DGAP-Adhoc: ElringKlinger defies market weakness with revenue growth in first quarter

ElringKlinger AG / Key word(s): Interim Report

08.05.2013 07:51

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Dettingen/Erms (Germany), May 8, 2013 +++ The ElringKlinger Group managed
to drive consolidated revenue forward in the first quarter of 2013 despite
the marked slump witnessed throughout Europe's car markets. Sales revenue
increased by 1.1% to EUR 286.8 (283.8) million. At EUR 35.8 (37.3) million,
earnings before interest and taxes (EBIT) fell 4.0% short of the Group's
buoyant earnings performance recorded in the previous year. Net income
after non-controlling interests totaled EUR 23.8 (24.2) million.

Dynamic business in Asia compensates for downturn in Western Europe

Supported by new product ramp-ups and an increase in revenue from sales in
Asia in excess of 20 %, ElringKlinger managed to compensate for the more
than 10 % decline in car production figures over the course of the first
three months of 2013 in Western Europe. Including exports, the Group
generated almost half of its Original Equipment revenue in Asia as well as
North and South America in the first quarter.

Performance of acquired companies - Successful turnaround at exhaust
specialist Hug

Benefiting from the increase in sales, the restructuring measures already
implemented and the deployment of state-of-the-art production technology,
the Hug Group has seen a gradual improvement in its earnings performance.
While the first quarter of the previous year had produced a pre-tax loss of
EUR 2.0 million, earnings before taxes were already showing a steady
improvement over the course of 2012. In the first quarter of 2013, sales
revenue increased to EUR 11.0 (7.0) million, while earnings before taxes
improved year on year to EUR 1.0 million.

By contrast, the protracted malaise afflicting car markets in Western
Europe also took its toll on capacity utilization levels at the former
Freudenberg company ElringKlinger Meillor SAS, France. Whereas the earnings
contributions of the two former Freudenberg sites in Gelting (Germany) and
Settimo Torinese (Italy) were well within positive territory, the earnings
performance of ElringKlinger Meillor was negative. ElringKlinger is
currently implementing restructuring measures at this site for the purpose
of adapting capacity levels to persistently low demand within the market.
In this context, other liabilities of EUR 1.8 million were recognized as
early as the first quarter of 2013, which had a one-time impact on
earnings. At the same time, processes are being further automated and
small-scale serial production is being introduced for the aftermarket line
of business. In total, the former Freudenberg sites acquired in 2011
produced revenue of EUR 13.4 (13.7) million in the first quarter of 2013
and earnings before taxes of minus EUR 1.5 (0.2) million.

Slight contraction in EBIT

Earnings before interest, taxes, depreciation and amortization (EBITDA)
stood at EUR 54.3 (57.0) million. At EUR 18.5 (19.8) million,
depreciation/amortization was slightly lower in the first quarter of 2013.
The ongoing purchase price allocations relating to Hug Engineering AG and
the Hummel-Formen Group had a negative effect of EUR 0.6 (-0.6) million in
total. Despite the negative aggregate earnings contribution made by the
acquired entities and the significant up-front costs associated with the
E-Mobility division, the Group's operating result stood at EUR 33.3 (39.0)
million. This corresponds to a 14.6% decline compared to the figure
recorded in the same quarter a year ago. However, the operating result was
up considerably on the figure posted in the fourth quarter of 2012 (EUR
25.8 million). The staff profit-sharing bonus of EUR 1,300 (1,150) per
employee for members of the ElringKlinger AG, ElringKlinger
Kunststofftechnik GmbH and Elring Klinger Motortechnik GmbH workforce, as
agreed for the financial year 2012, has already been accounted for in other
liabilities and resulted in additional staff costs of EUR 3.7 (3.3) million
in the first quarter of 2013. While the non-recurring restructuring
expenses of EUR 1.8 million attributable to the French site in Nantiat had
an adverse effect on earnings, the transition to full consolidation of the
newly acquired Korean joint venture ElringKlinger Korea Co., Ltd, Changwon,
produced positive one-time income of EUR 1.4 million.

