Quarterly Report • May 15, 2017
Quarterly Report
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Q2 FY2017
| Three months ended March 31, | ||||
|---|---|---|---|---|
| in € millions | 2017 | 2016 | CHANGE | % CHANGE |
| Revenue | 244.9 | 180.9 | 64.0 | 35.4% |
| EBIT | 33.3 | 21.8 | 11.5 | 52.8% |
| Adjusted EBIT | 38.4 | 25.0 | 13.4 | 53.6% |
| Profit for the period | 14.6 | 10.8 | 3.8 | 35.2% |
| Capital expenditure | (13.1) | (14.1) | 1.0 | (7.0)% |
| Free cash flow (FCF) | 15.3 | 17.0 | (1.7) | (10.0)% |
| EBIT as % of revenue | 13.6% | 12.1% | ||
| Adjusted EBIT as % of revenue | 15.7% | 13.8% | ||
| Profit in % of revenue | 6.0% | 6.0% | ||
| Capital expenditure as % of revenue | 5.4% | 7.8% | ||
| FCF in % of revenue | 6.2% | 9.4% |
| Six months ended March 31, | ||||
|---|---|---|---|---|
| in € millions | 2017 | 2016 | CHANGE | % CHANGE |
| Revenue | 455.5 | 348.2 | 107.3 | 30.8% |
| EBIT | 57.4 | 39.3 | 18.1 | 46.1% |
| Adjusted EBIT | 67.8 | 45.7 | 22.1 | 48.4% |
| Profit for the period | 44.4 | 24.4 | 20.0 | 82.0% |
| Capital expenditure | (22.6) | (27.6) | 5.0 | (18.0)% |
| Free cash flow (FCF) | 22.1 | 12.4 | 9.7 | 78.2% |
| EBIT as % of revenue | 12.6% | 11.3% | ||
| Adjusted EBIT as % of revenue | 14.9% | 13.1% | ||
| Profit in % of revenue | 9.7% | 7.0% | ||
| Capital expenditure as % of revenue | 5.0% | 7.9% | ||
| FCF in % of revenue | 4.9% | 3.6% | ||
T _ 001
22 5 Earnings per share
23 6 Property, plant and equipment
for the three and six months ended March 31, 2017
The table below sets out Stabilus Group's consolidated income statement for the second quarter of fiscal 2017 in comparison to the second quarter of fiscal 2016:
| 2017 | 2016 | Change | % change |
|---|---|---|---|
| 244.9 | 180.9 | 64.0 | 35.4% |
| (169.7) | (133.9) | (35.8) | 26.7% |
| 75.2 | 47.0 | 28.2 | 60.0% |
| (10.7) | (7.2) | (3.5) | 48.6% |
| (20.6) | (11.7) | (8.9) | 76.1% |
| (8.8) | (7.2) | (1.6) | 22.2% |
| 3.3 | 3.6 | (0.3) | (8.3%) |
| (5.0) | (2.8) | (2.2) | 78.6% |
| 33.3 | 21.8 | 11.5 | 52.8% |
| 0.1 | 0.1 | – | 0.0% |
| (11.3) | (5.6) | (5.7) | >100.0% |
| 22.1 | 16.3 | 5.8 | 35.6% |
| (7.5) | (5.5) | (2.0) | 36.4% |
| 14.6 | 10.8 | 3.8 | 35.2% |
| Three months ended March 31, |
Group's total revenue developed as follows:
| Revenue1) | 244.9 | 180.9 | 64.0 | 35.4% |
|---|---|---|---|---|
| Asia / Pacific and rest of world1) | 25.0 | 19.7 | 5.3 | 26.9% |
| NAFTA1) | 93.7 | 68.1 | 25.6 | 37.6% |
| Europe1) | 126.1 | 93.1 | 33.0 | 35.4% |
| IN € MILLIONS | 2017 | 2016 | Change | % change |
| Three months ended March 31, | ||||
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
| Three months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2017 | 2016 | Change | % change |
| Automotive Gas Spring | 91.5 | 80.9 | 10.6 | 13.1% |
| Automotive Powerise | 65.6 | 48.2 | 17.4 | 36.1% |
| Automotive business | 157.1 | 129.1 | 28.0 | 21.7% |
| Industrial / Capital Goods | 55.1 | 44.0 | 11.1 | 25.2% |
| Vibration & Velocity Control | 25.2 | – | 25.2 | n/a |
| Commercial Furniture | 7.5 | 7.8 | (0.3) | (3.8)% |
| Industrial business | 87.7 | 51.8 | 35.9 | 69.3% |
| Revenue | 244.9 | 180.9 | 64.0 | 35.4% |
Total revenue of €244.9 million in the second quarter of fiscal 2017 increased by 35.4% compared to the second quarter of fiscal 2016. The entities acquired in June 2016 (Hahn Gasfedern, ACE, Fabreeka and Tech Products) contributed €31.6 million to the Group's total revenue in the second quarter of fiscal 2017.
In the second quarter of fiscal 2017, revenue of our European entities increased by 35.4%. Revenue for Europe continues to benefit from the strong growth in the Powerise business. The entities acquired in June 2016 contributed €20.9 million to Europe's revenue in the second quarter of fiscal 2017.
NAFTA's revenue increased by 37.6% and, like Europe, continues to benefit from the strong growth in the Powerise business. ACE, Fabreeka andTech Products contributed €9.7 million to NAFTA's revenue in the second quarter of fiscal 2017. Approximately €3.1 million
of the revenue increase in NAFTA was due to the stronger US dollar, i.e. due to the currency translation of NAFTA's revenue from US dollar to euro (average rate per €1: \$1.07 in Q2 FY2017 versus \$1.10 in Q2 FY2016).
Revenue of our entities in Asia / Pacific and RoW increased by 26.9%. This is essentially due to new customer wins and increased production capacity in China. The entities acquired in June 2016 contributed €1.0 million to the revenue increase in Asia / Pacific and RoW.
Revenue in the Automotive business increased by €28.0 million or 21.7% to €157.1 million (Q2 FY2016: €129.1 million). This is particularly due to our Powerise business. The increase in the Powerise business by 36.1% is mainly the result of new OEM platform wins and the subsequent launch of new Powerise programs for a number of key vehicle OEMs. In addition, the share of end customers
4
(buyers of new vehicles) opting for this extra equipment continues to rise as well.
Revenue in the Industrial business increased by €35.9 million or 69.3% to €87.7 million (Q2 FY2016: €51.8 million) in the three months ended March 31, 2017. This is especially due to the acquisition in June 2016. ACE, Fabreeka and Tech Products form the new business unit Vibration & Velocity Control with €25.2 million revenue in Q2 FY2017 and Hahn Gasfedern is integrated into the business unit Industrial / Capital Goods and contributes €6.4 million revenue.
Commercial Furniture (formerly: Swivel Chair) revenue decreased by 3.8% from €7.8 million in the second quarter of fiscal 2016 to €7.5 million in the second quarter of fiscal 2017.
Cost of sales increased from €(133.9) million in the three months ended March 31, 2016 by 26.7% to €(169.7) million in the three months ended March 31, 2017 as a consequence of increased revenues.
The cost of sales as a percentage of revenue decreased to 69.3% (PY: 74.0%) and the gross profit margin improved to 30.7% (PY: 26.0%). This is due to a better fixed cost absorption (economies of scale especially from continuing growth of our Powerise business) and a stronger gross profit margin of the companies acquired in June 2016.
The companies acquired in June 2016 are active in the industrial market and offer custom-made products with small lot sizes combined with short lead times. This market approach provides the mentioned stronger gross profit margins to Stabilus. On the other hand this approach drives higher overhead cost and necessitates a different manufacturing approach, relative to the Automotive business Stabilus is engaged in.
R&D expenses (net of R&D cost capitalization) increased strongly by 48.6% from €(7.2) million in the second quarter of fiscal 2016 to €(10.7) million in the second quarter of fiscal 2017 as a consequence of increased general R&D activities. As a percentage of revenue, R&D expenses increased by 40 basis points to 4.4% (PY:
4.0%). The capitalization of R&D expenses decreased from €(3.3) million in the second quarter of fiscal 2016 to €(2.8) million in the second quarter of fiscal 2017.
