Quarterly Report • May 9, 2018
Quarterly Report
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FIRST QUARTER
| Q1 20181 | Q1 20171 Change in % | Q1 20181 | Q1 20171 | |||||
|---|---|---|---|---|---|---|---|---|
| Order situation | Non-financial control parameters | |||||||
| Order book (Mar 31) | EUR millions | 356.5 | 312.1 | 14.3 | Number of invention applications | 11 | 9 | |
| Income statement | Defective parts per million (PPM) | 6 | 18 | |||||
| Revenue | EUR millions | 272.6 | 254.9 | 6.9 | Quality-related customer complaints per month | 8 | 9 | |
| (Adjusted) gross profit | EUR millions | 158.7 | 152.2 | 4.3 | Share data | |||
| Adjusted EBITA | EUR millions | 45.7 | 45.0 | 1.6 | IPO | April 2011 | ||
| Adjusted EBITA margin | % | 16.8 | 17.7 | n/a | Stock exchange | Frankfurt Stock Exchange, | ||
| EBITA | EUR millions | 44.4 | 43.1 | 2.9 | Xetra | |||
| EBITA margin | % | 16.3 | 16.9 | n/a | Market segment | Regulated Market | ||
| Adjusted profit for the period | EUR millions | 29.5 | 27.1 | 8.8 | (Prime Standard), MDAX | |||
| Adjusted EPS | EUR | 0.92 | 0.85 | 8.7 | ISIN Security identification number |
DE000A1H8BV3 A1H8BV |
||
| Profit for the period | EUR millions | 25.0 | 22.5 | 11.2 | Ticker symbol | NOEJ | ||
| EPS | EUR | 0.78 | 0.70 | 11.4 | Highest price Q1 20182 | EUR | 65.95 | |
| Cash flow | Lowest price Q1 20182 | EUR | 55.05 | |||||
| Operating cash flow | EUR millions | –5.9 | 9.3 | n/a | Closing price as of Mar 31, 20182 | EUR | 60.80 | |
| Net operating cash flow | EUR millions | –13.8 | 4.5 | n/a | Market capitalization as of Mar 31, 20182 | EUR millions | 1,937 | |
| Cash flow from investing activities | EUR millions | –12.1 | –22.3 | –45.6 | Number of shares | 31,862,400 | ||
| Cash flow from financing activities | EUR millions | –1.0 | –1.0 | 0.1 | 1_Adjustments are described on PAGE 8. | |||
| Mar 31, 2018 |
Dec 31, 2017 |
Change in % |
2_Xetra price | |||||
| Balance sheet | ||||||||
| Total assets | EUR millions | 1,307.6 | 1,312.0 | –0.3 | ||||
| Equity | EUR millions | 552.6 | 534.3 | 3.4 | ||||
| Equity ratio | % | 42.3 | 40.7 | n/a | ||||
| Net debt | EUR millions | 361.4 | 344.9 | 4.8 | ||||
| Employees | ||||||||
| Core workforce | 6,310 | 6,115 | 3.2 |
| Overview of Key Figures | 02 |
|---|---|
| Highlights First Quarter 2018 | 04 |
| Course of Business | 06 |
| Significant Developments | 06 |
| Consolidated Statement of Comprehensive Income | 07 |
| Adjustments | 08 |
| Notes to the Sales and Earnings Development | 09 |
| Consolidated Statement of Financial Position | 11 |
| Notes to the Financial and Asset Position | 12 |
| Consolidated Statement of Cash Flows | 14 |
| Notes to the Consolidated Statement of Cash Flows | 15 |
| Segment Reporting | 16 |
| Notes to Segment Development | 17 |
| Forecast for the Fiscal Year 2018 | 18 |
| Financial Calendar 2018, Contact, Imprint | 19 |
IN EUR MILIONS
| in EUR millions | Share in % | |
|---|---|---|
| Sales Q1 2017 | 254.9 | |
| Organic growth | 34.6 | 13.6 |
| Acquisitions | 2.5 | 1.0 |
| Currency effects | –19.5 | –7.6 |
| Sales Q1 2018 | 272.6 | 6.9 |
IN %, PREVIOUS YEAR IN BRACKETS
| EJT | DS | |||
|---|---|---|---|---|
| Q1 2018 | Q1 2017 | Q1 2018 | Q1 2017 | |
| Group sales (in EUR millions) | 181.1 | 163.3 | 90.0 | 90.1 |
| Growth (in %) | 10.9 | –0.2 | ||
| Share of sales (in %) | 67 | 64 | 33 | 36 |
1_Adjustments are described on PAGE 8. 2_Adjusted
| IN EUR MILLIONS | Q1 2018 | Q1 2017 |
|---|---|---|
| Adjusted EBITDA | 52.2 | 51.3 |
| Change in working capital | –55.5 | –38.1 |
| Investments from operating business | –10.5 | –8.7 |
| Net operating cash flow | –13.8 | 4.5 |
In the first three months of 2018, NORMA Group's business developed better than expected. On May 7, 2018 the Management Board increased its sales forecast for fiscal year 2018 on the basis of Group sales from January until April 2018 as well as the expected Group sales until year end.
The Management Board of NORMA Group now expects organic sales growth, excluding currency and acquisition-related effects, of around 5% to 8% in 2018 compared to 2017 (previous forecast: 'solid organic growth of around 3% to 5%').
For the Americas region the Management Board now expects a strong organic growth (previous forecast: 'solid organic growth'). The market for commercial and agricultural machinery develops stronger than expected. In the area of water management, among others, catch-up effects, which are higher than previously assumed, provide for increased demand.
In the Asia-Pacific region, demand for advanced engineered joining technology is driven more strongly than originally forecast by the increased emission requirements of OEM customers, particularly in China and India. In this respect, the Management Board expects a higher than originally assumed organic growth in the double-digit range.
