DGAP-Adhoc: ElringKlinger preliminary results point to revenue growth of 5% in third quarter despite foreign exchange losses

ElringKlinger AG / Key word(s): Preliminary Results/Quarter Results

25.10.2013 07:50

Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted
by DGAP - a company of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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Dettingen/Erms, October 25, 2013 +++ Despite the severe weakness
afflicting car markets throughout Western Europe, the ElringKlinger Group
managed to drive sales forward by 5.1% to EUR 294.0 (279.8) million in the
third quarter of 2013. The Group's forward momentum in revenue growth was
restricted to some extent by the effects of foreign currency translation,
with the euro appreciating against a number of currencies. Expanding by
5.8% to EUR 38.6 (36.5) million, ElringKlinger's operating result moved up
at a slightly faster pace compared to sales revenue. Earnings before
interest and taxes (EBIT), which - unlike the operating result - include
the effects of foreign exchange gains and losses, were adversely affected
by foreign exchange losses of EUR 3.5 million as well as a non-recurring
exceptional charge of EUR 1.5 million in the third quarter and stood at EUR
35.1 (36.0) million.

Adverse foreign exchange effects

Benefiting from new product launches, more dynamic business in North
America and continued buoyancy in demand for foreign vehicles in Asia,
ElringKlinger was able to compensate for the anemic condition of Western
European automotive markets. By contrast, the direction taken in particular
by the US dollar, the Brazilian real and several Asian currencies exerted
downward pressure on sales revenue within the context of foreign currency
translation. ElringKlinger generates around 40% of its sales revenue
outside the eurozone. If foreign exchange rates had remained unchanged,
sales revenue would have been up by 8.6% to EUR 303.8 million, i.e. at a
rate that is well in excess of growth achieved by the automotive markets.

Integration of Hug and Freudenberg bears fruit

Sales generated by exhaust specialist Hug, in which ElringKlinger now holds
an interest of 93.7%, rose to EUR 13.1 (7.2) million in the third quarter
2013, driven in particular by strong demand within the US retrofit market
for trucks and buses as well as new projects relating to inland shipping
and exhaust gas purification for stationary, gas-fired power plants.
Earnings before taxes rose from minus EUR 0.7 million to EUR 2.2 million.

Despite the continued weakness of the French automotive market and a
downturn in sales at the site operated by the former Freudenberg company
ElringKlinger Meillor SAS, Nantiat, earnings before taxes generated by the
former Freudenberg plants improved to EUR 0.9 (0.5) million, with revenue
stagnating at EUR 11.5 million.

Operating result up by 5.8% - EBIT restricted by foreign exchange effects

In the third quarter, the Group's operating result was influenced to some
extent by a non-recurring exceptional charge of EUR 1.5 million associated
with efforts to unlock new markets in the Aftermarket segment as well as
significant start-up costs in the area of E-Mobility, where several
large-scale projects are about to be taken forward to the serial production
level. Against this backdrop, ElringKlinger recorded an operating result of
EUR 38.6 (36.5) million, which corresponds to growth of 5.8%. On this
basis, the operating margin in the third quarter of 2013 edged up slightly
year on year to 13.1% (13.0%). Earnings before interest and taxes (EBIT),
which - unlike the operating result - include foreign exchange gains and
losses, were adversely affected by foreign exchange losses of EUR 3.5
(-0.5) million and stood at EUR 35.1 (36.0) million.

These transactional foreign exchange losses were the key factor behind the
year-on-year increase in net finance costs to EUR 6.3 (3.6) million. While
net interest expenses were scaled down to EUR 2.8 (3.1) million, the net
result of foreign exchange gains and losses was considerably weaker than in
the same quarter a year ago at minus EUR 3.5 (-0.5) million. Thus, at EUR
32.3 (33.0) million, earnings before taxes were slightly lower than in the
third quarter of 2012.

At 30.5% (26.0%), the income tax rate in the third quarter exceeded the
previous year's figure, as a result of which net income after
non-controlling interests contracted slightly to EUR 22.5 (23.3) million.
On this basis, earnings per share for the third quarter of 2013 amounted to
EUR 0.36 (0.37).

Order intake remains strong

The Group maintained its high level of order intake. Having already
expanded by 11.0% in the second quarter of 2013 compared to the same period
a year ago, incoming orders rose by 11.5% to EUR 298.2 (267.5) million in
the third quarter. As of September 30, 2013, the value of order backlog
stood at EUR 578.1 (472.8) million, up 22.3% on the equivalent figure for
the previous year.

Revenue and earnings growth also expected for the financial year as a whole

The Group anticipates that automobile production at a global level will
expand only slightly in the year as a whole. While the Western Europe car
market appears to have reached its nadir, there are as yet no clear signs
of a fundamental recovery. The Group's operating margin for 2013 will be
reduced to some extent by the as yet below-average aggregate profit margin
of the entities acquired from Freudenberg. However, the dilutive effects
are expected to be less pronounced compared to the previous year. At the
same time, the E-Mobility division is facing substantial up-front expenses
and start-up costs. Several serial production projects are scheduled to
commence within this area at the end of the year.

Against this background, the ElringKlinger Group plans to increase sales
revenue by 5 to 7% in 2013 in terms of organic growth. Consequently,
ElringKlinger anticipates that EBIT adjusted for non-recurring items will
grow at a more pronounced percentage rate compared to sales revenue in
2013, taking the estimated figure to between EUR 150 and 155 million (EUR
136.0 million in 2012). Looking forward to the remainder of the financial
year, revenue and EBIT growth may be positioned at the lower end of these
ranges if the euro continues to appreciate significantly against other
currencies that are of relevance to the Group.

The announcement of preliminary results for the third quarter 2013 will be
accompanied by a conference call today, October 25th, 2013, at 10:00 a.m.
CEST. The full announcement of the results for the third quarter and first
nine months 2013 is scheduled for November 6th, 2013.

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Language: English
Company: ElringKlinger AG
Max-Eyth-Straße 2
72581 Dettingen/Erms
Germany
Phone: 071 23 / 724-0
Fax: 071 23 / 724-9006
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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