DGAP-News: Grammer AG: Further increase in revenue and earnings in the first half of 2018

Grammer AG: Further increase in revenue and earnings in the first half of 2018

- Increase in revenue to EUR 927.6 million

- Substantial growth in EBIT to EUR 41.9 million, accompanied by an improved EBIT margin of 4.5 percent

- Stable operating EBIT of EUR 43.3 million with a margin of 4.7 percent

- Continued strong performance in the Commercial Vehicles Division

- Full-year guidance for 2018 confirmed

- Minimum acceptance threshold for the takeover offer submitted by strategic partner Jiye Auto Parts GmbH is expected to be substantially exceeded

Amberg, August 7, 2018 - After a challenging first quarter as expected, Grammer grew in the second quarter in line with plans, posting an increase in Group revenue to EUR 927.6 million in the first half of 2018 (2017: 908.0). The Commercial Vehicles Division in particular continued to perform very well, although revenue in the Automotive Division was also up in the second quarter following the more muted start to the year as a result of production ramp-ups. Regionally, the Grammer Group expanded in EMEA and APAC. Whereas revenue in the domestic EMEA market rose slightly to EUR 636.7 million (2017: 625.7) due to strong growth in the Commercial Vehicles Division, Grammer again achieved strong top-line growth of 12.9 percent to EUR 151.9 million (2017: 134.5) in the APAC region. Only the Americas region sustained a moderate 6.0 percent decline to EUR 139.0 million (2017: 147.8) primarily as a result of lower revenue in the wake of numerous product phase-outs and ramp-ups as well as series change-overs in the Automotive Division.

Operating EBIT stable at a high level. Increase in IFRS EBIT
In the first six months of the current year, Group operating EBIT adjusted for exceptionals and currency effects came to EUR 43.3 million, thus coming very close to the previous year's figure (2017: 44.0). This also applied to the operating EBIT margin, which remained stable at 4.7 percent (2017: 4.8).
Although exceptional effects arising from changes in the shareholder structure and the uncovered R&D expenses again exerted pressure on earnings in the second quarter, IFRS earnings before interest and taxes (EBIT) rose by 19.4 percent to EUR 41.9 million (2017: 35.1). The EBIT margin came to 4.5 percent as of June 30, 2018, also widening sharply (2017: 3.9).

Strong growth in the Commercial Vehicles Division and stabilization in the Automotive Division
At EUR 646.7 million (2017: 661.9), the Automotive Division again contributed the bulk of Group revenue. However, as in the previous quarters, the Commercial Vehicles Division achieved stronger growth of 15.4 percent, resulting in very encouraging revenue of EUR 308.3 million in the first six months of 2018. Driven by upbeat market conditions in all regions, significant order intake in all market segments and the expansion of high-margin business segments, the strong top-line growth also led to a substantial improvement in this division's operating EBIT, which climbed to EUR 30.3 million (2017: 22.7), accompanied by an operating EBIT margin of 9.8 percent (2017: 8.5).

The sharp growth in the Commercial Vehicles Division thus easily made up for the small decline in revenue posted by the Automotive Division in the first half of the year. This decline was primarily caused by the numerous model change-overs and, hence, new product launches in the Automotive Division, which exerted pressure on revenue during the production ramp-up phase in the NAFTA region in particular. As expected, the situation eased in the second quarter, resulting in a slight increase in revenue. In addition to ramp-up-related capacity costs and higher raw material prices for plastic and foam components, the still uncovered development, sales and project costs weighted on the Automotive Division's operating performance, albeit to a far lesser extent than in the first quarter. This was also reflected in the Automotive Division's operating EBIT, which dropped to EUR 21.3 million, down from the previous year's figure of EUR 28.2 million, accompanied by an EBIT margin of 3.3 percent (2017: 4.3).

"The Group generally performed in line with our expectations in the first half of the year. The most important event for Grammer in the last few months has been the takeover offer submitted by our strategic partner in China. After a sucessful transaction, Ningbo Jifeng will be our anchor investor, acting as an important partner for Grammer's future activities in the Asian market," says Hartmut Müller, CEO of Grammer. "At the same time, we will be able to substantially reinforce our market position in North America with the acquisition of US automotive component supplier Toledo Molding & Die Inc., which will allow us to harness the growth potential that this region will continue to offer in the future."

Takeover offer by Ningbo Jifeng
At the end of May, Grammer AG entered into a business combination agreement with strategic investor Ningbo Jifeng via the bidding entity Jiye Auto Parts GmbH under which a public takeover offer was submitted to the shareholders of Grammer AG. The main purpose of the business combination agreement is to deepen the strategic partnership that was established in 2017, to additionally stabilize the shareholder structure by expanding the investor's share in Grammer AG, to optimize the Group's global footprint and to secure its independence and global growth strategy. The published takeover offer of June 25, 2018 offered a settlement of EUR 60.00 per share. The Executive Board and the Supervisory Board of Grammer AG welcome the terms of the business combination agreement and, in a reasoned joint statement, support the takeover offer. Accordingly, they recommend acceptance of the offer by the shareholders. During the acceptance period, the bidder altered the conditions for acceptance, lowering the minimum acceptance threshold from 50 percent plus one share to 36 percent plus one share. As a result, the acceptance period was extended until August 6, 2018. On August 6, 2018, the bidder has anncounced, that the amount of Grammer shares, which have been tendered until August 3, 2018, in addition to the amount of Grammer shares held directly by the bidder, equals a proportion of 45.58 percent of the Grammer shares issued.

Full-year forecast for 2018 confirmed
For 2018 as a whole, Grammer continues to project growth in revenue to EUR 1.85 billion as well as a further improvement in operating profitability in excess of the previous year's level, thus confirming the guidance published in the annual report for 2017 and in the first quarter of 2018.

The outlook for the second half-year 2018 is based on the current forecasts for the global economy as well as the main markets and customers. The EU-wide introduction of the worldwide harmonized light vehicles (WLTP) test procedure for passenger cars and light commercial vehicles could also have a negative impact on the sales of the customers in the Automotive Division in the second half of the year. However, a specific forecast is not yet possible at this stage. In addition, recent developments with respect to trade restrictions as well as mutually imposed retaliatory custom tariffs may leave noticeable traces on future earnings.

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 13,000 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.