Selling expenses increased from €(11.7) million in the second quarter of fiscal 2016 by 76.1% to €(20.6) million in the second quarter of fiscal 2017, mainly due to the entities acquired in June 2016 which have higher selling expense to revenue ratios, compared to the old Stabilus companies. As a percentage of revenue, the selling expenses increased to 8.4% (Q2 FY2016: 6.5%).
Administrative expenses increased from €(7.2) million in the second quarter of fiscal 2016 by 22.2% to €(8.8) million in the second quarter of fiscal 2017 essentially due to the entities acquired in June 2016. As a percentage of revenue, administrative expenses decreased by 40 basis points to 3.6% (Q2 FY2016: 4.0%).
Other income decreased from €3.6 million in the second quarter of fiscal 2016 by €0.3 million to €3.3 million in the second quarter of fiscal 2017. This mainly comprises foreign currency translation gains.
Other expenses increased from €(2.8) million in the second quarter of fiscal 2016 by €(2.2) million to €(5.0) million in the second quarter of fiscal 2017. This mainly comprises foreign currency translation losses.
Finance income is unchanged at €0.1 million in the second quarter of fiscal 2016 and in the second quarter of fiscal 2017.
Finance costs increased from €(5.6) million in the second quarter of fiscal 2016 to €(11.3) million in the second quarter of fiscal 2017. This is primarily due to higher net foreign exchange losses of €(8.4) million in the second quarter of FY2017 (Q2 FY2016: €(3.7) million) especially on euro loans of our US entities as a consequence of the weaker USD in the second quarter of fiscal 2017 (closing rate per €1: \$1.06 as at December 31, 2016 versus \$1.07 as at March 31, 2017). Besides intragroup loans €157.5 million of the euro term loan facility is borrowed by a US entity.
The interest expense on financial liabilities increased from €(1.7) million in the second quarter of fiscal 2016 to €(2.6) million in the second quarter of fiscal 2017. This increase is mainly due to increased financial liabilities following the acquisition in June 2016 and to a higher interest margin during the first nine months of the new term loan facility.
Income tax expense increased from €(5.5) million in the second quarter of fiscal 2016 to €(7.5) million in the second quarter of fiscal 2017 due to a pre-tax profit of €22.1 million in the second quarter of FY2017 compared to €16.3 million in the second quarter of FY2016.
The table below sets out Stabilus Group's consolidated income statement for the first half of fiscal 2017 in comparison to the first half of fiscal 2016:
| Six months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2017 | 2016 | Change | % change |
| Revenue | 455.5 | 348.2 | 107.3 | 30.8% |
| Cost of sales | (320.5) | (260.8) | (59.7) | 22.9% |
| Gross profit | 135.1 | 87.4 | 47.7 | 54.6% |
| Research and development expenses | (18.6) | (13.0) | (5.6) | 43.1% |
| Selling expenses | (40.6) | (22.9) | (17.7) | 77.3% |
| Administrative expenses | (17.8) | (13.8) | (4.0) | 29.0% |
| Other income | 7.2 | 6.1 | 1.1 | 18.0% |
| Other expenses | (7.9) | (4.5) | (3.4) | 75.6% |
| Profit from operating activities (EBIT) | 57.4 | 39.3 | 18.1 | 46.1% |
| Finance income | 12.0 | 0.5 | 11.5 | >100.0% |
| Finance costs | (5.7) | (3.7) | (2.0) | 54.1% |
| Profit / (loss) before income tax | 63.7 | 36.1 | 27.6 | 76.5% |
| Income tax income/ (expense) | (19.4) | (11.8) | (7.6) | 64.4% |
| Profit / (loss) for the period | 44.4 | 24.4 | 20.0 | 82.0% |
STABILUS
Group's total revenue developed as follows:
| Revenue1) | 455.5 | 348.2 | 107.3 | 30.8% |
|---|---|---|---|---|
| Asia / Pacific and rest of world1) | 51.8 | 39.3 | 12.5 | 31.8% |
| NAFTA1) | 175.3 | 135.3 | 40.0 | 29.6% |
| Europe1) | 228.4 | 173.6 | 54.8 | 31.6% |
| IN € MILLIONS | 2017 | 2016 | Change | % change |
| Six months ended March 31, |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
| Six months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2017 | 2016 | Change | % change |
| Automotive Gas Spring | 174.7 | 159.0 | 15.7 | 9.9% |
| Automotive Powerise | 119.0 | 90.7 | 28.3 | 31.2% |
| Automotive business | 293.7 | 249.7 | 44.0 | 17.6% |
| Industrial / Capital Goods | 100.9 | 83.7 | 17.2 | 20.5% |
| Vibration & Velocity Control | 46.6 | – | 46.6 | n/a |
| Commercial Furniture | 14.3 | 14.8 | (0.5) | (3.4)% |
| Industrial business | 161.9 | 98.5 | 63.4 | 64.4% |
| Revenue | 455.5 | 348.2 | 107.3 | 30.8% |
Total revenue of €455.5 million in the first half of fiscal 2017 increased by 30.8% compared to the first half of fiscal 2016. The entities acquired in June 2016 (Hahn Gasfedern, ACE, Fabreeka and Tech Products) contributed €58.2 million to the Group's total revenue in the first half of fiscal 2017.
In the first half of fiscal 2017, revenue of our European entities increased by 31.6%. Revenue for Europe continues to benefit from the strong growth in the Powerise business. The entities acquired in June 2016 contributed €37.6 million to Europe's revenue in the first half of fiscal 2017.
NAFTA's revenue increased by 29.6% and, like Europe, continues to benefit from the strong growth in the Powerise business. ACE, Fabreeka andTech Products contributed €18.4 million to NAFTA's revenue in the first half of fiscal 2017. Approximately €4.3 million of the revenue increase in NAFTA was due to the stronger US dollar, i.e. due to the currency translation of NAFTA's revenue from US dollar to euro (average rate per €1: \$1.07 in H1 FY2017 versus \$1.10 in H1 FY2016).
Revenue of our entities in Asia / Pacific and RoW increased by 31.8%. This is essentially due to new customer wins and increased production capacity in China. The entities acquired in June 2016 contributed €2.2 million to the revenue increase in Asia / Pacific and RoW.
Revenue in the Automotive business increased by €44.0 million or 17.6% to €293.7 million (H1 FY2016: €249.7 million). This is particularly due to our Powerise business. The increase in the Powerise business by 31.2% is mainly the result of new OEM platform wins and the subsequent launch of new Powerise programs for a number of key vehicle OEMs. In addition, the share of end customers (buyers of new vehicles) opting for this extra equipment continues to rise as well.
Revenue in the Industrial business increased by €63.4 million or 64.4% to €161.9 million (H1 FY2016: €98.5 million) in the six months ended March 31, 2017. This is especially due to the acquisition in June 2016. ACE, Fabreeka and Tech Products form the new business unit Vibration & Velocity Control with €46.6 million revenue in H1 FY2017. Hahn Gasfedern is integrated into the business unit Industrial / Capital Goods and contributes €11.6 million revenue.
Commercial Furniture (formerly: Swivel Chair) revenue decreased by 3.4% from €14.8 million in the first half of fiscal 2016 to €14.3 million in the first half of fiscal 2017.
Cost of sales increased from €(260.8) million in the six months ended March 31, 2016 by 22.9% to €(320.5) million in the six months ended March 31, 2017. Due to better fixed cost absorption (economies of scale especially from continuing growth of our Powerise business) and a stronger gross profit margin of the companies acquired in June 2016, cost of sales increased less than revenue. As a result, the gross profit margin improved to 29.7% (PY: 25.1%).
The companies acquired in June 2016 are active in the industrial market and offer custom-made products with small lot sizes combined with short lead times. This market approach provides stronger gross profit margins to Stabilus. On the other hand this approach drives higher overhead cost and necessitates a different manufacturing approach, relative to the Automotive business Stabilus is engaged in.
R&D expenses (net of R&D cost capitalization) increased strongly by 43.1% from €(13.0) million in the first half of fiscal 2016 to €(18.6) million in the first half of fiscal 2017. This is reflecting our increased general R&D activities. As a percentage of revenue, R&D expenses increased by 40 basis points to 4.1% (PY: 3.7%). The capitalization of R&D expenses decreased from €(6.9) million in the first half of fiscal 2016 to €(6.0) million in the first half of fiscal 2017.
