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Kongsberg Automotive

Quarterly Report Apr 23, 2020

3648_rns_2020-04-23_13b9a741-615a-4e3d-b8c2-1d082341a01f.pdf

Quarterly Report

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First Quarter Report 2020

Highlights first quarter 2020 3
Group financials 4
Segment reporting 7
Interior7
Powertrain and Chassis8
Specialty Products 9
Condensed consolidated financial statements 10
Notes to the consolidated financial statements14
Alternative performance measures (APM) 19
Other company information 22

HIGHLIGHTS FIRST QUARTER 2020

  • Revenues were MEUR 262.1 in the first quarter, MEUR 44.4 (-14.5%) below the first quarter last year, including negative currency translation effects of MEUR 0.3.
  • Adjusted EBIT amounted to MEUR 7.8 in the first quarter, which was MEUR 13.7 below than in Q1 2019.
  • Lifetime revenues business wins in the first quarter amounted to MEUR 491.0 (MEUR 102.0 in annualized revenue).
  • The adjusted gearing ratio (NIBD/adj. EBITDA) increased to 3.5 from 3.0 compared to Q1 2019. Excluding the effect of the IFRS 16 it amounted to 3.0, a deterioration of 0.8 compared to last year's first quarter.

KEY FIGURES

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Revenues 262.1 306.5 262.1 306.5 1,160.9
EBITDA 19.4 32.1 19.4 32.1 110.4
in % revenues 7.4% 10.5% 7.4% 10.5% 9.5%
Adjusted EBIT1 7.8 21.5 7.8 21.5 70.9
in % revenues 3.0% 7.0% 3.0% 7.0% 6.1%
Operating profit / EBIT 7.4 20.3 7.4 20.3 62.4
in % revenues 2.8% 6.6% 2.8% 6.6% 5.4%
Net Profit / (Loss) (12.1) 13.8 (12.1) 13.8 28.8
NIBD / Adjusted EBITDA (LTM) 3.5 3.0 3.5 3.0 3.1
excluding IFRS 16 3.0 2.2 3.0 2.2 2.5
Equity ratio 28.7% 29.0% 28.7% 29.0% 30.6%
excluding IFRS 16 32.2% 32.6% 32.2% 32.6% 34.5%

1 Adjusted for restructuring costs (see section APM)

Adjusted EBIT MEUR and in % revenues

Operating Cash Flow MEUR

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

GROUP FINANCIALS

SELECTED FINANCIAL INFORMATION – PROFIT AND LOSS

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Revenues 262.1 306.5 262.1 306.5 1,160.9
OPEX (242.7) (274.4) (242.7) (274.4) (1,050.4)
EBITDA 19.4 32.1 19.4 32.1 110.4
in % revenues 7.4% 10.5% 7.4% 10.5% 9.5%
Depreciation, amortization
and impairment
(12.0) (11.9) (12.0) (11.9) (48.0)
Operating profit / EBIT 7.4 20.3 7.4 20.3 62.4
in % revenues 2.8% 6.6% 2.8% 6.6% 5.4%
Adjusted EBIT1 7.8 21.5 7.8 21.5 70.9
in % revenues 3.0% 7.0% 3.0% 7.0% 6.1%
Net financial items (17.4) (1.2) (17.4) (1.2) (18.9)
Profit / (loss) before taxes (10.0) 19.1 (10.0) 19.1 43.5
Income taxes (2.1) (5.2) (2.1) (5.2) (14.8)
Net profit / (loss) (12.1) 13.8 (12.1) 13.8 28.8

1 See section APM for the reconciliation

REVENUES

Revenues for the Group amounted to MEUR 262.1 in the first quarter of 2020, MEUR 44.4 (-14.5%) below Q1 2019, including negative currency translation effects of MEUR 0.3. The decline in revenue in the current quarter has impacted all operating segments: Interior, Powertrain & Chassis and Specialty Products.

In the Interior segment, which serves the passenger car end markets, revenues decreased by MEUR 5.0 (-6.5%) compared to the first quarter of 2019, despite positive currency translation effects of MEUR 0.4. In nominal values, Interior Comfort System products suffered from the bigger decline in revenues than Light Duty Cables.

In the Powertrain & Chassis segment, which serves the passenger car and commercial vehicle end markets, revenues decreased by MEUR 24.5 (-20.6%) compared to the same quarter in 2019, including negative currency translation effects of MEUR 0.7. The revenues in the heavy duty market declined by MEUR 11.6 in total, of which MEUR 7.7 was related to the revenues decline in the United States.

In the Specialty Products segment, which serves the passenger car, commercial vehicle end markets and general industrial customers, revenues decreased by MEUR 14.8 (-13.5%) compared to the same quarter in 2019 with no net currency translation effects.

ADJUSTED EBIT / EBIT

Adjusted EBIT for the Group was MEUR 7.8 in the first quarter 2020, a decrease of MEUR 13.7 compared to last year. This was mainly driven by the lower revenue levels due to the outbreak of COVID-19 in March 2019.

Including restructuring cost of MEUR 0.4, operating profit in Q1 2020 amounted to MEUR 7.4, compared to MEUR 20.3 in Q1 2019.

NET FINANCIAL ITEMS

Net financial items came to an expense of MEUR 17.4 in the first quarter of 2020, compared to an expense of MEUR 1.2 in the same period in 2019 (see Note 5).

The main driver for the significant negative changes in net financial items was the unfavorable development of the foreign currency gains/losses. The net currency loss of MEUR 12.2 contributed mainly to the increase in the financial expensesin the current quarter, compared to the net currency gain of MEUR 3.9 in Q1 2019. Any other financial items in Q1 2020 remained on the level comparable with Q1 2019.

