ElringKlinger AG — Earnings Release 2014

Nov 5, 2014

News Details

Corporate | 5 November 2014 07:42

ElringKlinger sustains strong revenue and earnings growth in third quarter of 2014

DGAP-News: ElringKlinger AG / Key word(s): 9-month figures/Quarter
Results

05.11.2014 / 07:42

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Dettingen/Erms, November 5, 2014 +++ The ElringKlinger Group recorded
another double-digit percentage increase in revenue in the third quarter of
2014. Group sales revenue rose by 13.9% to EUR 327.4 (287.5) million.
Earnings before interest and taxes (EBIT) improved by 7.6% to EUR 41.2
(38.3) million. Benefiting from foreign exchange gains, net income after
taxes and non-controlling interests grew at a faster rate than revenue in
the third quarter, up 44.0% to EUR 32.4 (22.5) million.

In the first nine months of 2014, revenue growth generated by the
ElringKlinger Group again exceeded the rate of expansion achieved by car
markets around the globe. This positive trend was fueled by robust demand
patterns in key sales markets of the United States and China as well as
an increase in the number of new vehicle registrations in Western Europe.
At the same time, ElringKlinger benefited from a number of new product
ramp-ups during the reporting period, complemented by structural growth in
many of its product groups.

Group revenue increased by 13.9% to EUR 985.0 (864.6) million in the first
nine months of 2014. Expressed in organic terms, i.e. without the effects
of consolidation and foreign exchange rates, revenue grew by 10.7% (8.5% in
the third quarter). In the third quarter, revenue also increased by 13.9%,
taking the figure to EUR 327.4 (287.5) million. Similar to the preceding
quarter, this included higher-than-average tooling revenue in preparation
for new lightweight engineering projects. The negative effect of
translating sales revenue into the Group currency - the euro - was
equivalent to EUR 13.3 million in the first nine months of 2014. By
contrast, at EUR 2.1 million, this effect was just within positive
territory in the third quarter.

Due to the retrospective application of IFRS 11 as regards the presentation
of comparative prior-year figures, the joint venture ElringKlinger Marusan
Corporation, Tokyo, Japan, was no longer accounted for on a proportionate
basis but rather in accordance with the equity method. As a result, the
Group revenue figure originally presented for the first nine months of 2013
was reduced to EUR 864.6 million (and by EUR 6.5 million to EUR 287.5
million in the third quarter), the difference being attributable to this
entity's revenue contribution (EUR 19.5 million) originally included at a
proportionate rate of 50%. Effective from the first quarter of 2014, the
entity was fully consolidated as a result of the assumption of control
effective from December 31, 2013, and accounted for in Group revenue with
its total revenue of EUR 35.4 million. The additional contribution to
revenue in the first nine months of 2014 thus amounted to EUR 17.7 million
(EUR 6.1 million in the third quarter). When determining organic revenue
growth, the joint venture was accounted for as if the entity had remained
subject to proportionate consolidation, as originally presented in 2013.

Further improvement in EBIT in third quarter

Despite a number of adverse factors, EBIT grew by 11.4% year on year to EUR
124.8 (112.0) million in the first nine months of 2014. In this context,
the full consolidation of ElringKlinger Marusan Corporation (dilutive
effect of around 0.2 percentage points on margin) as well as up-front and
start-up costs incurred in the new E-Mobility division (EBIT loss of EUR
6.0 million) and the decline in earnings contributed by the Brazilian
subsidiary exerted downward pressure.

In the third quarter of 2014, the Group achieved EBIT of EUR 41.2 (38.3)
million, thereby exceeding the figure for the same period a year ago by
7.6%. Supported by a positive performance in the company's core business,
the EBIT margin improved slightly compared with the preceding quarter, up
from 12.4% to 12.6%, despite the fact that earnings contributed by the Hug
Group in the third quarter, amounting to EUR 2.0 (2.3) million, failed to
reach the extremely high levels recorded in the first half. In the third
quarter, EBIT attributable to the E-Mobility division remained unchanged on
the previous quarter (EUR -1.9 million). Additionally, earnings generated
by the Brazilian subsidiary were down EUR 1.0 million on the previous
year's figure, having been adversely affected by the extremely poor
performance of Brazil's vehicle market. Before purchase price allocation,
adjusted EBIT for the third quarter was EUR 42.1 (38.6) million. The
adjusted EBIT margin before purchase price allocation stood at 12.9%.

