EANS-Adhoc: ElringKlinger records revenue growth of 27% in Q2 2011 -
Operating result contracts slightly related to acquisitions
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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.
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quarterly report
04.08.2011
Dettingen/Erms, August 4, 2011 +++ The ElringKlinger Group
increased consolidated sales by 30.0% to EUR 498.9 (383.7)
million in the first half of 2011. Within this context, the
continuing buoyancy in car demand, together with the Group's
strong presence in China and several new product launches, proved
beneficial. In the second quarter, the ElringKlinger Group saw
sales revenue increase by 26.6% to EUR 254.4 (201.0) million. The
flat gaskets business acquired from the Freudenberg Group and the
first-time consolidation of Swiss-based exhaust treatment
specialist Hug contributed EUR 20.7 million to sales revenue in
the second quarter. After taxes and minority interests, net
income rose by 15.5% to EUR 39.5 (34.2) million in the first half
of 2011. Following a strong period last year, the Group saw net
income decline by 8.7% to EUR 18.8 (20.6) million in the second
quarter of 2011. There were no changes compared to the
preliminary results announced on July 26, 2011.
Although global car production contracted slightly in the second
quarter compared to the first three months of 2011, the
ElringKlinger Group managed to generate further quarter-on-
quarter growth in revenue from Original Equipment sales to
vehicle manufacturers. Compared to the previous year, second-
quarter sales generated within the Original Equipment segment
rose by 19.8%, adjusted for acquisitions, which was well in
excess of the growth rate in global vehicle production. The
German market, as well as Asia and South America, generated above-
average growth.
First-time contribution by newly acquired Hug Group
Hug Group, a Swiss exhaust treatment specialist and manufacturer
of diesel particulate filters in which ElringKlinger acquired a
majority interest, was included fully in the scope of
consolidation of the ElringKlinger Group for the first time
effective from May 1, 2011. Hug contributed EUR 6.7 million to
Group sales in the second quarter of 2011. Owing to the purchase
price allocation of EUR 0.3 million and negative foreign exchange
effects, its contribution to earnings before taxes was minus EUR
0.8 million.
The flat gaskets business acquired from the Freudenberg Group
contributed EUR 14.0 million to sales revenue in the second
quarter of 2011 and minus EUR 0.6 million to earnings before
taxes. This figure includes the purchase price allocation of EUR
0.1 million as well as EUR 0.4 million in non-recurring staff
costs associated with the partial relocation of gasket production
in Germany to a French plant in close proximity to ElringKlinger
customers. ElringKlinger is currently implementing extensive
integration measures at the recently acquired businesses, with
the express purpose of bringing efficiency levels in line with
those achieved by the ElringKlinger Group. The Hug product
portfolio in particular, which includes diesel particulate
filters and exhaust abatement systems, already shows considerable
cross-selling potential to be leveraged via existing distribution
channels operated by the ElringKlinger Group.
Operating result recedes slightly in second quarter
The operating result improved by 14.6% in the first six months
2011, reaching EUR 66.0 (57.6) million. The Group's operating
result in the second quarter 2011 declined by 2.9% compared to
the buoyant second quarter of 2010, primarily as a result of the
lower margins currently generated by the newly acquired entities
and came in at EUR 33.3 (34.3) mn. The significantly lower gross
profit margins currently achieved by the new acquisitions exerted
downward pressure on the Group's gross profit margin, equivalent
to approx. 1.5 percentage points. Additionally, higher material
costs, substantial start-up costs attributable to the area of E-
Mobility and the introduction of extra production shifts required
in many areas of operation led to an increase in costs during the
second quarter of 2011 in particular. In parallel, the lower
proportion of revenue generated through aftermarket sales had a
dampening effect. Compared with the first quarter of 2011
(27.3%), however, the Group's gross profit margin nevertheless
rose to 27.9% in the second quarter. Selling expenses as well as
general and administrative expenses increased at a faster rate
than sales revenue in the second quarter, primarily as a result
of the acquisitions. Committed to expanding the area of E-
Mobility, the ElringKlinger Group increased the overall costs
associated with research and development by 16.2% to EUR 12.2
(10.5) million. In the second quarter of 2011, ElringKlinger
received government grants of EUR 0.6 (1.4) million for ongoing
development projects within this area.
The operating margin was 13.1% (17.0%). Adjusted for dilutive
effect on earnings associated with the acquisition of Freudenberg
and Hug operations, the operating margin of ElringKlinger's core
business was 14.6% in the second quarter of 2011.