PROFIT BEFORE TAX / NET PROFIT

Loss before tax amounted to MEUR 10.0 in the first quarter of 2020, a decrease of MEUR 29.1 compared to the profit in the same quarter of 2019. Net loss amounted to MEUR 12.1 as per Q1 2020, being a decline of MEUR 25.9 compared to the net profit of MEUR 13.8 in Q1 2019. Income tax expenses in Q1 2020 amounting to MEUR 2.0 are impacted by the valuation allowances on deferred tax assets at MEUR 6.3.

GROUP FINANCIALS

SELECTED FINANCIAL INFORMATION – CASH FLOW

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Cash flow
- Operating activities
18.8 (4.4) 18.8 (4.4) 51.4
Cash flow
- Investing activities
(13.0) (13.5) (13.0) (13.5) (63.3)
Cash flow
- Financing activities
(1.7) (11.2) (1.7) (11.2) (22.9)
Currency effects on cash (1.9) 2.5 (1.9) 2.5 0.7
Change in cash 2.2 (26.6) 2.2 (26.6) (34.0)
Cash as of beginning of period 25.2 59.2 25.2 59.2 59.2
Cash as of end of period 27.4 32.6 27.4 32.6 25.2
Of this, restricted cash 0.9 0.2 0.9 0.2 0.8

CASH FLOW FROM OPERATING ACTIVITIES

Cash from operating activities increased by MEUR 23.2 in comparison with the first quarter last year. The change in net working capital amounted to MEUR 3.0 compared to a change of MEUR (26.9) in Q1 2019.

Restructuring had a negative cash effect of MEUR 0.4 in first the quarter of 2020.

CASH FLOW USED IN INVESTING ACTIVITIES

Cash used by investing activities amounted to MEUR 13.0 in the first quarter of 2020. In addition, buildings were sold at MEUR 1.9. Investments continued to be made in capacity expansions to accommodate current and future business growth, along with some maintenance investments.

CASH FLOW FROM FINANCING ACTIVITIES

Cash flow used by financing activities was MEUR 1.7 in the first quarter, compared to MEUR 11.2 used in the same quarter last year. With the interest for the bond, revolving facility and other financial items being at comparable level, the main change compared to Q1 2019 is the net draw of revolving facility at MEUR 10.0.

Payments related to interests on bond in the first quarter of 2020 amounted to MEUR 6.9. Moreover, the total payments for interest on lease liabilities were equal to MEUR 1.3. In Q1 2020 the repayment of lease liabilities amounted to MEUR 3.1.

CHANGE IN CASH

Cash increased by MEUR 2.2 during the first quarter, resulting in a cash position of MEUR 27.4 at the end of the quarter, compared to the balance at the end of last year of MEUR 25.2.

LIQUIDITY RESERVE

The liquidity reserve was MEUR 56.6 at the end of the first quarter, compared to MEUR 64.4 at year-end 2019 (excluding restricted cash MEUR 0.9). The unutilized RCF as at March 31, 2020 amounted to MEUR 30.0.

On April 2, 2020, the RCF facility was increased by MEUR 20.0.

GROUP FINANCIALS

SELECTED FINANCIAL INFORMATION – FINANCIAL POSITION

(MEUR) 31.03.20 31.03.19 31.12.19
Non-current assets 516.5 504.0 531.5
Cash and cash equivalents 27.4 32.6 25.2
Other current assets 367.1 398.8 370.2
Total assets 911.0 935.4 927.0
Equity 261.4 271.5 282.9
Interest-bearing liabilities 390.7 373.8 386.5
Other liabilities 258.9 290.1 257.5
Total equity and liabilities 911.0 935.4 927.0
NIBD 363.3 341.2 361.3
Equity ratio 28.7% 29.0% 30.5%

ASSETS

Total assets were MEUR 911.0 at the end of the first quarter, a decrease of MEUR 15.9 from year-end 2019. The decrease of the value of total assets as of March 31, 2020 resulted mainly from the negative currency translation effects in the amount of MEUR 31.1.

EQUITY

Equity as of March 31, 2020 decreased by MEUR 21.6 (-7.6%) to MEUR 267.9 in comparison with December 31, 2019.

The net loss for the year of MEUR 12.1 contributed to the equity decrease. The other comprehensive income contributed another negative MEUR 9.9 to that decrease, the share-based compensation led to positive MEUR 0.4 equity increase.

The equity ratio decreased by 1.8 percentage points to 28.7%.

INTEREST BEARING LIABILITIES

Interest-bearing liabilities amounted to MEUR 390.7 comprising the issued bond of MEUR 275.0, netted by the capitalized fees of MEUR 5.6, IFRS 16 lease interest-bearing liabilities of MEUR 100.1 and MEUR 20.0 drawn under the revolving facility.

As at March 31, 2020, long-term interest-bearing debt amounted to MEUR 358.2 after netting of MEUR 5.6 capitalized arrangements fees.

NET INTEREST BEARING DEBT

At the end of the first quarter 2020, net interest-bearing debt amounted to MEUR 363.3, an increase of MEUR 2.0 compared to year-end 2019, mainly driven by the translation adjustments of the lease liabilities as of March 31, 2020.

INTERIOR

SEGMENT REPORTING

Interior is a global leader in the development, design and manufacture of seat comfort systems and mechanical and electro-mechanical light-duty motion controls to Tier 1 and OEM customers. The product range includes seat adjuster cables and other cabling systems, lumbar support and side bolsters, seat heating, ventilation and massage systems and head restraints.