In the EMEA region, the Management Board expects an unchanged solid organic growth.
While the Management Board sticks to its growth forecast regarding the Distribution Services area ('solid growth'), it expects a strong growth for the EJT business ('previous forecast: solid growth').
The remaining components of the forecast made in the 2017 Annual Report for the full year 2018 (including the adjusted EBITA margin) remain unchanged. FORECAST, P. 19
In April 2018, NORMA Group signed an agreement to acquire the Indian thermoplastic joining solutions company Kimplas Piping Systems Ltd. ('Kimplas'). The agreement provides for the acquisition of 100% of the shares in Kimplas. It is expected to be concluded in mid-2018.
Kimplas is headquartered in Nashik in the West Indian state of Maharashtra and employs around 690 people. The company has been developing and producing molded parts using injection molding since 1996. Its product portfolio includes compression fittings, sprinklers and drippers, valves, filters and electrofusion fittings such as tapping T-pieces for gas and water pipes. Kimplas's certified products are used for water-saving droplet irrigation in agriculture, safe and leak-free drinking water and gas supply as well as irrigation systems. Kimplas sells its products mainly on the domestic market and in other Asian markets. Last fiscal year, Kimplas achieved sales of around EUR 21 million.
With Kimplas's leading products, NORMA Group is expanding its water management portfolio and strengthening its position in Asia.
| IN EUR THOUSANDS | Q1 2018 | Q1 2017 |
|---|---|---|
| Revenue | 272,615 | 254,925 |
| Changes in inventories of finished goods and work in progress | 1,676 | 4,715 |
| Other own work capitalized | 569 | 376 |
| Raw materials and consumables used | –116,142 | –108,480 |
| Gross profit | 158,718 | 151,536 |
| Other operating income | 4,527 | 4,606 |
| Other operating expenses | –37,913 | –36,419 |
| Employee benefits expense | –73,596 | –69,359 |
| Depreciation and amortization | –13,889 | –14,678 |
| Operating profit | 37,847 | 35,686 |
| Financial income | 111 | 49 |
| Financial costs | –3,559 | –4,020 |
| Financial costs – net | –3,448 | –3,971 |
| Profit before income tax | 34,399 | 31,715 |
| Income taxes | –9,426 | –9,262 |
| Profit for the period | 24,973 | 22,453 |
| Other comprehensive income for the period, net of tax | ||
| Other comprehensive income that can be reclassified to profit or loss, net of tax | –6,716 | –1,038 |
| Exchange differences on translation of foreign operations | –7,534 | –1,152 |
| Cash flow hedges, net of tax | 818 | 114 |
| Other comprehensive income for the period, net of tax | –6,716 | –1,038 |
| Total comprehensive income for the period | 18,257 | 21,415 |
| Profit attributable to | ||
| Shareholders of the parent | 24,880 | 22,395 |
| Non-controlling interests | 93 | 58 |
| 24,973 | 22,453 | |
| Total comprehensive income attributable to | ||
| Shareholders of the parent | 18,088 | 21,382 |
| Non-controlling interests | 169 | 33 |
| 18,257 | 21,415 | |
| (Un)diluted earnings per share (in EUR) | 0.78 | 0.70 |
INTERIM STATEMENT FIRST QUARTER 2018
First Quarter 2018 06 Course of Business
02 Overview of Key Figures 04 Highlights
06 Significant Developments 07 Consolidated Statement of Comprehensive Income 11 Consolidated Statement of Financial Position
14 Consolidated Statement of Cash Flows 16 Segment Reporting 18 Forecast for Fiscal Year 2018 19 Financial Calendar, Contact and Imprint
In the first quarter of 2018, expenses totaling EUR 0.5 million were adjusted within EBITDA (earnings before interest, taxes, depreciation and amortization) (Q1 2017: EUR 0.9 million). These relate to adjustments within other operating expenses as part of due diligence in connection with the preparations for the acquisition of the Indian water specialist Kimplas. SIGNIFICANT DEVELOPMENTS, P. 6
As in previous years, depreciation of property, plant and equipment resulting from purchase price allocations of EUR 0.9 million (Q1 2017: EUR 1.0 million) was adjusted within EBITA (earnings before interest, taxes and amortization of intangible assets) and amortization of intangible assets resulting from purchase price allocations of EUR 4.8 million (Q1 2017: EUR 5.2 million) was adjusted within EBIT.
Notional income taxes resulting from adjustments are calculated at the tax rates of the respective local companies concerned and are included in adjusted earnings after taxes.
| IN EUR MILLIONS | Q1 2018 reported |
Total adjustments |
Q1 2018 adjusted |
|---|---|---|---|
| Revenue | 272.6 | 0.0 | 272.6 |
| Changes in inventories of finished goods and work in progress | 1.7 | 0.0 | 1.7 |
| Other own work capitalized | 0.6 | 0.0 | 0.6 |
| Raw materials and consumables used | –116.1 | 0.0 | –116.1 |
| Gross profit | 158.7 | 0.0 | 158.7 |
| Other operating income and expenses | –33.4 | 0.5 | –32.9 |
| Employee benefits expense | –73.6 | 0.0 | –73.6 |
| EBITDA | 51.7 | 0.5 | 52.2 |
| Depreciation | –7.4 | 0.9 | –6.5 |
| EBITA | 44.4 | 1.4 | 45.7 |
| Amortization | –6.5 | 4.8 | –1.7 |
| Operating profit (EBIT) | 37.8 | 6.2 | 44.1 |
| Financial costs – net | –3.4 | 0.0 | –3.4 |
| Profit before income tax | 34.4 | 6.2 | 40.6 |
| Income taxes | –9.4 | –1.7 | –11.1 |
| Profit for the period | 25.0 | 4.6 | 29.5 |
| Non-controlling interests | 0.1 | 0.0 | 0.1 |
| Profit attributable to shareholders of the parent | 24.9 | 4.6 | 29.4 |
| Earnings per share (in EUR) | 0.78 | 0.14 | 0.92 |
1_Deviations in decimal places may occur due to commercial rounding.