Earnings before interest and taxes (EBIT), which includes foreign
exchange gains and losses, rose by 14.1% to EUR 61.5 (53.9)
million in the first half of 2011, having accounted for negative
foreign exchange effects of EUR 4.5 million. Second-quarter EBIT
was adversely affected by foreign exchange losses of EUR 3.7
million and thus stood at EUR 29.6 (31.6) million. On this basis,
the EBIT margin for the second quarter of 2011 stood at 11.6%;
adjusted for the dilutive effects of the newly consolidated
acquisitions, the EBIT margin was 13.1%.
Operating cash slightly negative in the second quarter
Influenced mainly by non-recurring factors, net cash from
operating activities fell to minus EUR 3.5 (29.4) million in the
second quarter. Among the key contributors to the year-on-year
decline in operating cash flow were inventories, receivables and
other assets, which rose significantly to EUR 48.3 (18.2)
million. Alongside substantial growth in sales revenue, tools
billed to customers, which in contrast to the year before are now
no longer capitalized, added EUR 5.7 million to inventories in
the period under review. With respect to the strong order intake
level and with the express purpose of exploiting the slight fall
in commodity prices towards the end of the second quarter stock
levels were expanded to a larger extent than in the first
quarter. In addition EUR 24.4 million was attributable to the
recognition of a claim against insurers for warranties that was
after payments of EUR 7.5 mn set off by a corresponding increase
in liabilities amounting to EUR 16.9 mn within net cash from
operating activities. In total there was no earnings effect. As
regards the upcoming quarters, ElringKlinger Group expects to
return to operating cash flow that is well within positive
territory.
Net finance costs totaled EUR 10.8 (10.1) million in the first
half of 2011. Earnings before taxes rose by 16.0% in the same
period to EUR 55.2 (47.6) million. The second quarter of 2011 was
impacted in particular by foreign exchange losses, as a result of
which net finance costs rose to 7.0 (5.6) million. As a result,
earnings before taxes contracted by 8.0% to EUR 26.3 (28.6)
million in the second quarter.
At 26.1% (24.9%), the income tax rate in the first half of 2011
was higher than in the same period a year ago. Against this
backdrop, net income after minority interests rose by 15.5% to
EUR 39.5 (34.2) million in the first half of 2011. After taxes
and minority interests of EUR 0.6 (1.0) million, net income for
the second quarter of 2011 totaled EUR 18.8 (20.6) million.
Earnings per share for the first six months of 2011 stood at EUR
0.62 (0.59), while earnings per share for the second quarter
amounted to EUR 0.30 (0.36).
Dynamic growth in order intake - Revenue forecast upgraded for
2011
The Group saw a further expansion in order intake during the
period under review. In the second quarter of 2011, incoming
orders again exceeded sales revenue by a significant margin,
rising by 22.1% to EUR 298.1 (244.1) million. Order backlog
(excluding Hug) reached EUR 412.7 (303.1) million at the end of
the second quarter, up 36.2% on the figure reported for the same
period a year ago.
Based on the record levels achieved in order intake, the
continued stability in terms of economic performance and the rate
of expansion predicted within the automotive markets, the
ElringKlinger Group currently expects to generate organic revenue
growth of 12 to 14% (previously 5 to 7%) in 2011. This will be
complemented by a revenue contribution of around EUR 50 million
from the consolidation of the metal flat gaskets business
acquired from the Freudenberg Group as well as a revenue
contribution of approx. EUR 30 million from the Swiss-based Hug
Group. As a result, Group sales revenue for fiscal 2011 is
expected to reach EUR 970 to 985 million.
The Group's operating margin will be diluted temporarily in 2011.
This is due primarily to the operating margins generated by the
recent acquisitions, which are as yet considerably lower than the
Group average, as well as the purchase price allocation. Despite
the temporary dilutive effects attributable to the acquisitions,
start-up costs for the expanding E-Mobility business and higher
commodity prices, Group EBIT is expected to rise by 15 to 25%
(previously 15 to 25%).
The full financial report of ElringKlinger AG for the second
quarter and first half of 2011 can be accessed at
www.elringklinger.com
Further inquiry note:
ElringKlinger AG
Investor Relations / Corporate Communications
Stephan Haas
Max-Eyth-Straße 2
72581 Dettingen
Fon: +49 (0)7123-724-137
E-Mail:stephan.haas@elringklinger.com
end of announcement euro adhoc
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issuer: ElringKlinger AG
Max-Eyth-Straße 2
D-72581 Dettingen/Erms
phone: +49(0)7123 724-0
FAX: +49(0)7123-7249000
mail: info@elringklinger.com
WWW: http://www.elringklinger.com
sector: Automotive Equipment
ISIN: DE0007856023
indexes: MDAX, CDAX, Classic All Share, Prime All Share
stockmarkets: regulated dealing/prime standard: Frankfurt, free trade: Berlin,
Düsseldorf, München, regulated dealing: Stuttgart
language: English