Interior addresses the passenger car market, with particularly strong positions on premium car platforms in Europe and North America. The product penetration for products such as seat heating, seat ventilation and massage systems are especially high in medium to higher end cars, while headrests and light duty cables are found in all ranges of cars. Customers include all major European and North American car and seat manufacturers and most premium OEMs such as Adient, Magna, Faurecia, Lear, Jaguar, Land Rover, Audi, Volvo Cars, Daimler, BMW and Tesla.

KEY FIGURES

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Revenues 72.3 77.3 72.3 77.3 304.0
Adjusted EBITDA 3.0 5.6 3.0 5.6 23.8
in % revenues 4.1% 7.2% 4.1% 7.2% 7.8%
Adjusted EBIT (0.8) 2.1 (0.8) 2.1 10.3
in % revenues -1.1% 2.7% -1.1% 2.7% 3.4%
Restructuring (0.0) (0.0) (0.0) (0.0) (0.5)
Operating profit / EBIT (0.8) 2.1 (0.8) 2.1 9.8
in % revenues -1.1% 2.7% -1.1% 2.7% 3.2%
Investments (7.9) (5.8) (7.9) (5.8) (25.3)
Capital employed1 225.4 214.2 225.4 214.2 222.8

1 Includes PP&E, intangible assets, inventories, trade receivables and trade payables

FINANCIAL UPDATE

Revenues in interior decreased by MEUR 5.0 (-6.5%) compared to the first quarter 2019, despite positive currency translation effects of MEUR 0.4. Interior Comfort System suffered from the bigger decline in revenues than Light Duty Cables. With a significant share of the business in Europe, customer shutdowns in this region contributed the most to the unfavorable revenue development.

Adjusted EBIT was MEUR (0.8) in the first quarter, a decrease of MEUR 2.9 compared to the positive adjusted EBIT in Q1 last year. Beyond the fall through from lower revenues, ICS was impacted by extraordinary ramp-up costs for the new plant in China and higher fixed cost from increased depreciation.

It should also be noted that Chinese legislation led to full payment of salaries and wages in China during the corona virus related shutdown period.

COMMERCIAL AND OPERATIONAL UPDATE

The business wins for the first quarter amounted to MEUR 128.0 in lifetime revenue for the Interior segment (MEUR 21.0 in annualized revenue).

Within the quarter, Interior was awarded a contract to supply seat support systems to a major premium European car maker. The program totals MEUR 4.0 in expected annualized revenues and MEUR 34.0 in expected lifetime revenues with start of production in 2022.

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020

POWERTRAIN AND CHASSIS

SEGMENT REPORTING

Powertrain & Chassis is a global Tier 1 supplier of driver control and driveline products into the passenger and commercial vehicle automotive markets. The portfolio includes custom-engineered cable controls and complete shift systems, clutch actuation systems, vehicle dynamics, shift cables and shift towers for transmissions.

Powertrain & Chassis serves the passenger car and the commercial vehicle markets, with particularly strong positions in Europe and the Americas. With a global footprint, Powertrain & Chassis is able to support customers worldwide. Key customers include Ford, General Motors, FCA, Volvo, Scania, DAF, John Deere, PSA, Renault-Nissan and Geely.

KEY FIGURES

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Revenues 94.4 119.0 94.4 119.0 461.1
Adjusted EBITDA 3.4 7.9 3.4 7.9 38.1
in % revenues 3.6% 6.6% 3.6% 6.6% 8.3%
Adjusted EBIT (1.4) 2.9 (1.4) 2.9 19.0
in % revenues -1.4% 2.4% -1.4% 2.4% 4.1%
Restructuring (0.1) 0.1 (0.1) 0.1 (0.2)
Operating profit / EBIT (1.4) 2.9 (1.4) 2.9 18.7
in % revenues -1.5% 2.5% -1.5% 2.5% 4.1%
Investments (4.2) (6.8) (4.2) (6.8) (22.8)
Capital employed1 214.2 226.6 214.2 226.6 221.1

1 Includes PP&E, intangible assets, inventories, trade receivables and trade payables

FINANCIAL UPDATE

Revenues in Powertrain & Chassis decreased by MEUR 24.5 (-20.6%) to 94.4 MEUR in the first quarter 2020 compared to the same quarter in 2019, including negative currency translation effects of MEUR 0.7. The revenues in the heavy-duty market declined by MEUR 11.6 in total, of which MEUR 7.7 was related to the revenues decline in the United States. Similar to Interior, P&C saw the largest revenue decline in Europe due to plant shutdowns at our major customers.

Adjusted EBIT was (1.4) MEUR in the first quarter 2020, a decrease of 4.2 MEUR compared to the positive adjusted EBIT in Q1 of last year.

The adj. EBIT fall through was moderate due to a combination of better operational performance and stronger revenue declines or the lower margin products. Q1 2019 was negatively impacted by launch issues which did not occur this year.

It should also be noted that Chinese legislation led to full payment of salaries and wages in China during the corona virus related shutdown period.

COMMERCIAL AND OPERATIONAL UPDATE

Business wins amounted to MEUR 275.0 lifetime revenue (MEUR 55.0 in annualized revenue) in the first quarter 2020.

New Business Wins included a heavy-duty truck Gear Shift System project to a North American tier 1 supplier with expected annualized revenues of MEUR 35.0 or MEUR 175.0 in expected lifetime revenues.

SPECIALTY PRODUCTS

SEGMENT REPORTING

Specialty Products designs and manufactures fluid handling systems for both the automotive and commercial vehicle markets, couplings systems for compressed-air circuits in heavyduty vehicles, operator control systems for power sports construction, agriculture, outdoor power equipment and power electronics-based products.

Key customers include Volvo Trucks/Group, Scania, Navistar, Paccar/DAF, Ford, Jaguar Land Rover, Club Car, John Deere, CAT, Husqvarna, CNH and BRP and several Tier 1 customers in addition to an industrial customer base.