Selling expenses increased from €(22.9) million in the first half of fiscal 2016 by 77.3% to €(40.6) million in the first half of fiscal 2017, mainly due to the entities acquired in June 2016 which have higher selling expense to revenue ratios, compared to the old Stabilus companies. As a percentage of revenue, the selling expenses increased to 8.9% (H1 FY2016: 6.6%).
Administrative expenses increased from €(13.8) million in the first half of fiscal 2016 by 29.0% to €(17.8) million in the first half of fiscal 2017 essentially due to the entities acquired in June 2016. As a percentage of revenue, administrative expenses decreased slightly by 10 basis points to 3.9% (FY2016: 4.0%).
Other income increased from €6.1 million in the first half of fiscal 2016 by €1.1 million to €7.2 million in the first half of fiscal 2017. This mainly comprises foreign currency translation gains.
Other expenses increased from €(4.5) million in the first half of fiscal 2016 by €(3.4) million to €(7.9) million in the first half of fiscal 2017. This mainly comprises foreign currency translation losses.
Finance income increased from €0.5 million in the first half of fiscal 2016 to €12.0 million in the first half of fiscal 2017 primarily due to higher net foreign exchange gains especially on euro loans of our US entities (closing rate per €1:\$1.12 as at September 30, 2016 versus \$1.07 as at March 31, 2017). Besides intragroup loans €157.5 million of the euro term loan facility is borrowed by a US entity.
Finance costs increased from €(3.7) million in the first half of fiscal 2016 to €(5.7) million in the first half of fiscal 2017. This increase is mainly due to increased financial liabilities following the acquisition in June 2016 and to a higher interest margin during the first nine months of the new term loan facility.
Driven essentially by the higher pre-tax profit of €63.7 million in the first half of FY2017 (H1 FY2016: €36.1 million) income tax expense increased from €(11.8) million in the first half of fiscal 2016 to €(19.4) million in the first half of fiscal 2017.
The following table shows a reconciliation of earnings before interest and taxes (EBIT) to adjusted EBIT for the second quarter and the first half of fiscal 2017 and 2016:
| Three months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2017 | 2016 | Change | % change |
| Profit from operating activities (EBIT) | 33.3 | 21.8 | 11.5 | 52.8% |
| PPA adjustments – depreciation and amortization | 5.1 | 3.1 | 2.0 | 64.5% |
| Adjusted EBIT | 38.4 | 25.0 | 13.4 | 53.6% |
| Six months ended March 31, | ||||
| IN € MILLIONS | 2017 | 2016 | Change | % change |
| Profit from operating activities (EBIT) | 57.4 | 39.3 | 18.1 | 46.1% |
|---|---|---|---|---|
| PPA adjustments – depreciation and amortization | 10.4 | 6.3 | 4.1 | 65.1% |
| Adjusted EBIT | 67.8 | 45.7 | 22.1 | 48.4% |
Adjusted EBIT is defined as EBIT, adjusted for non-recurring costs like severance, consulting, and restructuring cost as well as expenses for one-time legal disputes or launch costs for new products. Furthermore, the depreciation / amortization of fair value adjustments from purchase price allocations is adjusted.
In this period the definition of adjusted EBIT has been slightly modified as interest cost on pensions recognized in EBIT will not be adjusted out anymore. The presentation of prior periods has been changed accordingly, i.e. the adjusted EBIT reported in our interim report Q2 FY2016 was €0.3 million higher for the second quarter of fiscal 2016 and €0.6 million higher for the first half of fiscal 2016.
The PPA adjustments in the current year reflect the PPAs from June 2016 and April 2010 whereas the prior year figures only reflect the April 2010 PPA.
In the periods presented there have been no adjustments except for PPA adjustments.
Stabilus Group is organized and managed primarily on a regional level. The three reportable operating segments of the Group are Europe, NAFTA, Asia / Pacific and RoW.
The table below sets out the development of our operating segments for the second quarter and first half of fiscal 2017 and 2016.
| Three months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2017 | 2016 | Change | % change |
| Europe | ||||
| External revenue1) | 126.1 | 93.1 | 33.0 | 35.4% |
| Intersegment revenue1) | 8.5 | 6.5 | 2.0 | 30.8% |
| Total revenue1) | 134.6 | 99.6 | 35.0 | 35.1% |
| Adjusted EBIT | 19.5 | 13.2 | 6.3 | 47.7% |
| as % of total revenue | 14.5% | 13.3% | ||
| as % of external revenue | 15.5% | 14.2% | ||
| NAFTA | ||||
| External revenue1) | 93.7 | 68.1 | 25.6 | 37.6% |
| Intersegment revenue1) | 6.7 | 1.2 | 5.5 | >100.0% |
| Total revenue1) | 100.4 | 69.2 | 31.2 | 45.1% |
| Adjusted EBIT | 15.8 | 9.1 | 6.7 | 73.6% |
| as % of total revenue | 15.7% | 13.2% | ||
| as % of external revenue | 16.9% | 13.4% | ||
| Asia / Pacific and RoW | ||||
| External revenue1) | 25.0 | 19.7 | 5.3 | 26.9% |
| Intersegment revenue1) | 0.3 | 0.2 | 0.1 | 50.0% |
| Total revenue1) | 25.3 | 19.9 | 5.4 | 27.1% |
| Adjusted EBIT | 3.2 | 2.6 | 0.6 | 23.1% |
| as % of total revenue | 12.6% | 13.1% | ||
| as % of external revenue | 12.8% | 13.2% |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
| Six months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2017 | 2016 | Change | % change |
| Europe | ||||
| External revenue1) | 228.4 | 173.6 | 54.8 | 31.6% |
| Intersegment revenue1) | 15.6 | 12.9 | 2.7 | 20.9% |
| Total revenue1) | 244.0 | 186.5 | 57.5 | 30.8% |
| Adjusted EBIT | 31.6 | 23.3 | 8.3 | 35.6% |
| as % of total revenue | 13.0% | 12.5% | ||
| as % of external revenue | 13.8% | 13.4% | ||
| NAFTA | ||||
| External revenue1) | 175.3 | 135.3 | 40.0 | 29.6% |
| Intersegment revenue1) | 12.5 | 2.5 | 10.0 | >100.0% |
| Total revenue1) | 187.8 | 137.8 | 50.0 | 36.3% |
| Adjusted EBIT | 28.1 | 17.1 | 11.0 | 64.3% |
| as % of total revenue | 15.0% | 12.4% | ||
| as % of external revenue | 16.0% | 12.6% | ||
| Asia / Pacific and RoW | ||||
| External revenue1) | 51.8 | 39.3 | 12.5 | 31.8% |
| Intersegment revenue1) | 0.4 | 0.3 | 0.1 | 33.3% |
| Total revenue1) | 52.2 | 39.6 | 12.6 | 31.8% |
| Adjusted EBIT | 8.2 | 5.3 | 2.9 | 54.7% |
| as % of total revenue | 15.7% | 13.4% | ||
| as % of external revenue | 15.8% | 13.5% |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
The external revenue generated by our European companies increased by 31.6% from €173.6 million in the first half of fiscal 2016 to €228.4 million in the first half of fiscal 2017. A key portion of the revenue growth, i.e. €37.6 million out of the €54.8 million revenue increase was contributed by the entities acquired in June 2016. In particular, Hahn Gasfedern which is now integrated into our Industrial/Capital Goods business unit contributed €11.6 million and ACE, Fabreeka and Tech Products which form the new business unit Vibration & Velocity Control contributed €26.0 million to Europe's revenue in the first half of fiscal 2017. In addition, €9.4 million revenue increase was generated by our Powerise business. Adjusted EBIT of the European segment increased by 35.6%. As a result, the adjusted EBIT margin, i.e. adjusted EBIT in percent of external revenue, increased by 40 basis points to 13.8% in the first half of fiscal 2017 (H1 FY2016: 13.4%).
The external revenue of our companies located in the NAFTA region increased from €135.3 million in the first half of fiscal 2016 by 29.6% to €175.3 million in the first half of fiscal 2017. An amount of €18.4 million out of the €40.0 million increase was generated by the acquired entities ACE, Fabreeka and Tech Products. €17.2 million were contributed by our Automotive Powerise business. Adjusted EBIT as percentage of external revenue increased in the first half of fiscal 2017 by 340 basis points to 16.0% (H1 FY2016: 12.6%).