As of March 31, 2018, the order backlog was EUR 356.5 million, EUR 44.5 million or 14.3% higher than at the same time last year (March 31, 2017: EUR 312.1 million). The increase in orders on hand is mainly due to the increase in orders in North America and Europe. Currency effects in the amount of EUR 16.9 million reduced the order backlog.
Group sales in the first quarter of 2018 amounted to EUR 272.6 million, 6.9% higher than in the same period of the previous year (Q1 2017: EUR 254.9 million). Organic growth amounted to 13.6% and resulted from strong sales development in all three regions with double-digit growth rates in the Americas and Asia-Pacific regions.
The Chinese company Fengfan, acquired in May 2017, contributed EUR 2.5 million or 1.0% to sales growth.
Particularly the translation effects related to the development of the following exchange rates against the euro had a noticeable negative effect on Group sales growth: US dollar, British pound, Swedish krone, Russian ruble, Swiss franc, Turkish lira, Chinese renminbi, Indian rupee, Australian dollar, Malaysian ringgit and Japanese yen.
In the EJT business, NORMA Group generated sales of EUR 181.1 million in the first quarter of 2018, 10.9% more than in the same period of the previous year (Q1 2017: EUR 163.3 million). Strong organic growth of 17.7%, resulting in particular from strong business development and high demand from the automotive industry in the Americas and Asia-Pacific regions, was held back by negative currency effects (–6.8%).
Sales in the DS segment amounted to EUR 90.0 million in the first quarter of 2018 (Q1 2017: EUR 90.1 million) and fell by 0.2% compared to the previous year due to strongly negative currency effects (–9.2%).
Organic growth of 6.2% was strengthened in particular by the healthy development of the US Distribution Services business, which also benefited from the recovery of NDS's water business.
Acquisition-related sales growth from the acquisition of Fengfan contributed 2.8% to DS sales growth.
Cost of materials amounted to EUR 116.1 million in the first quarter of 2018, an increase of 7.7% compared to the same period of the previous year (Q1 2017 adjusted: EUR 107.8 million). In relation to sales, this resulted in a cost of materials ratio of 42.6% (Q1 2017 adjusted: 42.3%). Compared to the total output (sales revenues plus changes in inventories and other own work capitalized), the cost of materials ratio was at 42.3% (Q1 2017: adjusted 41.5%).
The increase in the cost of materials ratio compared to the same period of the previous year is due in large part to the continuing increase of raw material prices, especially in the areas of alloy surcharges and thermoplastic materials. The price increase for engineering plastics was mainly driven by market shortages. 2017 ANNUAL REPORT, P. 73
Gross profit (sales revenues less cost of materials plus changes in inventories and other own work capitalized) amounted to EUR 158.7 million in the first quarter of 2018, an increase of 4.3% over the same period in the previous year (Q1 2017 adjusted: EUR 152.2 million). Due to the high cost of materials, the gross margin was 58.2% (Q1 2017: adjusted 59.7%), lower than in the same period of the previous year.
As of March 31, 2018, NORMA Group had 8,120 employees worldwide (Mar 31, 2017: 7,169), of whom 6,310 (Mar 31, 2017: 5,510) were permanent employees. This means that the total number of employees increased by 13.3% and the core workforce by 14.5% compared to the previous year.
Compared to the end of the year (Dec 31, 2017: 7,667), the total number of employees increased by 5.9%.
Employee benefits expenses in the first quarter of 2018 amounted to EUR 73.6 million, an increase of 6.1% compared to the previous year (Q1 2017: EUR 69.4 million). In light of the strong sales development, the personnel cost ratio improved slightly year-onyear to 27.0% (Q1 2017: 27.2%).
| Mar 31, 2018 | Mar 31, 2017 | |
|---|---|---|
| EMEA | 3,676 | 3,282 |
| Americas | 1,634 | 1,410 |
| Asia-Pacific | 1,000 | 818 |
| Core workforce | 6,310 | 5,510 |
| Temporary workers | 1,810 | 1,659 |
| Total number of employees including temporary workers |
8,120 | 7,169 |
Adjusted other operating income and expenses
The balance of adjusted other operating income and expenses amounted to EUR 32.9 million in the first quarter of 2018, an increase of 4.2% compared to the previous year (Q1 2017: EUR 31.6 million).
In relation to sales, the share of adjusted other operating income and expenses decreased to 12.1% (Q1 2017: 12.4%).
Other operating income includes in particular currency gains from operating activities of EUR 2.0 million (Q1 2017: EUR 1.1 million) and income from the release of liabilities and unused provisions of EUR 1.2 million (Q1 2017: EUR 2.5 million).
Other operating expenses include currency losses of EUR 2.4 million (Q1 2017: EUR 1.3 million). The costs related to the due diligence of Kimplas (EUR 0.5 million) were adjusted within operating expenses (Q1 2017: EUR 0.2 million). ADJUSTMENTS, P. 8
The balance of unadjusted operating income and expenses amounted to EUR 33.4 million (Q1 2017: EUR 31.8 million). The ratio to sales was 12.2% (Q1 2017: 12.5%).
The operating result of NORMA Group in the first quarter of 2018 was negatively impacted by high raw material prices, particularly in the area of alloy surcharges and engineering plastics. This had a negative impact on the margin.
Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) amounted to EUR 52.2 million in the first quarter of 2018, up 1.8% year-on-year (Q1 2017: EUR 51.3 million). This resulted in a lower adjusted EBITDA margin of 19.1% year-on-year (Q1 2017: 20.1%).
Unadjusted EBITDA amounted to EUR 51.7 million in the first quarter of 2018 (Q1 2017: EUR 50.4 million). The resulting unadjusted EBITDA margin was 19.0% (Q1 2017: 19.8%).
Adjusted EBITA, which was additionally adjusted for depreciation on tangible assets from purchase price allocations of EUR 0.9 million (Q1 2017: EUR 1.0 million), rose in the first quarter of 2018 by 1.6% to EUR 45.7 million compared to the previous year (Q1 2017: EUR 45.0 million). The adjusted EBITA margin resulting from the comparison to sales was 16.8% (Q1 2017: 17.7%).
The unadjusted EBITA margin was 16.3% (Q1 2017: 16.9%) based on an unadjusted EBITA of EUR 44.4 million (Q1 2017: EUR 43.1 million).
The financial result amounted to EUR –3.4 million in the first quarter of 2018, improving by 13.2% compared to the same period of the previous year (Q1 2017: EUR –4.0 million). This is partly due to lower net interest expense of EUR 3.1 million (Q1 2017: EUR 3.5 million) and to exchange rate effects of EUR 0.4 million (Q1 2017: EUR 0.8 million).
Adjusted income taxes for the period of January to March 2018 amounted to EUR 11.1 million (Q1 2017: EUR 11.7 million). Based on adjusted pre-tax earnings of EUR 40.6 million (Q1 2017: EUR 38.9 million), this resulted in an adjusted tax rate of 27.3% (Q1 2017: 30.2%), which is lower than in the same period of the previous year and is mainly attributable to the tax reform in the US in fiscal year 2017.
Adjusted earnings for the period (after tax) amounted to EUR 29.5 million, 8.8% above the previous year's level (Q1 2017: EUR 27.1 million). Based on the unchanged number of 31,862,400 shares, adjusted earnings per share in the first quarter of 2018 amounted to EUR 0.92 (Q1 2017: EUR 0.85).
Unadjusted earnings for the period amounted to EUR 25.0 million (Q1 2017: EUR 22.5 million), an increase of 11.2% over the previous year. Unadjusted earnings per share amounted to EUR 0.78 (Q1 2017: EUR 0.70). Overall, adjustments of EUR 4.6 million were made in the first quarter of 2018 (Q1 2017: EUR 4.7 million). This had an impact of EUR 0.14 on adjusted earnings per share.
ASSETS
| IN EUR THOUSANDS | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 |
|---|---|---|---|
| Non-current assets | |||
| Goodwill | 352,435 | 356,717 | 368,410 |
| Other intangible assets | 245,524 | 255,729 | 290,004 |
| Property, plant and equipment | 204,270 | 205,153 | 203,592 |
| Other non-financial assets | 1,083 | 1,048 | 243 |
| Derivative financial assets | 3,024 | 1,885 | 1,562 |
| Income tax assets | 104 | 76 | 108 |
| Deferred income tax assets | 3,851 | 4,845 | 7,402 |
| 810,291 | 825,453 | 871,321 | |
| Current assets | |||
| Inventories | 153,194 | 151,229 | 147,727 |
| Other non-financial assets | 17,483 | 15,754 | 19,033 |
| Other financial assets | 1,001 | 1,001 | 5,196 |
| Derivative financial assets | 422 | 640 | 916 |
| Income tax assets | 7,427 | 9,884 | 8,989 |
| Trade and other receivables | 182,654 | 152,746 | 159,004 |
| Cash and cash equivalents | 135,131 | 155,323 | 151,548 |
| 497,312 | 486,577 | 492,413 | |
| Total assets | 1,307,603 | 1,312,030 | 1,363,734 |
| IN EUR THOUSANDS | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 |
|---|---|---|---|
| Equity attributable to | |||
| equity holders of the parent | |||
| Subscribed capital | 31,862 | 31,862 | 31,862 |
| Capital reserve | 210,323 | 210,323 | 210,323 |
| Other reserves | –15,156 | –8,364 | 26,064 |
| Retained earnings | 323,025 | 298,077 | 235,899 |
| Equity attributable to shareholders | 550,054 | 531,898 | 504,148 |
| Non-controlling interests | 2,502 | 2,423 | 820 |
| Total equity | 552,556 | 534,321 | 504,968 |
| Liabilities | |||
| Non-current liabilities | |||
| Retirement benefit obligations | 12,030 | 12,127 | 11,759 |
| Provisions | 10,895 | 10,239 | 9,302 |
| Borrowings | 449,978 | 455,111 | 510,000 |
| Other non-financial liabilities | 465 | 489 | 583 |
| Other financial liabilities | 4,252 | 4,224 | 1,126 |
| Derivative financial liabilities | 866 | 1,226 | 1,729 |
| Deferred income tax liabilities | 58,351 | 60,543 | 101,273 |
| 536,837 | 543,959 | 635,772 | |
| Current liabilities | |||
| Provisions | 9,802 | 8,545 | 9,789 |
| Borrowings | 34,417 | 33,136 | 43,318 |
| Other non-financial liabilities | 35,277 | 31,860 | 33,603 |
| Other financial liabilities | 6,074 | 6,307 | 2,181 |
| Derivative financial liabilities | 992 | 193 | 561 |
| Income tax liabilities | 9,508 | 7,960 | 16,465 |
| Trade and other payables | 122,140 | 145,749 | 117,077 |
| 218,210 | 233,750 | 222,994 | |
| Total liabilities | 755,047 | 777,709 | 858,766 |
| Total equity and liabilities | 1,307,603 | 1,312,030 | 1,363,734 |
EQUITY AND LIABILITIES
Total assets amounted to EUR 1,307.6 million as of March 31, 2018, a slight decrease of 0.3% compared to the end of 2017 (Dec 31, 2017: EUR 1,312.0 million). Compared to March 31, 2017 (EUR 1,363.7 million), total assets decreased by 4.1%.