KEY FIGURES

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Revenues 95.4 110.2 95.4 110.2 395.7
Adjusted EBITDA 17.8 22.2 17.8 22.2 70.5
in % revenues 18.7% 20.1% 18.7% 20.1% 17.8%
Adjusted EBIT 15.1 19.4 15.1 19.4 58.8
in % revenues 15.8% 17.6% 15.8% 17.6% 14.9%
Restructuring 0.1 0.2 0.1 0.2 (2.1)
Operating profit / EBIT 15.1 19.6 15.1 19.6 56.8
in % revenues 15.8% 17.8% 15.8% 17.8% 14.3%
Investments (3.5) (1.8) (3.5) (1.8) (16.7)
Capital employed1 243.1 217.3 243.1 217.3 228.8

1 Includes PP&E, intangible assets, inventories, trade receivables and trade payables

FINANCIAL UPDATE

Revenues in Specialty Products decreased by MEUR 14.8 (13.4%) compared to the first quarter of 2019, with no net currency translation effects. Couplings had the most significant revenue declines in this segment driven by corona virus related OEM declines combined with a very good revenue quarter in Q1 2019.

Adjusted EBIT was 15.1 MEUR in the first quarter, a decrease of 4.4 MEUR compared to last year. The YoY decline in Adj. EBIT was in line with the expected fall through caused by the overall revenue decline.

COMMERCIAL AND OPERATIONAL UPDATE

During the first quarter 2020, total business wins amounted to MEUR 88.0 in lifetime revenue (MEUR 25.0 in annualized revenue).

The wins include fluid transfer systems to a premium European OEM. This program accounts for approximately MEUR 3.0 in annualized revenues, or MEUR 32.0 in expected lifetime revenues as the program length is approximately ten years.

Adjusted EBIT MEUR and in % rev enues

STATEMENT OF COMPREHENSIVE INCOME

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Revenues 262.1 306.5 262.1 306.5 1,160.9
OPEX (242.7) (274.4) (242.7) (274.4) (1,050.4)
EBITDA 19.4 32.1 19.4 32.1 110.4
in % revenues 7.4% 10.5% 7.4% 10.5% 9.5%
Depreciation, amortization and impairment (12.0) (11.9) (12.0) (11.9) (48.0)
Operating profit / EBIT 7.4 20.3 7.4 20.3 62.4
in % revenues 2.8% 6.6% 2.8% 6.6% 5.4%
Adjusted EBIT1 7.8 21.5 7.8 21.5 70.9
in % revenues 3.0% 7.0% 3.0% 7.0% 6.1%
Net financial items (17.4) (1.2) (17.4) (1.2) (18.9)
Profit / (loss) before taxes (10.0) 19.1 (10.0) 19.1 43.5
Income taxes (2.1) (5.2) (2.1) (5.2) (14.8)
Net profit / (loss) (12.1) 13.8 (12.1) 13.8 28.8
Other comprehensive income (items that
may be reclassified to profit or loss in
subsequent periods):
- - - - -
Translation differences on foreign
operations
69.9 (9.8) 69.9 (9.8) (0.8)
Tax on translation differences (9.2) 0.6 (9.2) 0.6 (0.6)
Other comprehensive income (items that
will not be reclassified to profit or loss in
subsequent periods):
Translation differences on non-foreign
operations
(70.6) 13.1 (70.6) 13.1 3.7
Remeasurement of net pension benefit
obligation
0.0 0.0 0.0 0.0 (3.3)
Tax on net pension benefit obligation
remeasurement
0.0 0.0 0.0 0.0 0.2
Other comprehensive income (9.9) 3.9 (9.9) 3.9 (0.8)
Total comprehensive income (22.0) 17.7 (22.0) 17.7 28.0
Net profit attributable to:
Equity holders (parent company) (12.1) 13.8 (12.1) 13.8 28.6
Non-controlling interests 0.0 (0.0) 0.0 (0.0) 0.2
Total (12.1) 13.8 (12.1) 13.8 28.9
Total comprehensive income attributable to:
Equity holders (parent company) (22.0) 17.6 (22.0) 17.6 27.8
Non-controlling interests 0.0 0.2 0.1 0.2 0.2
Total2 (22.0) 17.7 (22.0) 17.7 28.0
Earnings per share (EUR):
Basic earnings per share (0.03) 0.03 (0.03) 0.03 0.06
Diluted earnings per share (0.03) 0.03 (0.03) 0.03 0.06

1 Adjusted for restructuring costs, see section APM for the reconciliation

STATEMENT OF FINANCIAL POSITION

(MEUR) 31.03.20 31.03.19 31.12.19
Intangible assets 158.3 163.4 160.3
Property, plant and equipment 226.5 205.1 232.1
Right-of-use assets 97.6 103.4 103.8
Deferred tax assets 19.5 21.5 19.9
Other non-current assets 14.6 10.6 15.3
Non-current assets 516.5 504.0 531.5
Inventories 106.7 124.9 102.9
Accounts receivable 214.4 225.6 216.8
Other short-term receivables 46.0 48.3 50.6
Cash and cash equivalents 27.4 32.6 25.2
Current assets 394.5 431.4 395.4
Total assets 911.0 935.4 927.0
Share capital 19.6 23.2 22.8
Share premium reserve 177.7 212.0 207.6
Other equity 60.2 32.5 48.8
Non-controlling interests3 3.8 3.8 3.8
Total equity 261.4 271.5 282.9
Long-term interest-bearing liabilities 358.2 363.6 362.7
Deferred tax liabilities 26.8 26.3 21.8
Other long-term liabilities 20.1 21.2 21.6
Non-current liabilities 405.1 411.0 406.1
Short-term interest-bearing liabilities 32.5 10.2 23.8
Accounts payable 135.1 152.1 130.5
Other short-term liabilities 76.9 90.6 83.5
Current liabilities 244.5 252.9 237.9
Total liabilities 649.7 663.9 644.0
Total equity and liabilities 911.0 935.4 927.0