In the first half of fiscal 2017, the external revenue of our companies in Asia / Pacific and RoW increased by €12.5 million or 31.8%. Our new Vibration & Velocity Control business unit contributed €2.2 million to the region`s revenue. Another €1.4 million was generated by our Automotive Powerise business. The adjusted EBIT in Asia / Pacific and RoW increased by €2.9 million or 54.7%.
| T _ 010 | |||
|---|---|---|---|
| March 31, 2017 | Sept 30, 2016 | Change | % change |
| 677.4 | 671.9 | 5.5 | 0.8% |
| 284.4 | 265.6 | 18.8 | 7.1% |
| 961.8 | 937.4 | 24.4 | 2.6% |
| 297.3 | 262.9 | 34.4 | 13.1% |
| 510.1 | 522.4 | (12.3) | (2.4)% |
| 154.4 | 152.1 | 2.3 | 1.5% |
| 664.5 | 674.5 | (10.0) | (1.5)% |
| 961.8 | 937.4 | 24.4 | 2.6% |
The Group's balance sheet total increased from €937.4 million as of September 30, 2016 by 2.6% to €961.8 million as of March 31, 2017.
Our non-current assets increased from €671.9 million as of September 30, 2016 by 0.8% or €5.5 million to €677.4 million as of March 31, 2017. This increase is due to ongoing capacity expansion projects, but also to foreign exchange rate related value adjustments, e.g. an increase in goodwill of €2.7 million. This increase was partly offset by a decrease of intangible assets amounting to €8.9 million which is mainly due to the ongoing amortization of intangible assets from the purchase price allocations in 2010 and 2016.
Current assets increased from €265.6 million as of September 30, 2016 by 7.1% or €18.8 million to €284.4 million as of March 31, 2017. This is essentially the consequence of an increase of trade accounts receivables of €19.0 million and inventories of €6.1 million that reflect our ongoing revenue growth. This increase was partly offset by a lower cash balance that is reflecting the prepayments of the term loan facility amounting to €12.5 million and the dividend payments of €12.4 million.
The Group's equity increased from €262.9 million as of September 30, 2016 by €34.4 million to €297.3 million as of March 31, 2017. This increase results mainly from the profit amounting to €44.4 million that has been generated in the first half of fiscal 2017 and from other comprehensive income of €2.4 million that primarily comprises unrealized actuarial gains on pensions (net of tax). In the second quarter of fiscal 2017 dividends amounting to €12.4 million were paid to our shareholders reducing equity.
Non-current liabilities decreased from €522.4 million as of September 30, 2016 by €12.3 million to €510.1 million as of March 31, 2017 mainly due to the decrease of the non-current financial liabilities that result from prepayments of the term loan facility amounting to €12.5 million. The pension liabilities decreased by €4.3 million as a consequence of an increased discount rate (1.35% as at September 30, 2016 versus 1.83% as at March 31, 2017) while the deferred tax liability increased by €6.7 million mainly due to the recognition of deferred taxes on foreign currency translation gains on intragroup and external loans.
Current liabilities increased from €152.1 million as of September 30, 2016 by €2.3 million or 1.5% to €154.4 million as of March 31, 2017. The decrease of trade accounts payables amounted to
€4.4 million or 5.5% and was more than offset by an increase of provisions amounting to €3.1 million (e.g. warranties driven by higher sales and employee-related cost reflecting the bonus accruals for the current fiscal year) and an increase of the current portion of the financial liabilities amounting to €2.5 million.
| Six months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2017 | 2016 | Change | % Change |
| Cash flow from operating activities | 44.6 | 39.9 | 4.7 | 11.9% |
| Cash flow from investing activities | (22.5) | (27.5) | 5.0 | (18.2)% |
| Cash flow from financing activities | (30.0) | (5.7) | (24.3) | >100.0% |
| Net increase / (decrease) in cash | (7.8) | 6.7 | (14.5) | <(100.0)% |
| Effect of movements in exchange rates on cash held | 0.8 | (0.1) | 0.9 | <(100.0)% |
| Cash as of beginning of the period | 75.0 | 39.5 | 35.5 | 89.9% |
| Cash as of end of the period | 68.0 | 46.1 | 21.9 | 47.5% |
Cash flow from operating activities increased from €39.9 million in the first half of fiscal 2016 by €4.7 million to €44.6 million in the first half of fiscal 2017. This increase is mainly due to the strong revenue growth and partly offset by higher net working capital as a consequence of the continuing growth.
Cash outflow for investing activities decreased from €(27.5) million in the first half of fiscal 2016 by €5.0 million to €(22.5) million in the first half of fiscal 2017 due to lower capital expenditure in the six months ended March 31, 2017.
The cash outflow from financing activities increased from €(5.7) million in the first half of fiscal 2016 by €(24.3) million to €(30.0) million in the first half of fiscal 2017. This essentially reflects the prepayments of €12.5 million of the term loan facility and the €12.4 million dividend payments made to our shareholders in February 2017.
In the past periods the Group used the following definition of free cash flow (FCF): Free cash flow (FCF) comprises IFRS cash flow statement items "cash flow from operating activities", "cash flow from investing activities" and "payments for interest" (net interest payments). Going forward FCF will be defined as the total cash flow from operating and investing activities.
Free cash flow (before interest payments) increased from €12.4 million in the first half of fiscal 2016 by €9.7 million to €22.1 million in the first half of fiscal 2017. The table below (T_012) sets out the composition of both FCF definitions.
| Six months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2017 | 2016 | Change | % Change |
| Cash flow from operating activities | 44.6 | 39.9 | 4.7 | 11.9% |
| Cash flow from investing activities | (22.5) | (27.5) | 5.0 | (18.2)% |
| Free cash flow (before interest payments) | 22.1 | 12.4 | 9.7 | 78.2% |
| Payments for interest | (4.7) | (2.9) | (1.8) | 62.1% |
| Free cash flow after interest payments | 17.4 | 9.5 | 7.9 | 83.2% |
We refer to the risk-related disclosures in the Group Management Report and in the audited Consolidated Financial Statements as of and for the fiscal year ended September 30, 2016.
As of May 12, 2017, there were no further events or developments that could have materially affected the measurement and presentation of Group's assets and liabilities as of March 31, 2017.
We confirm our revenue guidance for fiscal 2017 of approximately €865 million under the assumptions outlined in the Annual Report 2016 based on an average rate per 1€: \$1.15 or €880 million at 1€: \$1.10.
The positive development of the adjusted EBIT margin gives us confidence for the remaining months of this fiscal year and allows us to raise the adjusted EBIT margin range from 13% – 14% to 14% – 15%.
as of and for the three and six months ended March 31, 2017
for the three and six months ended March 31, 2017 (unaudited)
| Three months ended March 31, | Six months ended March 31, | ||||
|---|---|---|---|---|---|
| IN € THOUSANDS | NOTE | 2017 | 2016 | 2017 | 2016 |
| Revenue | 2 | 244,866 | 180,872 | 455,548 | 348,161 |
| Cost of sales | (169,706) | (133,852) | (320,466) | (260,771) | |
| Gross profit | 75,160 | 47,020 | 135,082 | 87,390 | |
| Research and development expenses | (10,742) | (7,183) | (18,640) | (12,976) | |
| Selling expenses | (20,647) | (11,682) | (40,581) | (22,924) | |
| Administrative expenses | (8,788) | (7,203) | (17,803) | (13,766) | |
| Other income | 3,325 | 3,636 | 7,193 | 6,051 | |
| Other expenses | (5,032) | (2,818) | (7,851) | (4,460) | |
| Profit from operating activities | 33,278 | 21,770 | 57,400 | 39,315 | |
| Finance income | 3 | 97 | 92 | 12,002 | 485 |
| Finance costs | 4 | (11,279) | (5,565) | (5,664) | (3,681) |
| Profit / (loss) before income tax | 22,096 | 16,297 | 63,738 | 36,119 | |
| Income tax income / (expense) | (7,541) | (5,475) | (19,365) | (11,750) | |
| Profit / (loss) for the period | 14,556 | 10,822 | 44,373 | 24,369 | |
| thereof attributable to non-controlling interests | 6 | 9 | 14 | 12 | |
| thereof attributable to shareholders of Stabilus | 14,550 | 10,813 | 44,359 | 24,357 | |
| Other comprehensive income / (expense) | |||||
| Foreign curreny translation difference 1) | 11 | 8,384 | 20 | (348) | (1,940) |
| Unrealised actuarial gains and losses 2) | 11 | (157) | (2,324) | 2,766 | (2,324) |
| Other comprehensive income / (expense), net of taxes |
8,226 | (2,304) | 2,418 | (4,264) | |
| Total comprehensive income / (expense) for the period |
22,782 | 8,518 | 46,791 | 20,105 | |
| thereof attributable to non-controlling interests | 6 | 9 | 14 | 12 | |
| thereof attributable to shareholders of Stabilus | 22,776 | 8,509 | 46,777 | 20,093 | |
| Earnings per share (in €): | |||||
| basic | 5 | 0.59 | 0.52 | 1.80 | 1.18 |
| diluted | 5 | 0.59 | 0.52 | 1.80 | 1.18 |
1) Item that may be reclassified ('recycled') to profit and loss at a future point in time when specific conditions are met.