For the purpose of improved comparability, as from January 1, 2014,
ElringKlinger no longer includes foreign exchange gains and losses, which
are mainly attributable to financing activities, in the financial indicator
EBIT. Thus, as is standard, EBIT corresponds to the operating result
reported in the income statement. Based on the former method of
calculation, EBIT would have amounted to EUR 48.0 (35.5) million in the
third quarter.

Net finance costs impacted by foreign exchange gains

Due to positive foreign exchange effects equivalent to EUR 8.0 (-2.3)
million, net finance costs fell sharply to EUR 1.0 (10.9) million in the
period from January to September 2014. The improvement was attributable
primarily to the appreciation of the US dollar and the Chinese renminbi
against the euro, as accounted for at the end of the reporting period. In
the third quarter of 2014, the Group recorded net finance income of EUR 3.7
million, as opposed to net finance costs of EUR 5.6 million for the same
period a year ago. The difference of EUR 0.7 million between the net
finance costs originally reported for the third quarter of 2013 (EUR 6.3
million) and the figure now disclosed for that period is due to the
earnings contribution made by ElringKlinger Marusan Corporation, which
until December 31, 2013, had been accounted for on the basis of
proportionate consolidation and, under the provisions of IFRS 11, has now
been consolidated retrospectively using the equity method. Correspondingly,
earnings before taxes rose by a disproportionately large amount in the
first nine months of 2014, up by 22.5% to EUR 123.8 (101.1) million. In the
third quarter, the ElringKlinger Group saw its earnings before taxes rise
by 37.3% to EUR 44.9 (32.7) million.

Net income after non-controlling interests grows by 44% in third quarter

The significant increase in earnings before taxes resulted in higher income
tax expenses for the Group. The Group's tax rate in the first nine months
remained largely unchanged at 25.0% (25.1%). Net income attributable to the
shareholders of ElringKlinger AG rose by 22.5% to EUR 88.8 (72.5) million.
In the third quarter of 2014, net income after non-controlling interests
exceeded the previous year's third-quarter figure by 44.0% and rose to EUR
32.4 (22.5) million.

On this basis, earnings per share amounted to EUR 1.40 (1.14) in the first
nine months. In the third quarter of 2014, earnings per share stood at EUR
0.51 (0.36).

Order backlog remains at record level, while order intake rises markedly

In the third quarter of 2014 order intake rose by 13.9% to EUR 330.3
(289.9) million compared with the same period a year ago. Thus, the
ElringKlinger Group is supported by a solid order backlog when it comes to
achieving revenue growth targeted for both 2014 and 2015. At the end of the
third quarter, order backlog amounted to EUR 651.9 (572.4) million, i.e.
13.9% up on the figure recorded for the same period a year ago. The Group
again exceeded its previous record of EUR 649.1 million achieved in the
preceding quarter.

Annual forecast confirmed - Revenue and earnings growth expected in FY 2014

ElringKlinger has confirmed its forecast for the annual period 2014 as a
whole. For 2014, ElringKlinger anticipates that production output in the
global car market will expand by 2 to 3%. Against this backdrop, the
ElringKlinger Group has forecast that - on the back of revenue totaling EUR
1,175.2 million in the 2013 financial year (ElringKlinger Marusan
Corporation included on a proportionate basis) - its revenue will grow by 5
to 7% organically in 2014, thus outpacing the market as a whole in terms of
percentage growth. The full consolidation of ElringKlinger Marusan
Corporation will additionally contribute around EUR 25 million to Group
revenue. Full inclusion of this lower-margin subsidiary within the Group's
scope of consolidation will have a dilutive effect on the Group EBIT margin
in 2014 (approx. -0.3 percentage points). By contrast, improved capacity
utilization with regard to the production of lightweight components for
trucks following the introduction of Euro VI as well as the anticipated
earnings contribution from organic revenue growth and the improved earnings
performance at Hug should help to raise the Group's aggregate profit margin
slightly in 2014. Adjusted for non-recurring items, EBIT is to rise to a
level of EUR 160 to 165 million.

Contact:
For further information, please contact:

ElringKlinger AG - Investor Relations/Corporate PR
Stephan Haas
Max-Eyth-Straße 2
72581 Dettingen/Erms
Tel.: +49 (0)7123-724-137
E-Mail: stephan.haas@elringklinger.com

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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 News DGAP News-Service

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