Non-current assets amounted to EUR 810.3 million as of March 31, 2018, a slight decrease of 1.8% compared to the end of 2017 (Dec 31, 2017: EUR 825.5 million). This development is primarily due to currency effects in connection with the US dollar. Non-current assets accounted for 62.0% of total assets as of March 31, 2018 (Dec 31, 2017: 62.9%).
In the first three months of 2018, EUR 10.5 million was invested in fixed assets, including own work capitalized amounting to EUR 0.6 million. The main focuses of investment were in Germany, Serbia, the United Kingdom, France, China, the US and Mexico. There were no significant disposals.
Current assets amounted to EUR 497.3 million as of March 31, 2018, an increase of 2.2% compared to the end of 2017 (Dec 31, 2017: EUR 486.6 million). The increase is mainly due to the increase in trade receivables (+19.6%) in light of the increased sales volume in the first quarter of 2018 compared to the fourth quarter of 2017. In contrast, cash and cash equivalents decreased by 13.0%. As of March 31, 2018, current assets accounted for 38.0% of total assets (Dec 31, 2017: 37.1%).
Compared to the previous year, current assets slightly increased by 1.0% (Mar 31, 2017: EUR 492.4 million).
As of March 31, 2018, (trade) working capital (inventories plus receivables minus trade payables in each case) amounted to EUR 213.7 million, an increase of 35.1% compared to the end of 2017 (Dec 31, 2017: EUR 158.2 million) for seasonal reasons. Chief among these were the increase in business activity and the associated increase in trade receivables by 19.6% or EUR 29.9 million along with the decrease in trade and other payables by EUR 23.6 million to EUR 122.1 million (Dec 31, 2017: EUR 145.7 million) compared to the end of 2017.
Compared to the previous year (Mar 31, 2017: EUR 189.7 million), (trade) working capital increased by 12.7%. The increase compared to the same quarter of the previous year resulted in particular from the organic growth of NORMA Group.
Group equity amounted to EUR 552.6 million as of March 31, 2018, an increase of 3.4% compared to December 31, 2017 (EUR 534.3 million). This equates to an equity ratio of 42.3% (Dec 31, 2017: 40.7%). The change in equity resulted mainly from the result for the period (EUR 25.0 million). On the other hand, negative currency translation differences (EUR –7.5 million) lowered Group equity.
Net debt amounted to EUR 361.4 million as of March 31, 2018, an increase of 4.8% or EUR 16.6 million compared to the end of the year (Dec 31, 2017: EUR 344.9 million). The main reason for this was a decline in cash and cash equivalents due to cash outflows from operating and investing activities. Non-cash currency effects on foreign currency loans, however, had a positive effect on net debt.
Gearing (the ratio of net debt to equity) was 0.7, slightly above the level at the end of 2017 (Dec 31, 2017: 0.6). Leverage (net debt excluding hedging derivatives in relation to adjusted EBITDA for the last 12 months) was 1.8 (Dec 31, 2017: 1.7).
NORMA Group's net financial debt is as follows:
| IN EUR THOUSANDS | Mar 31, 2018 | Dec 31, 2017 |
|---|---|---|
| Bank borrowings, net | 484,395 | 488,247 |
| Derivative financial liabilities – hedge accounting |
1,858 | 1,419 |
| Finance lease liabilities | 111 | 156 |
| Other financial liabilities | 10,215 | 10,375 |
| Financial debt | 496,579 | 500,197 |
| Cash and cash equivalents | 135,131 | 155,323 |
| Net debt | 361,448 | 344,874 |
At EUR 496.6 million, NORMA Group's financial liabilities were 0.7% lower than on December 31, 2017 (EUR 500.2 million). The decline in loans results from the effects of exchange rate changes on the US dollar tranches of syndicated and promissory note loans.
Non-current liabilities amounted to EUR 536.8 million as of March 31, 2018, a slight decrease of 1.3% compared to the end of 2017 (Dec 31, 2017: EUR 544.0 million). Current liabilities decreased by 6.6% to EUR 218.2 million compared to the end of 2017 (Dec 31, 2017: EUR 233.8 million).
The terms of the syndicated and the promissory note loans as of March 31, 2018, were as follows:
| IN EUR THOUSANDS | up to 1 year | > 1 year up to 2 years |
> 2 years up to 5 years |
> 5 years |
|---|---|---|---|---|
| Syndicated bank facilities, net | 4,568 | 4,568 | 73,086 | 0 |
| Promissory note, net | 26,000 | 100,546 | 124,263 | 148,551 |
| Total | 30,568 | 105,114 | 197,349 | 148,551 |
Other non-financial liabilities are as follows:
| IN EUR THOUSANDS | Mar 31, 2018 | Dec 31, 2017 |
|---|---|---|
| Non-current | ||
| Government grants | 458 | 446 |
| Other liabilities | 7 | 43 |
| 465 | 489 | |
| Current | ||
| Non-income tax liabilities | 3,171 | 2,004 |
| Social liabilities | 7,271 | 5,582 |
| Personnel-related liabilities (e.g. vacation, bonus, premiums) | 23,892 | 23,274 |
| Other liabilities | 628 | 433 |
| Deferred income | 315 | 567 |
| 35,277 | 31,860 | |
| Total other non-financial liabilities | 35,742 | 32,349 |
As of March 31, 2018, foreign currency derivatives with a positive market value of EUR 0.4 million and foreign currency derivatives with a negative market value of EUR 0.3 million were held to hedge cash flows. Foreign currency derivatives with a negative market value of EUR 0.6 million were also held to hedge fair value changes.