2) Item that will not be reclassified to profit and loss.
as of March 31, 2017 (unaudited)
| Consolidated Statement of Financial Position | T _ 014 | ||
|---|---|---|---|
| IN € THOUSANDS | NOTE | March 31, 2017 | Sept 30, 2016 |
| Assets | |||
| Property, plant and equipment | 6 | 173,186 | 167,569 |
| Goodwill | 200,128 | 197,457 | |
| Other intangible assets | 7 | 286,916 | 295,815 |
| Other assets | 9 | 3,919 | 3,267 |
| Deferred tax assets | 13,265 | 7,743 | |
| Total non-current assets | 677,413 | 671,851 | |
| Inventories | 10 | 80,759 | 74,681 |
| Trade accounts receivable | 116,629 | 97,600 | |
| Current tax assets | 595 | 1,160 | |
| Other financial assets | 8 | 4,874 | 3,160 |
| Other assets | 9 | 13,532 | 13,923 |
| Cash and cash equivalents | 67,990 | 75,037 | |
| Total current assets | 284,380 | 265,561 | |
| Total assets | 961,793 | 937,412 | |
| IN € THOUSANDS | NOTE | March 31, 2017 | Sept 30, 2016 |
|---|---|---|---|
| Equity and liabilities | |||
| Issued capital | 247 | 247 | |
| Capital reserves | 225,848 | 225,848 | |
| Retained earnings | 104,544 | 72,535 | |
| Other reserves | 11 | (33,414) | (35,832) |
| Equity attributable to shareholders of Stabilus | 297,225 | 262,798 | |
| Non-controlling interests | 54 | 94 | |
| Total equity | 297,278 | 262,892 | |
| Financial liabilities | 12 | 381,590 | 396,095 |
| Other financial liabilities | 13 | 2,028 | 2,314 |
| Provisions | 14 | 4,488 | 3,781 |
| Pension plans and similar obligations | 15 | 54,395 | 58,738 |
| Deferred tax liabilities | 67,339 | 60,634 | |
| Other liabilities | 16 | 274 | 879 |
| Total non-current liabilities | 510,116 | 522,441 | |
| Trade accounts payable | 75,971 | 80,389 | |
| Financial liabilities | 12 | 7,500 | 5,000 |
| Other financial liabilities | 13 | 9,657 | 9,399 |
| Current tax liabilities | 10,682 | 10,904 | |
| Provisions | 14 | 33,984 | 30,898 |
| Other liabilities | 16 | 16,605 | 15,489 |
| Total current liabilities | 154,399 | 152,079 | |
| Total liabilities | 664,515 | 674,520 | |
| Total equity and liabilities | 961,793 | 937,412 | |
for the six months ended March 31, 2017 (unaudited)
| T _ 015 | |||||||
|---|---|---|---|---|---|---|---|
| NOTE | Issued capital |
Capital reserves |
Retained earnings |
Other reserves |
Equity attributable to shareholders of Stabilus |
Non controlling interests |
Total equity |
| 207 | 73,091 | 24,871 | (21,484) | 76,685 | 24 | 76,709 | |
| – | – | 24,357 | – | 24,357 | 12 | 24,369 | |
| 11 | – | – | – | (4,264) | (4,264) | – | (4,264) |
| – | – | 24,357 | (4,264) | 20,093 | 12 | 20,105 | |
| – | – | – | – | – | (78) | (78) | |
| 207 | 73,091 | 49,228 | (25,748) | 96,778 | (42) | 96,736 | |
| 247 | 225,848 | 72,535 | (35,832) | 262,798 | 94 | 262,892 | |
| – | – | 44,359 | – | 44,359 | 14 | 44,373 | |
| 11 | – | – | – | 2,418 | 2,418 | – | 2,418 |
| – | – | 44,359 | 2,418 | 46,777 | 14 | 46,791 | |
| – | – | (12,350) | – | (12,350) | (54) | (12,404) | |
| 247 | 225,848 | 104,544 | (33,414) | 297,225 | 54 | 297,278 | |
for the six months ended March 31, 2017 (unaudited)
| Consolidated Statement of Cash Flows | T _ 016 | ||
|---|---|---|---|
| Six months ended March 31, | |||
| IN € THOUSANDS | NOTE | 2017 | 2016 |
| Profit/ (loss) for the period | 44,373 | 24,369 | |
| Current income tax expense | 19,423 | 14,203 | |
| Deferred income tax expense | (58) | (2,453) | |
| Net finance result | 3/ 4 | (6,338) | 3,196 |
| Depreciation and amortization | 31,699 | 22,776 | |
| Other non-cash income and expenses | (2,938) | (10,312) | |
| Changes in inventories | (6,078) | (678) | |
| Changes in trade accounts receivable | (19,029) | (13,542) | |
| Changes in trade accounts payable | (4,418) | (3,163) | |
| Changes in other assets and liabilities | 1,170 | 6,966 | |
| Changes in provisions | 3,267 | 932 | |
| Changes in deferred tax assets and liabilities | 58 | 2,453 | |
| Income tax payments | 20 | (16,485) | (4,842) |
| Cash flow from operating activities | 44,647 | 39,905 | |
| Proceeds from disposal of property, plant and equipment | 104 | 123 | |
| Purchase of intangible assets | 7 | (5,647) | (6,498) |
| Purchase of property, plant and equipment | 6 | (16,984) | (21,093) |
| Cash flow from investing activities | (22,526) | (27,468) | |
| Payments for redemption of senior facilities | (12,500) | (2,500) | |
| Payments for finance leases | (314) | (271) | |
| Dividends paid | (12,350) | – | |
| Dividends paid to non-controlling interests | (54) | (78) | |
| Payments for interest | 20 | (4,744) | (2,870) |
| Cash flow from financing activities | (29,962) | (5,719) | |
| Net increase/ (decrease) in cash and cash equivalents | (7,841) | 6,718 | |
| Effect of movements in exchange rates on cash held | 794 | (90) | |
| Cash and cash equivalents as of beginning of the period | 75,037 | 39,473 | |
| Cash and cash equivalents as of end of the period | 67,990 | 46,101 |
as of and for the three and six months ended March 31, 2017
Stabilus S.A., Luxembourg, hereinafter also referred to as "Stabilus" or the "Company" is a public limited liability company (société anonyme) incorporated in Luxembourg and governed by Luxembourg law. The Company is registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés Luxembourg) under No. B0151589 and its registered office is located at 2, rue Albert Borschette, L-1246 Luxembourg, Grand Duchy of Luxembourg. The Company was founded under the name Servus HoldCo S.à r.l. on February 26, 2010.
The Company's fiscal year is from October 1 to September 30 of the following year (twelve-month period). The Consolidated Financial Statements of Stabilus S.A. include Stabilus and its subsidiaries (hereafter also referred to as "Stabilus Group" or the "Group").
The Stabilus Group is a leading manufacturer of gas springs and dampers, as well as electric tailgate opening and closing equipment. The products are used in a wide range of automotive and industrial applications, as well as in the furniture industry. Typically the products are used to support the lifting and lowering or dampening of movements. As world market leader for gas springs, the Group ships to all key vehicle manufacturers. Various Tier 1 suppliers of the global car industry as well as large technically focused distributors further diversify the Group's customer base.
The accompanying Condensed Interim Consolidated Financial Statements present the operations of Stabilus, Luxembourg, and its subsidiaries. The Company has prepared these statements under the going-concern assumption.
