouts in connection with fire damage.
ElringKlinger increased EBITDA by 4.4% to EUR 87.5 (83.8) million in the first half-year of 2008. Adjusted for the non-recurring effects from insurance income, provisions for commodities hedging and added value from the Marusan acquisition, EBITDA rose by 7.4% to EUR 84.9 (79.1) million. In the second quarter of 2008, EBITDA grew slightly to EUR 47.0 (46.3) million. Adjusted for non-recurring effects, EBITDA expanded by 6.7% to EUR 44.5 (41.6) million.
EBIT fell by 2.7% to EUR 60.4 (62.1) million in the first six months of 2008. Excluding the non-recurring effects and purchase price allocations, EBIT grew by 2.9% to EUR 59.1 (57.4) million. In the second quarter, the ElringKlinger Group achieved EBIT of EUR 31.2 (35.1) million. Adjusted for the non-recurring effects outlined above, EBIT before purchase price allocation reached EUR 29.9 (30.4) million, having accounted for negative foreign currency effects equivalent to EUR 0.5 million. The adjusted operating result before purchase price allocation stood at EUR 30.4 million, which was comparable to the figure posted for the same period a year ago. Due mainly to external financing of corporate acquisitions, net finance costs grew by EUR 2.5 million to EUR 3.7 (1.2) million in the second quarter of 2008.
This led to a 6.9% decline in earnings before taxes for the first six months of 2008, down to EUR 55.6 (59.7) million. Excluding non-recurring effects and purchase price allocation, earnings before taxes were 1.3% down on the figure recoded in the same period a year ago. In the second quarter, earnings before taxes amounted to EUR 28.0 (33.9) million. Excluding non-recurring effects, earnings before taxes and purchase price allocation totaled EUR 26.7 (29.2) million.
As a result of the reduction in the tax rate to 28.4% (34.7%) consolidated net income after minority interests rose by 4.7% to EUR 38.1 (36.4) million in the first half of 2008. Adjusted for non-recurring effects and excluding the allocation of the cost of purchase, consolidated net income after minority interests (profit attributable to the shareholders of ElringKlinger AG) rose by 11.1% to EUR 37.2 (33.5) million. In the second quarter, consolidated net income after minority interests fell by 8.6% to EUR 19.2 (21.0) million. Excluding non-recurring effects and the allocation of the cost of purchase, consolidated net income after minority interests amounted to EUR 18.3 (18.1) million, which was 1.0% higher than in the same quarter a year ago.
Earnings per share accounted for on the basis of IFRS rose from EUR 0.63 to EUR 0.66 in the first six months. Adjusted for non-recurring effects, earnings per share before purchase price allocation stood at EUR 0.65 (0.58), up 11.1% on the figure posted for the same period a year ago. In the second quarter, earnings per share amounted to EUR 0.33 (0.37). Adjusted for non-recurring effects, earnings per share rose slightly to EUR 0.32 (0.31).
Double-figure growth in order intake In the first six months order intake increased by 9.0% to EUR 355.1 (325.8) million. In the second quarter, the volume of incoming orders expanded by 10.7% to EUR 190.0 (171.7) million. At the end of the second quarter order backlog stood at EUR 288.2 (224.0) million, which was 28.7% higher than the level recorded at June 30, 2007. This figure includes the order backlog of SEVEX for the second quarter of 2008.
Revenue and earnings growth for the annual period ElringKlinger is targeting organic sales growth of 5 to 7% for the 2008 financial year as a whole. This forecast is based on the assumption that what is currently a sluggish automobile industry is not faced with a significant deterioration in its economic outlook and that new ramp-ups are executed in line with forecasts in the second half of the year. Adjusted for non-recurring effects, net income after minority interests (i.e. profit attributable to the shareholders of ElringKlinger AG) is forecast to rise faster in relation to sales. In 2007, earnings had included one-time income of EUR 3.2 million after taxes from insurance payouts following the fire at one of ElringKlinger's operating facilities as well as non-recurring income of EUR 5.5 million from the revaluation of deferred taxes, prompted by the corporate tax reform in Germany.
This is supplemented by revenue and earnings attributable to ElringKlinger Marusan Corp. as well as the SEVEX Group, which will contribute to total sales and profit on a pro rata basis. To a large extent, the expense items relating to the allocation of the cost of purchase to the acquired order backlog, as required under IFRS, will no longer apply as from the fourth quarter.
end of announcement euro adhoc --------------------------------------------------------------------------------
Further inquiry note:
Stephan Haas
Telefon: +49(0)7123 724 137
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
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