Foreign currency derivatives used to hedge cash flow changes are used against fluctuations in the exchange rate from operating activities. Foreign currency derivatives used to hedge fair value changes serve to hedge external financial liabilities and intercompany monetary items against exchange rate fluctuations.
Parts of the external financing of NORMA Group were hedged against interest rate fluctuations with interest rate swaps. As of March 31, 2018, interest rate hedges were held with a positive market value of EUR 3.0 million and a negative market value of EUR 1.0 million.
| IN EUR THOUSANDS | Q1 2018 | Q1 2017 |
|---|---|---|
| Operating activities | ||
| Profit for the period | 24,973 | 22,453 |
| Depreciation and amortization | 13,889 | 14,678 |
| Gain (–)/ loss (+) on disposal of property, plant and equipment | 30 | –1 |
| Change in provisions | 1,940 | –346 |
| Change in deferred taxes | –261 | –362 |
| Change in inventories, trade account receivables and other receivables, which are not attributable to investing or financing activities | –35,048 | –38,883 |
| Change in trade and other payables, which are not attributable to investing or financing activities | –15,456 | 3,637 |
| Change in reverse factoring liabilities | 721 | 4,619 |
| Interest expenses in the period | 3,172 | 3,459 |
| Income (–)/ expenses (+) due to measurement of derivatives | –311 | –552 |
| Other non-cash expenses (+)/ income (–) | 463 | 627 |
| Cash flows from operating activities | –5,888 | 9,329 |
| thereof interest received | 98 | 47 |
| thereof income taxes | –5,918 | –2,365 |
| Investing activities | ||
| Payments for acquisitions of subsidiaries, net | 0 | –11,044 |
| Investments in property, plant and equipment and intangible assets | –12,693 | –11,356 |
| Proceeds from the sale of property, plant and equipment | 551 | 82 |
| Cash flows from investing activities | –12,142 | –22,318 |
| Financing activities | ||
| Interest paid | –1,794 | –1,982 |
| Dividends paid to non-controlling interests | –73 | –32 |
| Repayment of borrowings | 0 | –7 |
| Proceeds from derivatives | 954 | 1,121 |
| Repayment of lease liabilities | –46 | –58 |
| Cash flows from financing activities | –959 | –958 |
| Net change in cash and cash equivalents | –18,989 | –13,947 |
| Cash and cash equivalents at the beginning of the year | 155,323 | 165,596 |
| Effect of foreign exchange rates on cash and cash equivalents | –1,203 | –101 |
| Cash and cash equivalents at the end of the period | 135,131 | 151,548 |
INTERIM STATEMENT FIRST QUARTER 2018
First Quarter 2018 06 Course of Business
02 Overview of Key Figures 04 Highlights
06 Significant Developments 07 Consolidated Statement of Comprehensive Income 11 Consolidated Statement of Financial Position
14 Consolidated Statement of Cash Flows 16 Segment Reporting 18 Forecast for Fiscal Year 2018 19 Financial Calendar, Contact and Imprint
A detailed overview of the general financial management of NORMA Group is provided in the 2017 Annual Report. 2017 ANNUAL REPORT, P. 54
Net operating cash flow for the first three months amounted to EUR –13.8 million, EUR 18.3 million below the level of the prior-year quarter (Q1 2017: EUR 4.5 million). This was mainly due to disproportionately high changes in working capital as of the reporting date compared with the increase in adjusted EBITDA and the year-on-year increase in expenditures for investments from operating activities. These amounted to EUR 10.5 million in the first three months of 2018 (Q1 2017: EUR 8.7 million).
Cash flow from operating activities amounted to EUR –5.9 million in the first quarter of 2018 (Q1 2017: EUR 9.3 million), EUR 15.2 million lower than in the same quarter of the previous year.
Cash outflow from operating activities in the first quarter of 2018 resulted mainly from the significant decrease in trade and other payables as of March 31, 2018, compared to December 31, 2017, while trade and other payables were almost unchanged as of March 31, 2017, compared to December 31, 2016.
Cash flow from operating activities shows changes in current assets, provisions and liabilities (excluding liabilities from financing activities).
The company participates in a reverse factoring program, a factoring program and an ABS program. Liabilities under the reverse factoring program are reported under trade and other payables. Cash flows from the reverse factoring, factoring and ABS programs are shown under cash flow from operating activities, as this corresponds to the economic content of the transactions.
Adjustments of EUR 0.3 million (Q1 2017: EUR 0.6 million) included in cash flow from operating activities for income from the valuation of derivatives relate to fair value changes of foreign currency derivatives and interest rate swaps allocated to financing activities and recognized in the income statement.
Adjusted other non-cash income (–) /expenses (+) mainly include expenses from the currency conversion of external financial liabilities and intragroup monetary items of EUR 0.4 million (Q1 2017: EUR 0.5 million).
Cash flow from investing activities amounted to EUR –12.1 million in the first quarter of 2018 (Q1 2017: EUR –22.3 million) and includes net outflows of EUR 12.1 million (Q1 2017: EUR 11.3 million) from the procurement and sale of non-current assets. This includes the change in liabilities for the acquisition of intangible assets and property, plant and equipment in the amount of EUR –2.2 million (Q1 2017: EUR –2.7 million). Investments made in the period from January to March 2018 related in particular to the sites in Germany, Serbia, the United Kingdom, France, China, the US and Mexico.
Net cash outflows for acquisitions of EUR –11.0 million from the acquisition of Lifial in January 2017 are also included in net cash used in investing activities.