The Condensed Interim Consolidated Financial Statements as of and for the three and six months ended March 31, 2017 have been prepared in accordance with IAS 34 "Interim Financial Reporting"; they comply with the International Financial Reporting Standards (IFRS) as adopted by the European Union. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the financial position and performance of Stabilus Group since the last annual Consolidated Financial Statements as of and for the fiscal year ended September 30, 2016. These Interim Consolidated Financial Statements are condensed and do not include all information for full annual financial statements prepared in accordance with International Financial Reporting Standards and therefore should be read in connection with the Consolidated Financial Statements as of September 30, 2016.
The accounting policies adopted in the preparation of the Condensed Interim Consolidated Financial Statements are consistent with those followed in the preparation of the Group's annual financial statements for the fiscal year ended September 30, 2016.
These Condensed Interim Consolidated Financial Statements as of and for the three and six months ended March 31, 2017 comprise the Consolidated Statement of Comprehensive Income for the three and six months ended March 31, 2017, the Consolidated Statement of Financial Position as of March 31, 2017, the Consolidated Statement of Changes in Equity for the six months ended March 31, 2017, the Consolidated Statement of Cash Flows for the six months ended March 31, 2017 and explanatory Notes to the Condensed Interim Consolidated Financial Statements. The Condensed Interim Consolidated Financial Statements are prepared in euros (€) rounded to the nearest thousand. Due to rounding, numbers presented may not add up precisely to the totals provided.
The Condensed Interim Consolidated Financial Statements were authorized for issue by the Management Board on May 12, 2017.
The Group's revenue developed as follows:
| Three months ended March 31, | Six months ended March 31, | |||
|---|---|---|---|---|
| IN € THOUSANDS | 2017 | 2016 | 2017 | 2016 |
| Europe1) | 126,141 | 93,111 | 228,385 | 173,564 |
| NAFTA1) | 93,686 | 68,056 | 175,325 | 135,337 |
| Asia/Pacific and rest of world1) | 25,039 | 19,705 | 51,838 | 39,260 |
| Revenue1) | 244,866 | 180,872 | 455,548 | 348,161 |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
| Three months ended March 31, | Six months ended March 31, | ||||
|---|---|---|---|---|---|
| IN € THOUSANDS | 2017 | 2016 | 2017 | 2016 | |
| Automotive Gas Spring | 91,507 | 80,860 | 174,672 | 159,003 | |
| Automotive Powerise | 65,620 | 48,225 | 119,002 | 90,691 | |
| Automotive business | 157,127 | 129,085 | 293,674 | 249,694 | |
| Industrial / Capital Goods | 55,066 | 43,990 | 100,949 | 83,696 | |
| Vibration & Velocity Control | 25,175 | – | 46,597 | – | |
| Commercial Furniture | 7,498 | 7,797 | 14,328 | 14,771 | |
| Industrial business | 87,739 | 51,787 | 161,874 | 98,467 | |
| Revenue | 244,866 | 180,872 | 455,548 | 348,161 |
| Three months ended March 31, | Six months ended March 31, | ||||
|---|---|---|---|---|---|
| IN € THOUSANDS | 2017 | 2016 | 2017 | 2016 | |
| Interest income on loans and financial receivables | 20 | 11 | 75 | 19 | |
| Net foreign exchange gain | – | – | 11,796 | 336 | |
| Other interest income | 77 | 81 | 131 | 130 | |
| Finance income | 97 | 92 | 12,002 | 485 | |
| Three months ended March 31, | Six months ended March 31, | |||
|---|---|---|---|---|
| IN € THOUSANDS | 2017 | 2016 | 2017 | 2016 |
| Interest expenses on financial liabilities | (2,576) | (1,726) | (5,330) | (3,431) |
| Net foreign exchange loss | (8,435) | (3,687) | – | – |
| Interest expenses finance lease | (20) | (25) | (33) | (50) |
| Other interest expenses | (248) | (127) | (301) | (200) |
| Finance costs | (11,279) | (5,565) | (5,664) | (3,681) |
The weighted average number of shares used for the calculation of earnings per share in the six months ended March 31, 2017 and 2016 is set out in the following table.
| Weighted average number of shares | T _ 021 | ||||
|---|---|---|---|---|---|
| DATE | Number of days | Transaction | Change | Total shares | Total shares (time-weighted) |
| October 1, 2015 | 183 | – | – | 20,723,256 | 20,723,256 |
| March 31, 2016 | – | – | 20,723,256 | 20,723,256 | |
| October 1, 2016 | 182 | – | – | 24,700,000 | 24,700,000 |
| March 31, 2017 | – | – | 24,700,000 | 24,700,000 | |
The earnings per share for the six months ended March 31, 2017 and 2016 were as follows:
| Six months ended March 31, | ||
|---|---|---|
| 2017 | 2016 | |
| Profit / (loss) attributable to shareholders of Stabilus | 44,359 | 24,357 |
| Weighted average number of shares | 24,700,000 | 20,723,256 |
| Earnings per share (in €) | 1.80 | 1.18 |
Basic and diluted earnings per share are calculated by dividing the profit attributable to the shareholders of the Company by the weighted average number of shares outstanding.
Property, plant and equipment as of March 31, 2017 amounted to €173,186 thousand (Sept 30, 2016: €167,569 thousand). Additions to property, plant and equipment in the first six months of fiscal 2017 amounted to €16,406 thousand (H1 FY2016: €21,632 thousand).
Disposals occurred only in the ordinary course of business. The net value of disposed property, plant and equipment in the first six month of fiscal 2017 amounted to €119 thousand (H1 FY2016: €66 thousand).
The Group recognized impairment losses amounting to €261 thousand in the reporting period.
Other intangible assets as of March 31, 2017 amounted to €286,916 thousand (Sept 30, 2016: €295,815 thousand). Additions to intangible assets in the first six months of fiscal 2017 amounted to €5,647 thousand (H1 FY2016: 6,498 thousand) and mainly comprised capitalized development costs (less related customer contributions) of €5,003 thousand (H1 FY2016: €5,859 thousand). Borrowing costs capitalized in the first six months of fiscal 2017 amounted to €113 thousand (H1 FY2016: €126 thousand).
In the first six months of fiscal 2017 total amortization expenses on intangible assets amounted to €17,376 thousand (H1 FY2016: €10,418 thousand). The increase is mainly due to the amortization of intangible assets from business combinations. Amortization expenses on development costs include impairment losses of €1,665 thousand (H1 FY2016: €468 thousand) due to withdrawal of customers from the respective projects and change in expected benefits.
Significant disposals have not been recognized.
| March 31, 2017 | Sept 30, 2016 | |||||
|---|---|---|---|---|---|---|
| IN € THOUSANDS | Current | Non-current | Total | Current | Non-current | Total |
| Other miscellaneous | 4,874 | – | 4,874 | 3,160 | – | 3,160 |
| Other financial assets | 4,874 | – | 4,874 | 3,160 | – | 3,160 |
Other financial assets as of March 31, 2017 amounting to €4,874 thousand (Sept 30, 2016: €3,160 thousand) comprised only assets related to the sale of trade accounts receivable program.
| Other assets | T _ 024 | |||||
|---|---|---|---|---|---|---|
| March 31, 2017 | Sept 30, 2016 | |||||
| IN € THOUSANDS | Current | Non-current | Total | Current | Non-current | Total |
| VAT | 3,215 | – | 3,215 | 5,698 | – | 5,698 |
| Prepayments | 2,890 | 1,324 | 4,214 | 2,925 | 746 | 3,671 |
| Deferred charges | 4,783 | – | 4,783 | 3,178 | – | 3,178 |
| Other miscellaneous | 2,644 | 2,595 | 5,239 | 2,122 | 2,521 | 4,643 |
| Other assets | 13,532 | 3,919 | 17,451 | 13,923 | 3,267 | 17,190 |
Non-current prepayments comprise prepayments on property, plant and equipment.
| Inventories | T _ 025 | |
|---|---|---|
| IN € THOUSANDS | March 31, 2017 | Sept 30, 2016 |
| Raw materials and supplies | 40,900 | 38,076 |
| Finished products | 15,801 | 17,103 |
| Work in progress | 13,715 | 12,616 |
| Merchandise | 10,343 | 6,886 |
| Inventories | 80,759 | 74,681 |
The development of the Group's equity is presented in the Statement of Changes in Equity.