STATEMENT OF CHANGE IN EQUITY

(MEUR) 31.03.20 31.03.19 31.12.19
Equity as of start of period 282.9 253.5 253.5
Net profit / (loss) for the period (12.1) 13.8 28.8
Translation differences (0.7) 3.4 2.9
Tax on translation differences (9.2) 0.6 (0.6)
Remeasurement of the net pension benefit obligation 0.0 0.0 (3.3)
Tax on remeasurement of the net pension benefit obligation 0.0 0.0 0.2
Total comprehensive income (22.0) 17.7 28.0
Stock based compensation 0.4 0.2 1.4
Net result of treasury shares sale/purchase and other changes in equity 0.0 0.0 0.0
Equity as of end of period 261.4 271.5 282.9

STATEMENT OF CASH FLOW

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Operating activities
Profit / (loss) before taxes (10.0) 19.1 (10.0) 19.1 43.5
Depreciation 10.9 10.7 10.9 10.7 42.9
Amortization 1.0 1.1 0.9 1.1 5.1
Interest income (0.0) (0.2) (0.0) (0.2) (0.6)
Interest and other financial expenses1 5.3 2.2 5.3 2.2 22.5
Taxes paid (2.0) (0.5) (2.0) (0.5) (14.4)
(Gain) / loss on sale of non-current assets (0.3) 0.1 (0.3) 0.1 (0.3)
Changes in receivables 2.4 (14.9) 2.4 (14.9) (6.0)
Changes in inventory (3.9) (4.5) (3.9) (4.5) 17.6
Changes in payables 4.5 (7.6) 4.5 (7.6) (29.1)
Currency (gain) / loss 12.2 (3.9) 12.1 (3.9) (3.0)
Changes in other items (1.3) (6.0) (1.3) (6.0) (26.9)
Cash flow - Operating activities 18.8 (4.4) 18.8 (4.4) 51.4
Investing activities
Investments1 (14.9) (14.3) (14.9) (14.3) (65.0)
Sale of fixed assets 1.9 0.4 1.9 0.4 1.2
Interest received 0.0 0.2 0.0 0.2 0.6
Proceeds from sale of subsidiaries 0.0 0.0 0.0 0.0 0.0
Net payments for other long-term
investments
(0.0) 0.1 (0.0) 0.1 (0.0)
Cash flow - Investing activities (13.0) (13.5) (13.0) (13.5) (63.3)
Financing activities
Proceeds from increases in equity 0.0 0.2 0.0 0.2 (0.0)
Net draw
dow
n of debt
10.0 0.3 10.0 0.3 10.3
Interest paid and other financial items (8.6) (8.2) (8.6) (8.2) (21.3)
Repayment of lease liabilities and other (3.1) (3.5) (3.1) (3.5) (11.9)
Cash flow - Financing activities (1.7) (11.2) (1.7) (11.2) (22.9)
Currency effects on cash (1.9) 2.5 (1.9) 2.5 0.7
Change in cash 2.2 (26.6) 2.2 (26.6) (34.0)
Cash as of beginning of period 25.2 59.2 25.2 59.2 59.2
Cash as of end of period 27.4 32.6 27.4 32.6 25.2
Of this, restricted cash 0.9 0.2 0.9 0.2 0.8

1 Includes Other financial items and the repayment of lease liabilities – See Note 5

NOTE 1 – DISCLOSURES

GENERAL INFORMATION

Kongsberg Automotive ASA and its subsidiaries develop, manufacture and sell products to the automotive and commercial vehicle industry globally. Kongsberg Automotive ASA is a limited liability company, which is listed on the Oslo Stock Exchange. The consolidated interim financial statements are not audited.

BASIS OF PREPARATION

This condensed consolidated interim financial information, for the three months ended March 31, 2020, has been prepared in accordance with IAS 34 "Interim financial reporting". The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year-ended December 31, 2019, which have been prepared in accordance with IFRS.

ACCOUNTING POLICIES

The accounting policies are consistent with those of the annual financial statements for the year-ended December 31, 2019, as described in those annual financial statements. Taxes on income in the interim periods are accrued using the estimated effective tax rate.

RISK AND UNCERTAINTIES

Kongsberg Automotive continuously monitors its risk factors. Our activities are exposed to different types of risk.

The single most important risk that Kongsberg Automotive is exposed to is the development of demand in the end markets for light duty and commercial vehicles worldwide. Some of the most important additional risk factors are foreign-exchange rates, raw material prices, credit risks, and an increasing tariffs risk. As we operate in many countries, we are vulnerable to currency risk. The most significant currency exposure for Kongsberg Automotive is associated with EUR, NOK and USD exchange rate. The greatest raw material exposures are for copper, zinc, aluminum and steel. As most of our revenues are earned from automotive OEMs and automotive Tier 1 and Tier 2 customers, the financial health of these automotive companies is critical to our credit risk.

All concerned risk factors that Kongsberg Automotive must face in its normal business operations are additionally impacted by the COVID-19 pandemic since its outbreak in Q1 2020. These risks and uncertainties include, but are not limited to: the severity and duration of the COVID-19 pandemic, related economic effects and the resulting negative impact on demand for the Company's products; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and wellbeing of employees, remote work arrangements, performance of contracts and supply chain disruptions etc.

