ElringKlinger : makes further ground in second quarter of 2017

ElringKlinger makes further ground in second quarter of 2017

- Strong demand sees revenue expand by 4.3% in second quarter of 2017 and by 8.4% in first half of 2017

- EBIT before purchase price allocation up by 12% to EUR 76.3 million in first half; EBIT margin before purchase price allocation improves to 9.1%

- Guidance for 2017 confirmed

Dettingen/Erms (Germany), August 7, 2017 +++ After a strong start to the year ElringKlinger AG maintained its forward momentum in the second quarter of 2017. Despite automobile production stagnating at its prior-year level, the Group managed to increase sales revenue by 4.3% to EUR 407.8 (390.9) million. Asked to comment, CEO Dr. Stefan Wolf said, "The good situation in terms of orders and our sustained revenue growth at a high level are a reflection of the strong demand for our products. One of the most striking aspects is that we managed to expand especially in those markets that were generally in decline in the second quarter." In the NAFTA region, for instance, ElringKlinger lifted sales revenue by 8.5% year on year in the second quarter, while automobile production in this market was down by around 3%. The situation was similar in the Asia-Pacific region, where ElringKlinger recorded revenue growth of 12.6%. By contrast, China - as the most important market in Asia - was faced with a slight slowdown of around 1%.

The dynamic level of growth recorded by ElringKlinger was attributable to a number of new product rollouts. "These ramp-ups covered the entire product portfolio within the Original Equipment segment. We also saw solid growth in the other segments of our business during the second quarter, with Aftermarket expanding by 3.1% and Engineered Plastics by 3.6%," said Wolf.

Building on this positive performance, the Group recorded organic revenue growth of EUR 18.1 million, or 4.6%, in the second quarter just ended. There are revenue streams from acquisitions to be considered amounting to EUR 2.6 million, or 0.7%, contributed by hofer powertrain products GmbH, by the company formerly known as COdiNOx Beheer B.V., and by the business operations of Maier Formenbau GmbH. Currency effects - particularly with regard to the Chinese yuan, the Turkish lira, and the British pound - diluted revenue by EUR 3.8 million, or -1.0%, as a result of which reportable revenue of EUR 407.8 million for the quarter just ended was up EUR 16.9 million, or 4.3%, on the figure posted for the same period a year ago.

On the back of strong revenue growth, earnings before interest and taxes (EBIT) also expanded in the second quarter, although the improvement in earnings was affected slightly by several factors. First, the implementation of the Group-wide ERP system at the Swiss site effective from May 1, 2017, led to a slight delay in the scheduled improvement process. Secondly, the large volume of components requested by customers as part of their production scheduling temporarily led to additional selling expenses at some of the NAFTA sites. Furthermore, the volatile nature of project-driven business in the Exhaust Gas Purification division had an impact on earnings due to the fact that a strong fourth quarter in 2016 was now followed by two less buoyant quarters in 2017. In total, the Group recorded EBIT before purchase price allocation of EUR 37.2 (36.2) million in the second quarter, which corresponds to a margin of 9.1 (9.3)%. The year-on-year improvement was more noticeable in the first half as a whole, with the Group growing by EUR 8.1 million to EUR 76.3 (68.2) million, which translates into a margin of 9.1 (8.8)%.

ElringKlinger also remained on track with regard to its other performance indicators: at 5.4%, net working capital rose at a slower rate than revenue (+8.4%) in the first half of 2017. On a quarterly basis, investments in property, plant, and equipment and real estate increased by EUR 6.3 million to EUR 42.4 (36.1) million. In the first half of 2017 as whole, however, they were down by EUR 1.6 million year on year at EUR 72.0 (73.6) million. Correspondingly, the investment ratio fell to 8.6 (9.5)%. Additionally, strong revenue growth in the first two quarters and the associated temporary increase in inventories and trade receivables resulted in a decline in operating free cash flow to EUR -21.8 (-5.7) million; of this total, a figure of EUR -10.2 (-6.3) million was attributable to the second quarter.

Based on the current market climate, ElringKlinger has kept its forecast for global car production unchanged at 1 to 2% for 2017 as whole and continues to expect revenue to exceed this figure by around 2 to 4 percentage points. Provided that the Swiss site is able to sustain its positive performance, the Management Board can affirm its guidance for the annual period as a whole, the target being to achieve an EBIT margin before purchase price allocation of around 9 to 10%. ElringKlinger's medium-term revenue and earnings targets have also been confirmed.

For further information, please contact:
ElringKlinger AG
Dr. Jens Winter
Investor Relations / Corporate PR
Max-Eyth-Straße 2
D-72581 Dettingen/Erms
Phone: +49 7123 724-88335
Fax: +49 7123 724-85 8335
E-mail: jens.winter@elringklinger.com

About ElringKlinger AG
As an automotive supplier, ElringKlinger has become a trusted partner to vehicle manufacturers - with a firm commitment to shaping the future of mobility. Be it optimized combustion engines, high-performance hybrids, or environmentally-friendly battery and fuel cell technology, ElringKlinger provides innovative solutions for all types of drive systems. ElringKlinger's lightweighting concepts help to reduce the overall weight of vehicles. As a result, vehicles powered by combustion engines consume less fuel and emit less CO₂, while those equipped with alternative propulsion systems benefit from an extended range. In response to increasingly complex combustion engine technology, the Group also continues to make refinements with regard to gaskets in order to meet the highest possible standards. Additional solutions include thermal and acoustic shielding components as well as particulate filters and end-to-end exhaust gas purification systems for engines used in stationary and mobile applications. The Group's portfolio is complemented by products made of the high-performance plastic PTFE which are also marketed to industries beyond the automotive sector. These efforts are supported by a dedicated workforce of more than 9,000 people at 49 ElringKlinger Group locations around the globe.

Disclaimer
This release contains forward-looking statements. These statements are based on expectations, market evaluations and forecasts by the Management Board and on information currently available to them. In particular, the forward-looking statements shall not be interpreted as a guarantee that the future events and results to which they refer will actually materialize. Whilst the Management Board is confident that the statements as well as the opinions and expectations on which they are based are realistic, the aforementioned statements rely on assumptions that may conceivably prove to be incorrect. Future results and circumstances depend on a multitude of factors, risks and imponderables that can alter the expectations and judgments that have been expressed. These factors include, for example, changes to the general economic and business situation, variations of exchange rates and interest rates, poor acceptance of new products and services, and changes to business strategy.