Cash flow from financing activities in the period of January to March 2018 amounted to EUR –1.0 million (Q1 2017: EUR –1.0 million). This mainly includes interest payments (Q1 2018: EUR –1.8 million; Q1 2017: EUR –2.0 million) and proceeds from derivatives amounting to EUR 1.0 million (Q1 2017: EUR 1.1 million).
| INTERIM STATEMENT | |
|---|---|
| FIRST QUARTER 2018 |
| EMEA | Americas | Asia-Pacific | Total segments | Central functions | Consolidation | Consolidated Group | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| IN EUR THOUSANDS | Q1 2018 | Q1 2017 | Q1 2018 | Q1 2017 | Q1 2018 | Q1 2017 | Q1 2018 | Q1 2017 | Q1 2018 | Q1 2017 | Q1 2018 | Q1 2017 | Q1 2018 | Q1 2017 |
| Total revenue | 144,583 | 137,966 | 109,979 | 103,266 | 33,966 | 28,439 | 288,528 | 269,671 | 6,701 | 5,965 | –22,614 | –20,711 | 272,615 | 254,925 |
| thereof intersegment revenue |
12,427 | 10,102 | 2,639 | 3,603 | 847 | 1,041 | 15,913 | 14,746 | 6,701 | 5,965 | –22,614 | –20,711 | 0 | 0 |
| Revenue from external customers |
132,156 | 127,864 | 107,340 | 99,663 | 33,119 | 27,398 | 272,615 | 254,925 | 0 | 0 | 0 | 0 | 272,615 | 254,925 |
| Contribution to consolidated Group sales |
49% | 50% | 39% | 39% | 12% | 11% | 100% | 100% | ||||||
| Adjusted gross profit 1 |
82,829 | 79,288 | 61,024 | 60,310 | 15,123 | 13,504 | 158,976 | 153,102 | na | na | –258 | –885 | 158,718 | 152,217 |
| Adjusted EBITDA1 | 27,478 | 28,168 | 21,566 | 19,489 | 4,834 | 5,863 | 53,878 | 53,520 | –1,662 | –2,004 | –10 | –243 | 52,206 | 51,273 |
| EBITDA margin 1, 2 |
19.0% | 20.4% | 19.6% | 18.9% | 14.2% | 20.6% | 19.2% | 20.1% | ||||||
| Depreciation without PPA depreciation 3 |
–2,984 | –2,780 | –2,151 | –2,349 | –995 | –792 | –6,130 | –5,921 | –351 | –332 | 0 | 0 | –6,481 | –6,253 |
| Adjusted EBITA1 | 24,494 | 25,388 | 19,415 | 17,140 | 3,839 | 5,071 | 47,748 | 47,599 | –2,013 | –2,336 | –10 | –243 | 45,725 | 45,020 |
| Adjusted EBITA margin 1, 2 |
16.9% | 18.4% | 17.7% | 16.6% | 11.3% | 17.8% | 16.8% | 17.7% | ||||||
| Assets 4, 5 |
583,660 | 601,335 | 577,988 | 599,880 | 158,919 | 159,056 | 1,320,567 | 1,360,271 | 354,388 | 383,616 | –367,352 | –431,857 | 1,307,603 | 1,312,030 |
| Liabilities5, 6 | 177,132 | 206,488 | 265,705 | 292,760 | 52,124 | 54,016 | 494,961 | 553,264 | 570,259 | 601,915 | –310,173 | –377,470 | 755,047 | 777,709 |
| CAPEX | 4,648 | 4,200 | 3,934 | 2,580 | 1,112 | 1,185 | 9,694 | 7,965 | 771 | 694 | na | na | 10,465 | 8,659 |
1_Adjustments are described on PAGE 8.
2_Based on segment sales.
3_Depreciation from purchase price allocations.
4_Including allocated goodwills, taxes are shown in the column 'consolidation.'
5_Previous year's figures as of Dec. 31, 2017.
6_Taxes are shown in the column 'consolidation.'
In the first three months of 2018, the share of sales generated by foreign Group companies amounted to 79.9% (Q1 2017: 79.3%).
Sales (external sales) in the EMEA region amounted to EUR 132.2 million in the first quarter of 2018, an increase of 3.4% over the same period of the previous year (Q1 2017: EUR 127.9 million). The EMEA region thus accounted for 49% of Group sales (Q1 2017: 50%). Sales growth in the region is due in particular to strong business in the automotive sector, which was boosted by the generally positive economic situation in the industry with increasing production and sales figures.
Adjusted EBITDA in the EMEA region amounted to EUR 27.5 million, 2.4% lower than in the same period of the previous year (Q1 2017: EUR 28.2 million). The adjusted EBITDA margin fell accordingly from 20.4% to 19.0%. Adjusted EBITA was EUR 24.5 million (Q1 2017: EUR 25.4 million) while the adjusted EBITA margin was 16.9% (Q1 2017: 18.4%).
The main reasons for the decline in margins in the EMEA region were the persistently high prices for alloy surcharges and engineering plastics. 2017 ANNUAL REPORT, P. 64
Investments in the EMEA region in the reporting period amounted to EUR 4.6 million (Q1 2017: EUR 4.2 million) and related in particular to the sites in Serbia, Germany, the United Kingdom and France.
Assets decreased by 2.9% to EUR 583.7 million (Dec 31, 2017: EUR 601.3 million).
External sales in the Americas region amounted to EUR 107.3 million in the first quarter of 2018, an increase of 7.7% compared to the previous year (Q1 2017: EUR 99.7 million).
Growth results both from the healthy order situation in the automotive industry – partly as a result of the significant recovery in the market for commercial vehicles and agricultural machinery – and from the positive development of the Distribution Services business. Water-related business, which was weaker in fiscal year 2017 due to weather conditions, recovered with particular significance in the first quarter of 2018.