As we expect the COVID-19 pandemic to have significant negative impact on Kongsberg Automotive's income and liquidity, we have initiated actions to strengthen our liquidity. Such actions are spelled out in the invitation for an extraordinary general meeting (EGM) of April 7th as well as in our company presentation published April 15th. Both these documents have been published on Oslo Stock Exchange. With the proposed measures, Kongsberg Automotive believes it will be properly funded through the expected duration of the effects of the Covid-19 pandemic.

SEASONALITY

The Group quarterly results are to some extent influenced by seasonality. The seasonality is mainly driven by the vacation period in the third quarter and December each year having lower sales. Also, year-over-year seasonality differences may occur as a result of varying number of working days in each quarter.

NOTE 2 – SEGMENT REPORTING (FIRST QUARTER 2020)

Q1 2020 Powertrain Speciality Total
(MEUR) Interior & Chassis Products Other1 Group
Revenues2 72.3 94.4 95.4 (0.0) 262.1
Adjusted EBITDA 3.0 3.4 17.8 (4.5) 19.7
Depreciation3 (3.7) (4.1) (2.7) (0.4) (10.9)
Amortization3 (0.1) (0.7) (0.1) (0.2) (1.0)
Adjusted EBIT (0.8) (1.4) 15.1 (5.1) 7.8
- - - -
Timing of revenue recognition
Ownership transferred at a point in
time
72.3 94.4 95.4 (0.0) 262.1
Assets and liabilities
Goodw
ill
56.2 23.0 68.9 0.0 148.1
Other intangible assets 0.5 8.2 1.0 0.5 10.2
Property, plant and equipment 91.3 77.2 56.9 1.1 226.5
Right-of-use assets 28.8 31.3 24.9 12.6 97.6
Inventories 22.5 41.0 44.5 (1.3) 106.7
Trade receivables 60.4 82.9 78.9 (7.8) 214.4
Other assets 12.7 10.1 3.9 1.8 28.5
Segment assets 272.5 273.7 279.0 7.0 832.1
Unallocated assets 78.9 78.9
Total assets 272.5 273.7 279.0 85.9 911.0
Trade payables 43.9 54.4 33.6 3.1 135.1
Non-current lease interest-bearing liabilities 25.6 26.6 24.3 11.0 87.6
Current lease interest-bearing liabilities 3.2 5.0 2.2 2.0 12.5
Segment liabilities 72.7 86.1 60.2 16.2 235.2
Unallocated liabilities 414.5 414.5
Total liabilities 72.7 86.1 60.2 430.7 649.7
Total equity 261.4 261.4
Total equity and liabilities 72.7 86.1 60.2 692.0 911.0
Capital expenditure (7.9) (4.2) (3.5) (0.0) (14.9)

1 The column Other includes corporate costs, transactions and balance sheet items related to tax, pension and financing.

2 For segment reporting purposes the revenues are only external revenues, the related expenses are adjusted accordingly. The adjusted EBIT is thus excluding IC profit.

3 Excluding restructuring costs.

NOTE 2 – SEGMENT REPORTING (FIRST QUARTER 2019)

Q1 2019 Powertrain Speciality Total
(MEUR) Interior & Chassis Products Other1 Group
Revenues2 77.3 119.0 110.2 0.0 306.5
Adjusted EBITDA 5.6 7.9 22.2 (2.3) 33.4
Depreciation3 (3.3) (4.4) (2.5) (0.5) (10.7)
Amortization3 (0.1) (0.6) (0.2) (0.1) (1.1)
Adjusted EBIT 2.1 2.9 19.4 (2.9) 21.5
- - - -
Timing of revenue recognition
Ownership transferred at a point in
time
77.3 119.0 110.2 0.0 306.5
Assets and liabilities
Goodw
ill
57.5 23.2 68.7 0.0 149.4
Other intangible assets 0.6 11.2 1.2 1.0 14.0
Property, plant and equipment 78.3 72.2 53.2 1.5 205.1
Right-of-use assets 21.0 39.5 29.6 13.2 103.4
Inventories 26.2 45.4 54.6 (1.3) 124.9
Trade receivables 64.8 87.8 72.6 0.4 225.6
Segment assets 248.4 279.3 279.9 14.8 822.4
Unallocated assets 112.9 112.9
Total assets 248.4 279.3 279.9 127.8 935.4
Trade payables 36.3 63.8 63.7 (11.7) 152.1
Non-current lease interest-bearing liabilities 18.3 35.5 28.1 11.9 93.7
Current lease interest-bearing liabilities 2.8 4.2 1.7 1.4 10.1
Segment liabilities 57.4 103.4 93.5 1.6 255.9
Unallocated liabilities 408.1 408.1
Total liabilities 57.4 103.4 93.5 409.7 664.0
Total equity 271.5 271.5
Total equity and liabilities 57.4 103.4 93.5 681.2 935.4
Capital expenditure (5.7) (6.5) (1.8) 0.1 (13.9)

1 The column Other includes corporate costs, transactions and balance sheet items related to tax, pension and financing.

2 For segment reporting purposes the revenues are only external revenues, the related expenses are adjusted accordingly. The adjusted EBIT is thus excluding IC profit.

