EANS-Adhoc: ElringKlinger sales up 34% in first quarter of 2011
-------------------------------------------------------------------------------- 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. --------------------------------------------------------------------------------
3-month report
12.05.2011
Dettingen/Erms (Germany), May 12, 2011 +++ Benefiting from the sustained strength of car markets as well as new product rollouts, the ElringKlinger Group saw its sales revenue expand by 33.8% to EUR 244.5 (182.7) million in the first quarter of 2011. The recently acquired metal flat gaskets business from the Freudenberg Group was included in the consolidated group for the first time and contributed EUR 14.4 million in sales revenue. The Group's operating result rose by 39.7% to EUR 32.7 (23.4) million. ElringKlinger propelled net income after minority interests by 52.9% to EUR 20.8 (13.6) million.
The ElringKlinger Group recovered well from the adverse effects of the sales crisis previously blighting the international vehicle industry. Against the backdrop of expansive global car production and several new product rollouts, the Original Equipment segment in particular generated significant growth in the first quarter of 2011. The dynamic rise in demand was particularly evident in Asia, but also in the United States. In total, revenue from sales in the Original Equipment segment increased by 40.2% to EUR 191.2 (136.4) million and by 29.9% adjusted for the acquisition. Thus, ElringKlinger again outpaced global vehicle production in terms of percentage growth.
First-time contribution of metal flat gaskets business acquired from Freudenberg
The acquisition by ElringKlinger AG of Freudenberg Group´s metal flat gaskets business was closed effective from January 1, 2011, and the acquired entities were included in the scope of consolidation of the ElringKlinger Group as of the first quarter of 2011. In total, the three acquired companies contributed revenue of EUR 14.4 million to the consolidated sales of the ElringKlinger Group, primarily in the area of Original Equipment. The contribution made to earnings before taxes generated by the ElringKlinger Group was minus EUR 1.1 million and includes charges of EUR 0.2 million attributable to the purchase price allocation. As part of measures implemented for the purpose of restructuring and raising efficiency levels, the Group recorded non-recurring staff costs of EUR 0.8 million in the first quarter of 2011. The issue of cost savings and synergies is currently being addressed.
Operating profit rises faster than sales revenue
The Group's financial performance remained solid in the first quarter of 2011. Alongside measures implemented throughout the Group for the purpose of raising efficiency levels, higher capacity utilization had a positive effect on earnings. By contrast, the Group was faced with rising costs with regard to personnel and materials. Consequently, the cost of sales rose by 37.9% to EUR 177.7 (128.9) million. Having been brought forward by ElringKlinger from April to February 2011, the collective wage increase of 2.7% for the Group's German sites resulted in higher staff costs in the period under review. Provisions for the staff profit-sharing bonus of EUR 1,000 per employee for members of the ElringKlinger AG, ElringKlinger Kunststofftechnik GmbH and Elring Klinger Motortechnik GmbH workforce, as agreed for the financial year 2010, were recognized as early as the first quarter of 2011, and resulted in expenses of EUR 2.5 million in total.
The ElringKlinger Group increased its research and development costs by 11.1% to EUR 12.0 (10.8) million. Alongside R&D directed at several new applications for existing technologies, the Group focused in particular on expanding its activities in the new area of E-Mobility, which now employs 50 engineers and technicians. While this area incurred significant input costs, it has yet to generate tangible sales; the first revenue contributions are scheduled for the second half of the year.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were up EUR 11.6 million on last year's figure for the first quarter, taking the total to EUR 53.3 (41.7) million.
On the back of revenue growth and solid utilization of production capacities, the Group once again recorded a disproportionately high increase in its operating profit when compared to the rate of expansion in sales revenue in the first quarter of 2011. Operating profit rose by 39.7% or EUR 9.3 million to EUR 32.7 (23.4) million. As a result, the Group's operating margin stood at 13.4% in the period under review, despite a significant increase in material costs, the expenses associated with the staff profit-sharing bonus and the downward pressure exerted on earnings by the acquisition of the former Freudenberg division. Adjusted for the dilutive effects of the Freudenberg acquisition, ElringKlinger's core business achieved an operating margin of 14.7%.
Earnings before interest and taxes (EBIT), which in contrast to the operating result takes account of foreign exchange gains and losses - increased by 43.5% to EUR 32.0 (22.3) million, a figure that includes net foreign exchange losses of EUR 0.7 million. The EBIT-margin for the first quarter of 2011 thus came in at 13.1%. Adjusted for the dilutive effects from the acquisition it stood at 14.4%.
As a result of lower interest expenses, net finance costs improved to EUR 3.8 (4.5) million in the first quarter of 2011. Earnings before taxes thus rose by 52.9% to EUR 28.9 (18.9) million.
The ElringKlinger Group generated net income of EUR 21.4 million in the first quarter of 2011, compared to EUR 14.1 million in the same quarter a year ago. After minority interests of EUR 0.7 (0.5) million, profit attributable to the shareholders of ElringKlinger AG amounted to EUR 20.8 (13.6) million. Basic and diluted earnings per share - based on the higher figure of 63,359,990 shares outstanding after the seasoned equity offering of October 6, 2010 - stood at EUR 0.33 (0.24).
Positive outlook for business: order intake expands further
Order intake remained robust, rising by 29.9% to EUR 260.5 (200.5) million. As at March 31, 2011, order backlog stood at EUR 369.0 (260.0) million, up 41.9% on the figure recorded in the same period a year ago.
On the basis of a stable economic performance and the growth rates anticipated in the automotive markets, the ElringKlinger Group expects to generate organic revenue growth of between 5 and 7% in 2011. This will be complemented by a revenue contribution of approx. EUR 50 million from the consolidation of the Metal Flat Gaskets division acquired from the Freudenberg Group. Due to the fact that the divisional operating margin is still considerably lower than the average figure for the Group, the total operating margin in 2011 will be temporarily diluted by an estimated 0.6 to 0.8 percentage points. The objective is to gradually increase the operating margin of the newly acquired business to around 10% by the end of 2011 and to guide it towards that of the ElringKlinger Group in 2012 with the help of integration measures already initiated as well as extensive automation and an alignment of internal production processes.
Despite the aforementioned dilutive effects, start-up costs in the area of E-Mobility and the upward trend in commodity prices, Group EBIT is expected to rise by 15 to 25%, i.e. at a more pronounced rate than sales revenue targeted by the Group.
Closing of majority takeover of Swiss-based Hug Group
Acquisitions may produce additional revenue and earnings contributions. Following approval by the Federal Cartel Office, the transaction relating to the acquisition by ElringKlinger AG of a 66.7% interest in the Hug Group, a Swiss exhaust treatment specialist, was closed on May 11, 2011. The Hug Group expects to generate sales revenue of around CHF 60 million (approx. EUR 46 million) in its current financial year. ElringKlinger anticipates that the inclusion of the acquired entity in its consolidated group will take place effective from May 1, 2011, as a result of which Hug will contribute to the Group's revenue and earnings in 2011 on a pro-rata basis.
end of announcement euro adhoc --------------------------------------------------------------------------------
Contact:
ElringKlinger AG
Investor Relations / Corporate Communications
Stephan Haas
Max-Eyth-Straße 2
72581 Dettingen
Phone: +49 (0)7123-724-137
E-mail:stephan.haas@elringklinger.com
Branche: Automotive Equipment
ISIN: DE0007856023
WKN: 785602
Index: MDAX, CDAX, Classic All Share, Prime All Share
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