Earnings before interest and taxes, which in contrast to the operating
result include foreign exchange gains and losses, fell by 4.0% to EUR 35.8
(37.3) million. Foreign exchange gains of EUR 2.5 (-1.7) million had a
positive effect on Group EBIT in the first quarter of 2013. The as yet
negative impact on Group EBIT from contributions made by the acquired Hug
Group, Hummel-Formen Group and former Freudenberg companies was equivalent
to EUR 0.6 (-0.6) million in total. The EBIT margin was 12.5% (13.1%).
Adjusted for the dilutive effects attributable to the as yet less
profitable acquisitions, the EBIT margin within the Group's core business
would have reached 14.0%, despite the significant up-front costs associated
with E-Mobility.

Net finance costs down due to foreign exchange effects

Net finance costs were reined back by EUR 4.7 million year on year to EUR
0.3 (5.0) million, primarily as a result of significant foreign exchange
gains, but also due to lower market interest rates. In total, the Group
recorded foreign exchange gains of EUR 2.5 (-1.7) million. At EUR 33.0
(34.0) million, earnings before taxes were down 2.9% compared to the
previous year.

Net income remains stable year on year

Benefiting from a lower tax rate, the ElringKlinger Group was able to match
last year's first-quarter performance by again posting net income of EUR
24.6 (24.6) million in the first quarter of 2013. Net income attributable
to non-controlling interests rose to EUR 0.8 (0.4) million, primarily as a
result of the significant improvement in earnings contributed by Hug
Engineering AG, Switzerland. Correspondingly, net income attributable to
the shareholders of ElringKlinger AG fell by 1.7% to EUR 23.8 (24.2)
million.

Positive order intake

Incoming orders were up significantly compared to the fourth quarter of
2012, when order intake had totaled EUR 260.8 million. In the first three
months of 2013 order intake increased by 23.9% year on year to EUR 333.9
(269.4) million. As of March 31, 2013, order backlog for the ElringKlinger
Group stood at EUR 503.1 (434.0) million, up 15.9% on the figure recorded a
year before. Thus, the ElringKlinger Group is supported by a solid order
backlog when it comes to achieving sales growth targeted for the annual
period as a whole.

Forecast for the full year confirmed

The company confirms its forecast for the full year. For 2013 ElringKlinger
still expects global auto industry to rather stagnate or to see modest
growth at best. Against this backdrop the ElringKlinger Group plans to
increase sales revenue by 5 to 7% in 2013 in terms of organic growth.
Should global car production merely stagnate in 2013, revenue growth is
more likely to be positioned at the lower end of this range. The operating
margin attributable to ElringKlinger's core business will still be diluted
in 2013 as a result of the as yet below-average aggregated profit margins
of the acquired entities and the associated purchase price allocations.
However, the dilutive effects in 2013 are expected to be less pronounced
compared to the previous year. Additionally, the substantial up-front
expenses and start-up costs incurred in the E-Mobility division, which will
be working on several projects as they progress through the start-up phase
during the second half of the year, also have to be taken into account.
Despite these factors, however, ElringKlinger believes that it will be in a
position to expand its earnings before interest and taxes (EBIT), adjusted
for one-time charges, at a faster rate relative to revenue growth. Adjusted
EBIT for the financial year 2013 as a whole is expected to be in the range
from EUR 150 to 155 million (EUR 136.0 million in 2012).

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Language: English
Company: ElringKlinger AG
Max-Eyth-Straße 2
72581 Dettingen/Erms
Germany
Phone: 071 23 / 724-636
Fax: 071 23 / 724-459
E-mail: stephan.haas@elringklinger.de
Internet: www.elringklinger.de
ISIN: DE0007856023
WKN: 785602
Indices: MDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard), Stuttgart;
Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, München

End of Announcement DGAP News-Service

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