3 Excluding restructuring costs.

NOTE 3 – SALES AND NON-CURRENT ASSETS BY GEOGRAPHICAL LOCATION

3.1 SALES TO CUSTOMERS BY GEOGRAPHICAL LOCATION

2020 2019
(MEUR) YTD March % YTD March %
Europe - Sales 124.9 47.7% 156.1 50.9%
Northern America - Sales 102.1 39.0% 111.2 36.3%
Southern America - Sales 4.5 1.7% 5.2 1.7%
Asia - Sales 29.2 11.1% 31.6 10.3%
Other - Sales 1.3 0.5% 2.4 0.8%
Total operating revenues 262.1 306.5

3.2 INTANGIBLE ASSETS, PROPERTY, PLANT AND EQUIPMENT (PP&E) AND RIGHT-OF USE ASSETS BY GEOGRAPHICAL LOCATION

(MEUR) 31.03.20 % 31.03.19 %
Europe 287.7 59.6% 283.5 60.1%
Northern America 148.9 30.9% 146.3 31.0%
Southern America 2.9 0.6% 6.4 1.4%
Asia 43.0 8.9% 35.8 7.6%
Total Intangible assets, PPE and RoU 482.5 471.9

NOTE 4 – INTEREST-BEARING LOANS AND BORROWINGS

4.1 INTEREST-BEARING LIABILITIES AS PRESENTED IN STATEMENT OF FINANCIAL POSITION

4.1 INTEREST-BEARING LIABILITIES AS PRESENTED IN STATEMENT OF FINANCIAL POSITION
(MEUR) 31.03.20 31.03.19 31.12.19
Long-term interest-bearing loan and borrow
ing
276.2 276.4 276.4
IFRS 16 long-term lease liabilities 87.6 93.7 92.2
Capitalized arrangement fees1 (5.6) (6.5) (5.8)
Current interest-bearing liabilities 32.5 10.2 23.8
Total interest-bearing liabilities 390.7 373.8 386.5

1 As at March 31, 2020 and December 31, 2019, the fees relate to the bond emission and are amortized over the 7-years period of the bond

Long-term interest-bearing liabilities by currency

(MEUR) 31.03.20 31.03.19 31.12.19
EUR 273.1 275.0 297.1
USD 8.1 0.0 8.1
Other currencies 115.2 1.4 87.2
Capitalized arrangement fees (5.6) (6.5) (5.8)
Total long-term interest-bearing loan and borrowing 390.7 269.9 386.5

4.2 LIQUIDITY RESERVE

The liquidity reserve of KA Group consists of cash equivalents in addition to undrawn credit facilities

(MEUR) 31.03.20 31.03.19 31.12.19
Cash reserve 27.4 32.6 25.2
Restricted cash (0.9) (0.2) (0.8)
Undraw
n facility
30.0 50.0 40.0
Liquidity reserve 56.6 82.4 64.4

NOTE 5 – NET FINANCIAL ITEMS

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Interest income 0.1 0.2 (0.1) 0.2 0.6
Interest expenses (4.9) (5.1) (4.9) (5.1) (21.1)
Foreign currency gains (losses)1 (12.2) 3.9 (12.2) 3.9 2.9
Other financial items - Note 5 (0.4) (0.2) (0.2) (0.2) (1.3)
Net financial items - Note 5 (17.4) (1.2) (17.4) (1.2) (18.9)

1 Is made up of an unrealized currency loss of MEUR 12.9 and of a realized currency gain of MEUR 0.7 (Q1 2019: unrealized gain MEUR 4.1 and realized loss MEUR 0.2)

NOTE 6 – SUBSEQUENT EVENTS

On 2 April 2020, the RCF facility was increased by the amount of MEUR 20.0.

On April 3, 2020, the Company announced its intention to raise around €100 million through a capital increase and that the Board of Directors of the Company summons for an extraordinary general meeting in the Company to be held on April 30, 2020.

ALTERNATIVE PERFORMANCE MEASURES (APM)

This section describes the non-GAAP financial measures that are used in this report and in the quarterly presentation.

The following measures are neither defined nor specified in the applicable financial reporting framework of the IFRS GAAP. They may be considered as non-GAAP financial measures that may include or exclude amounts that are calculated and presented according to the IFRS GAAP.

  • Operating profit EBIT/Adjusted EBIT
  • EBITDA/Adjusted EBITDA
  • Restructuring per segment
  • Free cash flow

  • NIBD

  • Capital employed
  • ROCE (last twelve months)

OPERATING PROFIT - EBIT/ADJUSTED EBIT

EBIT, earnings before interest and tax, is defined as the earnings excluding the effects of how the operations were financed, taxed and excluding foreign exchange gains & losses Adjusted EBIT is defined as EBIT excluding restructuring items, which are defined as any incurred costs or sales reduction of an unusual or non-recurring nature in connection with the considered restructuring of the activities of the Group.

EBIT is used as a measure of operational profitability. In order to exclude restructuring one-time effects, the Group also reports the adjusted EBIT, which is the EBIT excluding restructuring items.

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Operating profit / EBIT1 7.4 20.3 7.4 20.3 62.4
Restructuring items2 0.4 1.2 0.4 1.2 8.5
Adjusted EBIT1+2 7.8 21.5 7.8 21.5 70.9

EBITDA/ADJUSTED EBITDA

EBITDA is defined as EBIT (previously defined) before depreciation and amortization. Adjusted EBITDA is therefore EBITDA excluding restructuring items.

EBITDA is used as an additional measure of the Group's operational profitability, excluding the impact from depreciation and amortization.

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Operating profit / EBIT 7.4 20.3 7.4 20.3 62.4
Depreciation 11.0 10.7 11.0 10.7 42.9
Amortization 0.9 1.1 0.9 1.1 5.1
EBITDA1 19.4 32.1 19.4 32.1 110.4
Restructuring items(*) 2 0.4 1.2 0.4 1.2 7.4
Adjusted EBITDA1+2 19.7 33.4 19.7 33.4 117.9

(*) Excluding impairment, depreciation and amortization

ALTERNATIVE PERFORMANCE MEASURES (APM)

RESTRUCTURING ITEMS PER SEGMENT

(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Interior 0.0 0.0 0.0 0.0 0.5
Pow
ertrain & Chassis
0.1 (0.1) 0.1 (0.1) 0.2
Specialty Products (0.1) (0.2) (0.1) (0.2) 2.1
Other 0.4 1.5 0.4 1.5 5.6
Group total 0.4 1.2 0.4 1.2 8.5

The restructuring items in Q1 2020 mainly relate to corporate systems transition costs.