Other reserves comprise all foreign currency differences arising from the translation of the financial statements of foreign operations and unrealized actuarial gains and losses. The following table shows the changes in other reserves recognized in equity through other comprehensive income as well as the income tax recognized in equity through other comprehensive income:
| IN € THOUSANDS | Unrealized actuarial gains and losses |
Unrealized gains / (losses) from foreign currency translation |
Total |
|---|---|---|---|
| Balance as of Sept 30, 2015 | (8,717) | (12,767) | (21,484) |
| Before tax | (7,841) | (8,858) | (16,699) |
| Tax (expense) / benefit | 2,351 | – | 2,351 |
| Other comprehensive income / (expense), net of taxes | (5,490) | (8,858) | (14,348) |
| Non-controlling interest | – | – | – |
| Balance as of Sept 30, 2016 | (14,207) | (21,625) | (35,832) |
| Before tax | 3,817 | (348) | 3,469 |
| Tax (expense) / benefit | (1,051) | – | (1,051) |
| Other comprehensive income / (expense), net of taxes | 2,766 | (348) | 2,418 |
| Non-controlling interest | – | – | – |
| Balance as of March 31, 2017 | (11,442) | (21,972) | (33,414) |
1) See also Consolidated Statement of Comprehensive Income above.
The financial liabilities comprise the following items:
March 31, 2017 Sept 30, 2016 IN € THOUSANDS Current Non-current Total Current Non-current Total Senior facilities 7,500 381,590 389,090 5,000 396,095 401,095 Financial liabilities 7,500 381,590 389,090 5,000 396,095 401,095
The Group's liability under the term loan facility with an initial principal amount of €455.0 million was measured at amortized cost taking into consideration transaction costs. Next to the prepayments of €50.0 million on August 31, 2016 and of €10.0 million on December 31, 2016, another prepayment of €2.5 million was made on March 31, 2017 and reduced the outstanding principal amount to €392.5 million. The current portion of the financial liability reflects the expected next two semi-annual prepayments of €2.5 million on September 30, 2017 and of €5.0 on March 31, 2018.
As of March 31, 2017, the Group had no liability under the committed €70 million revolving credit facility.
| March 31, 2017 | Sept 30, 2016 | |||||
|---|---|---|---|---|---|---|
| IN € THOUSANDS | Current | Non-current | Total | Current | Non-current | Total |
| Liabilities to employees | 6,528 | – | 6,528 | 6,648 | – | 6,648 |
| Social security contribution | 2,821 | – | 2,821 | 2,440 | – | 2,440 |
| Finance lease obligation | 308 | 2,028 | 2,336 | 311 | 2,314 | 2,625 |
| Other financial liabilities | 9,657 | 2,028 | 11,685 | 9,399 | 2,314 | 11,713 |
The liabilities to employees mainly comprise outstanding salaries and wages. The finance lease obligation relates to leasing contracts for land and buildings for the production facility in Romania.
| Sept 30, 2016 | |||||
|---|---|---|---|---|---|
| Current | Non-current | Total | Current | Non-current | Total |
| 12 | 118 | 130 | – | 61 | 61 |
| – | 2,599 | 2,599 | 36 | 2,599 | 2,635 |
| 12,571 | – | 12,571 | 11,050 | – | 11,050 |
| 190 | 1,512 | 1,702 | 415 | 990 | 1,405 |
| 3,033 | – | 3,033 | 1,521 | – | 1,521 |
| 124 | – | 124 | 115 | – | 115 |
| 13,598 | – | 13,598 | 12,227 | – | 12,227 |
| 4,456 | 259 | 4,715 | 5,534 | 131 | 5,665 |
| 33,984 | 4,488 | 38,472 | 30,898 | 3,781 | 34,679 |
| March 31, 2017 |
The provision for environmental protection, in particular long-term bioremediation of the former Colmar US site, increased in the first six months of fiscal 2017 from €1,405 thousand to €1,702 thousand. This provision is to cover the contractor expense to finish the bioremediation program in the next years. Provision for warranties increased from €12,227 thousand as of September 30, 2016 to €13,598 thousand as of March 31, 2017 partially due to higher sales as well as the regional mix of these sales to provide for potential warranty cases.
The Group's liability for pension plans and similar obligations decreased from €58,738 thousand as of September 30, 2016 by €4,343 thousand to €54,395 thousand as of March 31, 2017. The decrease was mainly due to the higher discount rate (March 31, 2017: 1.83% versus September 30, 2016: 1.35%).
The following table sets out the breakdown of Group's other current and non-current liabilities:
| March 31, 2017 | Sept 30, 2016 | |||||
|---|---|---|---|---|---|---|
| IN € THOUSANDS | Current | Non-current | Total | Current | Non-current | Total |
| Advanced payments received | 2,433 | 274 | 2,707 | 1,353 | 879 | 2,232 |
| Vacation expenses | 5,365 | – | 5,365 | 3,329 | – | 3,329 |
| Other personnel-related expenses | 6,307 | – | 6,307 | 6,964 | – | 6,964 |
| Outstanding costs | 2,307 | – | 2,307 | 3,619 | – | 3,619 |
| Miscellaneous | 193 | – | 193 | 224 | – | 224 |
| Other liabilities | 16,605 | 274 | 16,879 | 15,489 | 879 | 16,368 |
Contingent liabilities are uncertainties for which the outcome has not been determined. If the outcome is probable and estimable, the liability is shown in the statement of financial position.
In regards to the potential contingent obligation in the EPA Colmar case, please refer to Note 25 in the Annual Report 2016.
A detailed description of the guarantees the Group has issued can be found in the 2016 Annual Report.
The nominal values of the other financial commitments as of March 31, 2017 are as follows:
| IN € THOUSANDS | March 31, 2017 | Sept 30, 2016 |
|---|---|---|
| Capital commitments for fixed and other intangible assets | 7,356 | 8,611 |
| Obligations under rental and leasing agreements | 23,924 | 23,785 |
| Total | 31,280 | 32,396 |
The following table shows the carrying amounts and fair values of the Group's financial instruments. The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
| Financial instruments | T _ 032 | ||||
|---|---|---|---|---|---|
| March 31, 2017 | Sept 30, 2016 | ||||
| IN € THOUSANDS | Measurement category acc. to IAS 39 |
Carrying amount |
Fair value | Carrying amount |
Fair value |
| Trade accounts receivables | LaR | 116,629 | 116,629 | 97,600 | 97,600 |
| Cash | LaR | 67,990 | 67,990 | 75,037 | 75,037 |
| Other financial assets | LaR | 4,874 | 4,874 | 3,160 | 3,160 |
| Total financial assets | 189,493 | 189,493 | 175,797 | 175,797 | |
| Financial liabilities | FLAC | 389,090 | 380,109 | 401,095 | 376,191 |
| Trade accounts payable | FLAC | 75,971 | 75,971 | 80,389 | 80,389 |
| Finance lease liabilities | – | 2,336 | 3,825 | 2,625 | 3,557 |
| Total financial liabilities | 467,397 | 459,905 | 484,109 | 460,137 | |
| Aggregated according to categories in IAS 39: | |||||
| Loans and receivables (LaR) | 189,493 | 189,493 | 175,797 | 175,797 | |
| Financial liabilities measured at amortized cost (FLAC) |
465,061 | 456,080 | 481,484 | 456,580 |
The following table provides an overview of the classification of financial instruments presented above in the fair value hierarchy, except for financial instruments with fair values corresponding to the carrying amounts (i.e. trade accounts receivable and payable, cash, other financial assets and finance lease liabilities).
1) Fair value measurement based on quoted prices (unadjusted) in active markets for these or identical instruments.
2) Fair value measurement based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3) Fair value measurement based on inputs that are not observable market data.
The fair value is the price that would be received to sell an asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used to estimate the fair values.
The determination of the fair value of the senior facilities is based on the discounted cash flow model where the projected cash flows are discounted to the valuation date using independently sourced market data.
The valuation technique used for the determination of the obligations under finance leases is the discounted cash flow method. The valuation model considers the present value of the expected payments, discounted using a risk-adjusted discount rate depending on the maturity of the payment. The expected payments are determined by considering contractual redemption payments and interest payments with the currently agreed interest rate. Significant unobservable inputs are the risk-adjusted discount rates, which range from 7.5% to 10.1%, and the forecast interest payments. Therefore, the fair value would change if the risk-adjusted discount rate or the interest rate changed.
