Grammer : with further revenue growth and substantial increase in operating EBIT

-5.8 percent increase in Group revenue to EUR 1.34 billion
-Substantial 23.4 percent increase in operating EBIT to EUR 58.6 million testifying further improvements of the operational performance
-Persistent restraint on the part of individual premium OEMs in awarding new contracts to Grammer
-Adjusted EBIT forecast reflecting strain from uncovered development and project costs arising from shortfall in new orders

Amberg, November 13, 2017 - The Grammer Group remained on its growth trajectory in the first nine months, posting a substantial increase in revenue (up 5.8 percent) and an even greater improvement in operating EBIT (up 23.4 percent) over the previous year. Despite negative currency translation effects and high exceptional expenses in connection with an attempted change of control as well as additional uncovered development and project expenses arising from a shortfall in new orders, earnings before interest and taxes (EBIT) came to EUR 45.8 million, thus almost matching the previous year's level. Although the change of control on Grammer AG's Executive Board and Supervisory Board sought by a minority shareholder was successfully averted, these plans had - as feared - an adverse effect on order intake and project awards from German OEMs in particular. Unfortunately, the restraint shown by individual premium OEMs in awarding new contracts also continued in the third quarter of 2017, exerting pressure on operating EBIT in the Automotive Division in the current year. This led to additional strain in the form of uncovered development and project expenses which, contrary to original plans, it was no longer possible to recoup from new projects.

Higher revenue in all regions
Group revenue grew by 5.8 percent in the first nine months to EUR 1.34 billion (2016: 1.27). This encouraging performance was underpinned by revenue growth in the Automotive Division with continued very favorable console business and particularly also the very strong third quarter experienced in the Commercial Vehicles Division.

The Grammer Group grew in all regions in the first nine months - albeit at differing rates. In its domestic EMEA market, Grammer achieved a small 1.5 percent increase in revenue to EUR 919.4 million (2016: 906.1). The greatest growth was recorded in the Americas, where revenue climbed by 20.3 percent to EUR 216.6 million (2016: 180.1) APAC revenue also grew very substantially by 13.3 percent to EUR 202.9 million (2016: 179.1).
Further improvement in operating profitability
Group earnings before interest and taxes (EBIT) came to EUR 45.8 million as of September 30, 2017, thus falling only slightly below the previous year (2016: 49.5). The EBIT margin came to 3.4 percent (2016: 3.9). This stable performance was achieved despite the significant strains referred to above.

At EUR 25.7 million, net profit for the year to September 30, 2017 thus remained at the previous year's level (2016: 25.5).

Adjusted for currency translation effects and exceptionals in connection with the attempted change of control, the improved profitability is readily apparent: Despite the additional strain arising from the uncovered development and project expenses, operating EBIT rose substantially by 23.4 percent to EUR 58.6 million (2016: 47.5). Likewise, the operating EBIT margin widened to 4.4 percent and was, thus, substantially up on the previous year's already increased figure (2016: 3.8).

'The exceptional challenges this year have been mastered very well by all employees and we could achieve important strategic and operational milestones. However, order intake for new project remained unsatisfactory in the third quarter and has impacted operative earnings. Even so, we were generally able to improve our operating performance substantially and are well positioned for further profitable growth', says Hartmut Müller, Chief Executive Officer of Grammer AG.

Particularly strong growth in Commercial Vehicles Division
Both of Grammer's Divisions posted gains in revenue and earnings in the first nine months.
In the Automotive Division, revenue grew by 3.5 percent to EUR 973.9 million (2016: 941.1). At EUR 33.1 million, operating EBIT was up a substantial 16.1 percent on the previous year (2016: 28.5), reflecting the success of the measures implemented for improving and optimizing operating performance and the Grammer Group's strategic orientation. Accordingly, the operating EBIT margin widened to 3.4 percent (2016: 3.0).

The Commercial Vehicles Division performed particularly encouragingly in the period under review thanks to a very strong third quarter and the nascent recovery in the agricultural machinery market together with the stabilization of the Brazilian truck market. All told, this Division reported revenue of EUR 397.8 million (2016: 360.6), translating into strong growth of 10.3 percent. In the period under review, operating EBIT increased a good deal more quickly by 31.4 percent to EUR 34.3 million (2016: 26.1), the operating EBIT margin thus widening by 1.4 percentage points to 8.6 percent (2016: 7.2).

 
Main shareholder Ningbo Jifeng increasing share in Grammer AG to 25.51 percent
After the end of the reporting period, JAP Capital Holding GmbH (a company affiliated with our strategic partner Ningbo Jifeng) announced that it had increased its share in Grammer AG from 20.01 to 25.51 percent. As a result, it is the company's largest shareholder.

Adjusted EBIT forecast reflecting strain from uncovered development and project costs arising from shortfall in new orders
In response to the changed shareholder structure and attempts by minority shareholder Cascade International to secure a change of control, the restraint on the part of individual premium OEMs in the award of new contracts for Grammer continued in the third quarter as well. The lower order intake left traces on the Automotive Division's future business performance and caused a shortfall in the recovery of development, selling and project costs in the third quarter. Although the measures already taken to optimize fixed costs and process structures are already having an effect, they now have to be intensified and continued in the light of new conditions.

Despite this additional cost pressure due to the shortfall in new and follow-up orders, however, Grammer AG still expects to achieve very strong operating EBIT in 2017 as a whole well in excess of the previous year's level. Even so, the Grammer Group's operating EBIT margin will no longer reach the target of around 5 percent, although it should still exceed the previous year's figure of 4.0 percent slightly. At this stage, an adjustment to the medium-term forecast for the Grammer Group is not necessary.

Looking forward, Grammer will continue to steadily implement its corporate strategy with the aim of additionally improving profitability and shareholder value. A further clear sign pointing to the company's continuity and reliability can be seen in the renewal of the contracts of the two Executive Board members Gérard Cordonnier (CFO) and Manfred Pretscher (COO) by a further three years. CEO Hartmut Müller's contract had previously been renewed by five years in May 2016.

The Grammer Group's full interim report on the first nine months of 2017 is available from the corporate website at the following link:
https://www.grammer.com/en/investor-relations/publications/financial-reports.html

Company profile

Located in Amberg, Germany, Grammer AG specializes in the development and production of components and systems for automotive interiors as well as suspension driver and passenger seats for onroad and offroad vehicles.
In the Automotive Division, we supply headrests, armrests, center console systems and high-quality interior components and operating systems to premium automakers and automotive system suppliers. The Commercial Vehicle Division comprises seats for the truck and offroad seat segments (tractors, construction machinery, forklifts) as well as train and bus seats. With over 12,000 employees, Grammer operates in 19 countries around the world.

Grammer shares are listed in the SDAX and traded on the Frankfurt and Munich stock exchanges via the electronic trading system Xetra.

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