FREE CASH FLOW

Free cash flow is measured based on cash flow from operations, investments and financing excluding debt drawn and paid.

Free Cash Flow is used to measure the Group's ability to generate cash. It allows the Group to view how much cash it generates from its operations after subtracting the cash flow from investing and financing activities excluding debt repayments. The Group considers that this measurement illustrates the amount of cash the Group has at its disposal to pursue additional investments or to repay debt.

this measurement illustrates the amount of cash the Group has at its disposal to pursue additional investments or to repay debt.
(MEUR) Q1 2020 Q1 2019 YTD 2020 YTD 2019 FY 2019
Cash flow
- Operating activities
18.8 (4.4) 18.8 (4.4) 51.4
Cash flow
- Investing activities
(13.0) (13.5) (13.0) (13.5) (63.3)
Cash flow
- Financing activities
(1.7) (11.2) (1.7) (11.2) (22.9)
n) / repayment of debt1
Net (draw
dow
(6.9) (0.3) (6.9) (0.3) 1.6
Free Cash Flow (2.8) (29.4) (2.8) (29.4) (33.2)

1 includes the repayments of lease liabilities

NIBD

Net Interest-Bearing Debt (NIBD), consists of interest-bearing liabilities less cash and cash equivalents.

The Group risk of default and financial strength is measured by the net interest-bearing debt. It shows the Group's financial position and leverage. As cash and cash equivalents can be used to repay debt, this measurement shows the net overall financial position of the Group.

(MEUR) 31.03.20 31.03.19 31.12.19
Long-term interest-bearing liabilities 358.2 363.6 362.7
Other short-term interest-bearing liabilities 32.5 10.2 23.8
Cash and cash equivalents (27.4) (32.6) (25.2)
Net Interest Bearing Debt 363.3 341.2 361.3

ALTERNATIVE PERFORMANCE MEASURES (APM)

CAPITAL EMPLOYED

Capital Employed is equal to operating assets less operating liabilities. Operating assets and liabilities are items, which are involved in the process of producing and selling goods and services. Long-term financial assets and obligations are excluded, as those are involved in raising cash for operations and disbursing excess cash from operations.

Capital Employed is measured in order to assess how much capital is needed for the operations/business to function and evaluate if the capital employed can be utilized more efficiently and/or if operations should be discontinued.

(MEUR) 31.03.20 31.03.19 31.12.19
Total assets 911.0 935.4 927.0
Deferred tax liabilities (26.8) (26.3) (21.8)
Other long-term liabilities (20.1) (21.2) (21.6)
Current liabilities (244.5) (252.9) (237.9)
Capital employed 619.6 635.0 645.6

ADJUSTED ROCE (LAST TWELVE MONTHS)

Return on Capital Employed (ROCE) is based on EBIT for the last twelve months divided by the average of capital employed at the beginning and end of the period.

Return on Capital Employed is used to measure the return on the capital employed without taking into consideration the way the operations and assets are financed during the period under review. The Group considers this ratio as appropriate to measure the return of the period.

(MEUR) Q1 2020 Q1 2019 FY 2019
Capital employed beginning1 01.04.2019 635.0 01.04.2018 469.8 629.2
Capital employed at end2 31.03 2020 619.6 31.03 2019 635.0 645.6
elve months3
Adjusted EBIT last tw
57.1 76.1 70.9
Adjusted ROCE 3 / (1+2) * 200% 9.1% 13.8% 11.1%

OTHER COMPANY INFORMATION

THE BOARD OF DIRECTORS

Firas Abi-Nassif Chairman
Emese Weissenbacher Shareholder elected
Peter Schmitt Shareholder elected
Ellen M. Hanetho Shareholder elected
Gerard Cordonnier Shareholder elected
Leif Harvard Stromhaug Employee elected
Bjørn Ivan Ødegård Employee elected
Tonje Sivesindtajet Employee elected

EXECUTIVE COMMITTEE

Henning E. Jensen President & CEO
Norbert Loers Executive Vice President & CFO
Ralf Voss Executive Vice President, Interior Systems
Bob Riedford Executive Vice President, Powertrain & Chassis
Henning E. Jensen Executive Vice President, Specialty Products (acting)
Dzeki Mackinovski Executive Vice President, Purchasing
Virginia Grando Executive Vice President, Quality
Marcus von Pock Executive Vice President, Human Resources & Communications
Jon Munthe General Counsel
Doug Tushar Senior Vice President, IS&T

CORPORATE COMMUNICATION

Marcus von Pock Communications +41 43 508 94 93
Hallstein Kvam Oma Investor Relations +41 43 508 89 63

FINANCIAL CALENDAR

The quarterly reports and financial statements will be published on the following days:

2
nd quarter 2020 and Half-yearly Report
August 06, 2020
rd quarter 2020
3
November 11, 2020

Kongsberg Automotive ASA KA Group AG Dyrmyrgata 48 Europaallee 39 3601 Kongsberg, Norway 8004 Zürich, Switzerland Phone +47 32 77 05 00 Phone +41 43 508 65 60

www.kongsbergautomotive.com

Operational Headquarters

Enhancing the driving experience

Kongsberg Automotive ASA, Dyrmyrgata 48, 3601 Kongsberg, Norway, Phone +47 32 77 05 00

www.kongsbergautomotive.com

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