As in the prior-year quarter, the Americas region accounted for 39% of Group sales in the first quarter of 2018.
Adjusted EBITDA in the Americas region amounted to EUR 21.6 million in the first quarter of 2018 (Q1 2017: EUR 19.5 million), an increase of 10.7% year-on-year. The adjusted EBITDA margin was 19.6%, an improvement on the previous year (Q1 2017: 18.9%).
The adjusted EBITA margin was 17.7% (Q1 2017: 16.6%) based on an adjusted EBITA of EUR 19.4 million (Q1 2017: EUR 17.1 million).
Investments in the Americas region amounted to EUR 3.9 million in the first quarter of 2018 (Q1 2017: EUR 2.6 million) and related in particular to the sites in the US and Mexico. Assets fell by 3.6% to EUR 578.0 million (Dec 31, 2017: EUR 599.9 million), also due to the development of the euro/US dollar closing rate.
With external sales of EUR 33.1 million, the Asia-Pacific region showed strong growth of 20.9% compared to the previous year (Q1 2017: EUR 27.4 million). The main growth driver was the EJT business, which benefited from high demand for joining technology, particularly in China.
The region's share of Group sales rose to 12% (Q1 2017: 11%) thanks to the strong development of sales.
Adjusted EBITDA in the Asia-Pacific region amounted to EUR 4.8 million, a decrease of 17.6% compared to the same quarter of last year (Q1 2017: EUR 5.9 million). The adjusted EBITDA margin was 14.2% (Q1 2017: 20.6%).
Adjusted EBITA amounted to EUR 3.8 million, 24.3% below the previous year's level (Q1 2017: EUR 5.1 million). The adjusted EBITA margin was 11.3% (Q1 2017: 17.8%).
The decline in margins in the Asia-Pacific region in comparison to the previous year is primarily due to higher material costs.
Capital expenditure in the first quarter of 2018 amounted to EUR 1.1 million (Q1 2017: EUR 1.2 million) and mainly related to the plants in China. Assets amounted to EUR 158.9 million and fell slightly by 0.1% compared to the end of the year (Dec 31, 2017: EUR 159.1 million).
On May 7, 2018, the Management Board of NORMA Group increased its full year sales forecast for the fiscal year 2018, on the basis of Group sales from January until April 2018 as well as expected Group sales until year end. The adjustments to the forecast
are shown in the following table.
| Consolidated sales | organic growth of around 5% to 8% (previously: solid organic growth of around 3% to 5%), additionally around EUR 5 million from acquisitions |
|||||
|---|---|---|---|---|---|---|
| EMEA: solid organic growth |
||||||
| Americas: strong organic growth APAC: organic growth in the double-digit range |
||||||
| DS: solid growth |
||||||
| EJT: strong growth |
||||||
| Adjusted cost of materials ratio | roughly at the same level as in previous years | |||||
| Adjusted personnel cost ratio | roughly at the same level as in previous years | |||||
| Investments in R&D (in relation to sales) | around 5% | |||||
| Adjusted EBITA margin | sustainable at the same level as in previous years of more than 17.0% | |||||
| Financial result | up to EUR – 15 million |
|||||
| Adjusted tax rate | around 26% to 28% | |||||
| Adjusted earnings per share | strong increase | |||||
| Investment rate (excluding acquisitions) | operative investments of around 5% of Group sales | |||||
| Net operating cash flow | around EUR 140 million | |||||
| Dividend | approx. 30% to 35% of adjusted net profit of the Group | |||||
| Number of invention applications per year | more than 20 | |||||
| Number of defective parts per million (PPM) | less than 20 | |||||
| Number of quality-related complaints per month | less than 8 | |||||
Date Event May 17, 2018 Ordinary Annual General Meeting 2018, Frankfurt August 1, 2018 Publication of Interim Report Q2 2018 November 7, 2018 Publication of Interim Statement Q3 2018
The financial calendar is constantly updated. Please visit the Investor Relations section on the Company website INVESTORS.NORMAGROUP.COM.
NORMA Group SE Edisonstraße 4 63477 Maintal, Germany
Phone: +49 6181 6102 740 E-mail: [email protected] www.normagroup.com
E-mail: [email protected]
Phone: +49 6181 6102 741 E-mail: [email protected]
Senior Manager Investor Relations
Phone: +49 6181 6102 742 E-mail: [email protected]
Senior Manager Investor Relations Phone: +49 6181 6102 748 E-mail: [email protected]
MPM Corporate Communication Solutions, Mainz
NORMA Group
This Interim Statement is also available in German. If there are differences between the two, the German version takes priority.
Please note that slight differences may arise as a result of the use of rounded amounts and percentages.
This Interim Statement contains certain future-oriented statements. Future-oriented statements include all statements which do not relate to historical facts and events and contain future-oriented expressions such as 'believe,' 'estimate,' 'assume,' 'expect,' 'forecast,' 'intend,' 'could' or 'should' or expressions of a similar kind. Such future-oriented statements are subject to risks and uncertainties since they relate to future events and are based on the Company's current assumptions, which may not in the future take place or be fulfilled as expected. The Company points out that such future-oriented statements provide no guarantee for the future and that the actual events including the financial position and profitability of NORMA Group SE and developments in the economic and regulatory fundamentals may vary substantially (particularly on the down side) from those explicitly or implicitly assumed in these statements. Even if the actual assets for NORMA Group SE, including its financial position and profitability and the economic and regulatory fundamentals, are in accordance with such future-oriented statements in this Interim Statement, no guarantee can be given that this will continue to be the case in the future.
Publication date May 9, 2018
NORMA Group SE Edisonstraße 4 63477 Maintal Germany
Phone: +49 6181 6102 740
E-mail: [email protected] Internet: www.normagroup.com
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