All aspects of the Group's financial risk management objectives and policies are consistent with those disclosed in the Consolidated Financial Statements as of and for the fiscal year ended September 30, 2016.
The statement of cash flows is prepared in compliance with IAS 7. The statement of cash flows of the Stabilus Group shows the development of the cash flows from operating, investing and financing activities. Inflows and outflows from operating activities are presented in accordance with the indirect method and those from investing and financing activities by the direct method.
The cash funds reported in the statement of cash flows comprise all liquid funds, cash balances and cash at banks reported in the statement of financial position.
Interest payments in the first half of fiscal 2017 amounting to €(4,744) thousand (H1 FY2016: €(2,870) thousand) are taken into account in the cash outflows from financing activities. Income tax payments in the same period of €(16,485) thousand (H1 FY2016: €(4,842) thousand) are reflected in operating activities.
The Stabilus Group is organized and managed primarily on a regional level. The three reportable operating segments of the Group are Europe, NAFTA and Asia / Pacific including RoW. The product portfolio is largely similar in these three regional segments.
The Group measures the performance of its operating segments through a measure of segment profit or loss (key performance indicator) which is referred to as "adjusted EBIT". Adjusted EBIT is defined as EBIT, as adjusted by management primarily in relation to non-recurring costs like severance, consulting, restructuring cost as well as expenses for one-time legal disputes or launch costs for new products. Furthermore, the depreciation / amortization of fair value adjustments from purchase price allocations is adjusted.
Segment information for the six months ended March 31, 2017 and 2016 is as follows:
| Segment reporting | T _ 034 | |||||
|---|---|---|---|---|---|---|
| Europe | NAFTA | Asia / Pacific and RoW | ||||
| Six months ended March 31, | Six months ended March 31, | Six months ended March 31, | ||||
| IN € THOUSANDS | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
| External revenue1) | 228,384 | 173,564 | 175,325 | 135,337 | 51,838 | 39,260 |
| Intersegment revenue1) | 15,567 | 12,900 | 12,465 | 2,508 | 368 | 331 |
| Total revenue1) | 243,951 | 186,464 | 187,790 | 137,845 | 52,206 | 39,591 |
| Depreciation and amortization (incl. impairment losses) |
(16,789) | (11,201) | (6,364) | (3,240) | (2,385) | (1,996) |
| EBIT | 29,136 | 23,319 | 26,342 | 17,081 | 8,082 | 5,254 |
| Adjusted EBIT | 31,611 | 23,342 | 28,059 | 17,081 | 8,163 | 5,254 |
| Total segments | Other / Consolidation | Stabilus Group | ||||
| Six months ended March 31, | Six months ended March 31, | Six months ended March 31, | ||||
| IN € THOUSANDS | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
| External revenue1) | 455,548 | 348,161 | – | – | 455,548 | 348,161 |
| Intersegment revenue1) | 28,400 | 15,739 | (28,400) | (15,739) | – | – |
| Total revenue1) | 483,948 | 363,900 | (28,400) | (15,739) | 455,548 | 348,161 |
| Depreciation and amortization (incl. impairment losses) |
(25,539) | (16,437) | (6,160) | (6,339) | (31,699) | (22,776) |
| EBIT | 63,560 | 45,654 | (6,160) | (6,339) | 57,400 | 39,315 |
| Adjusted EBIT | 67,834 | 45,678 | – | – | 67,834 | 45,678 |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
The column "Other / Consolidation" includes the effects from the purchase price allocation for the April 2010 business combination. The effects from the purchase price allocation for the June 2016 business combination are included in the regions.
The following table sets out the reconciliation of the total segments' profit (adjusted EBIT) to profit before income tax.
| Six months ended March 31, | ||
|---|---|---|
| IN € THOUSANDS | 2017 | 2016 |
| Total segments' profit (adjusted EBIT) | 67,834 | 45,678 |
| Other / consolidation | – | – |
| Group adjusted EBIT | 67,834 | 45,678 |
| Adjustments to EBIT | (10,434) | (6,363) |
| Profit from operating activities (EBIT) | 57,400 | 39,315 |
| Finance income | 12,002 | 485 |
| Finance costs | (5,664) | (3,681) |
| Profit / (loss) before income tax | 63,738 | 36,119 |
The adjustments to EBIT in the periods presented only include the depreciation and amortization of the Group`s assets to fair value resulting from the April 2010 and June 2016 purchase price allocations (PPA). In this period the definition of adjusted EBIT has been slightly modified as interest cost on pensions recognized in EBIT will not be adjusted out anymore. The presentation of prior periods has been changed accordingly, i.e. the adjusted EBIT reported in our interim report Q2 FY2016 was €554 thousand higher for the first half of fiscal 2016.
In accordance with IAS 24, persons or entities that control or are controlled by the Stabilus Group shall be disclosed, unless they are included in the scope of consolidation as a consolidated entity.
The disclosure obligation under IAS 24 furthermore extends to transactions with persons who exercise a significant influence on the financial and business policies of the Stabilus Group, including close family members or interposed entrepreneurs. A significant influence on the financial and business policies of the Stabilus Group can hereby be based on a shareholding in Stabilus of 20% or more, a seat on the Stabilus Management Board or another key position.
Related parties of the Stabilus Group in accordance with IAS 24 primarily comprise the Stabilus Group management which holds an investment in the Company.
As of May 12, 2017, there were no further events or developments that could have materially affected the measurement and presentation of Group's assets and liabilities as of March 31, 2017.
To the best of our knowledge, and in accordance with the applicable accounting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the corporation, and the interim management report of the corporation includes a fair review of the development and performance of the business and the position of the corporation, together with a description of the principal opportunities and risks associated with the expected development of the corporation for the remaining months of the fiscal year.
Luxembourg, May 12, 2017
Management Board Dietmar Siemssen Mark Wilhelms Andreas Schröder Andreas Sievers
| DATE 1)2) | PUBLICATION / EVENT |
|---|---|
| May 15, 2017 | Publication of the second-quarter results for fiscal year 2017 (Interim Report Q2 FY17) |
| August 11, 2017 | Publication of the third-quarter results for fiscal year 2017 (Interim Report Q3 FY17) |
| November 27, 2017 | Publication of preliminary financial results for FY2017 |
| December 15, 2017 | Publication of full year results for fiscal year 2017 (Annual Report 2017) |
1) We cannot rule out changes of dates. We recommend checking them on our website in the Investor Relations / Financial Calendar section (www.ir.stabilus.com). 2) Please note that our fiscal year (FY) comprises a twelve-month period from October 1 until September 30 of the following calendar year, e.g. the fiscal year 2017 comprises a year ended September 30, 2017.
This interim report contains forward-looking statements that relate to the current plans, objectives, forecasts and estimates of the management of Stabilus S.A. These statements take into account only information that was available up to and including the date that this interim report was prepared. The management of Stabilus S.A. makes no guarantee that these forward-looking statements will prove to be right. The future development of Stabilus S.A. and its subsidiaries and the results that are actually achieved are subject to a variety of risks and uncertainties which could cause actual events or results to differ significantly from those reflected in the forward-looking statements. Many of these factors are beyond the control of Stabilus S.A. and its subsidiaries and therefore cannot be precisely predicted. Such factors include, but are not limited to, changes in economic conditions and the competitive situation, changes in the law, interest rate or exchange rate fluctuations, legal disputes and investigations, and the
availability of funds. These and other risks and uncertainties are set forth in the Group Management Report. However, other factors could also have an adverse effect on our business performance and results. Stabilus S.A. neither intends nor assumes any separate obligation to update forward-looking statements or to change these to reflect events or developments that occur after the publication of this interim report.
Certain numbers in this interim report have been rounded up or down. There may therefore be discrepancies between the actual totals of the individual amounts in the tables and the totals shown as well as between the numbers in the tables and the numbers given in the corresponding analyses in the text of the interim report. All percentage changes and key figures in the Group Management Report were calculated using the underlying data in millions of euros rounded to one decimal place (€ millions).
Further information including news, reports and publications can be found in the Investor Relations section of our website at www.ir.stabilus.com.
Phone: +352 286 770 21 Fax: +352 286 770 99 Email: [email protected]
Stabilus S.A. 2, rue Albert Borschette, L-1246 Luxembourg Grand Duchy of Luxembourg
Phone: +352 286 770 1 Fax: +352 286 770 99 Email: [email protected] Internet: www.stabilus.com
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