New revenue record reached by Grammer in 2018
- Record revenue with growth of 4.2 percent to EUR 1.86 billion
- Operating EBIT of EUR 75.8 million and an operating EBIT margin of 4.1 percent almost at the previous year's level
- Group net profit below previous year due to exceptional effects
- Proposed dividend of EUR 0.75 per share
- Stabilization of shareholder structure spurring growth in order intake for future projects in the automotive sector
- Further growth and improvement in profitability expected in 2019
Amberg, March 18, 2019 - The Grammer Group looks back on an eventful year in 2018 with further record revenue achieved in tandem with virtually unchanged operating profitability compared with the previous year. With the successful acquisition of the US automotive components supplier Toledo Molding & Die, Inc., Grammer was able to progress in its targeted efforts to acquire additional process know-how and capacity in the United States last year. The TMD Group is the largest acquisition in the company's history and additionally broadens its footprint in the NAFTA region.
The stabilization of the shareholder structure had a positive effect on order intake. Following the successful takeover offer, the majority shareholder Ningbo Jifeng and its affiliated companies now hold 84.2 percent of Grammer AG. Under a business combination agreement far-reaching assurances have been given for the planned joint activities at the operating level.
"We are satisfied with the good business performance achieved in 2018 despite the adverse market conditions. We were also able to expand our market position with new customers and can see from the gratifying order situation that our customers are acknowledging the stabilization of our shareholder structure," said Manfred Pretscher, Chief Executive Officer of Grammer AG. "However, we are also feeling the effects of the slower momentum in the global economy and, in particular, the challenges facing passenger vehicle OEMs. Accordingly, we will be continuing to strengthen our competitive position by taking appropriate measures."
Growth in both divisions
Underpinned by its good international footprint, Grammer recorded revenue growth of 4.2 percent to EUR 1.86 billion in 2018 despite the difficult market environment. The main driver behind this growth was the Group's Commercial Vehicles Division, which recorded an 11 percent increase in revenue to EUR 599.8 million (2017: 540.2) and a further 13 percent increase in operating EBIT to EUR 53.5 million (2017: 47.5). The Commercial Vehicles Division benefited in particular from its global footprint and strong demand in the offroad and material handling segments. In addition, the Shaanxi joint venture in China performed better than expected, gaining significant market share in the local truck sector. Business in Brazil also continued to grow.
The Automotive Division remained on a stable trajectory, posting a slight 1.7 percent increase in revenue to EUR 1.31 billion (2017: 1.29) in 2018. However, this was solely attributable to the acquisition of the TMD Group. The significant weakening of the passenger car market in Europe from the end of the third quarter as well as a high number of model start-ups in the NAFTA region influenced operating performance in this Division. Accordingly, operating EBIT reached EUR 36.8 million in 2018 (2017: 45.4).
Revenue growth the strongest in the Americas and APAC
Regionally, the Americas region (North, South and Central America) and APAC region (Asia Pacific) posted the greatest revenue growth in 2018. In the Americas region, revenues rose the most strongly by 30.5 percent to EUR 366.4 million (2017: 280.7). In addition to the acquisition of the TMD Group, this was attributable to favorable economic influences in the NAFTA region and new automotive start-ups at the plants in Tupelo, Mississippi and Mexico. In addition, the Brazilian economy continued to recover. APAC region recorded growth of 8.0 percent to EUR 303.5 million (2017: 280.9) mainly as a result of the successful expansion of truck business in China. In EMEA (Europe, Middle East, Africa), on the other hand, there was a slight decline of 2.7 percent in revenue to EUR 1.19 billion (2017: 1.22) due to the muted state of the passenger car market in Europe from the end of the third quarter.
Operating profitability almost at previous year's level
The Grammer Group's earnings were heavily impacted by exceptional effects in 2018. These included one-off legal and consulting costs in connection with the takeover by Ningbo Jifeng, transaction costs in connection with the successful takeover of TMD and the expenses resulting from payments made to the members of the Executive Board leaving the company under change-of-control rights. This was compounded by market-related earnings effects caused by the growing slump in the European passenger car market from the end of the third quarter.
Group earnings before interest and taxes (EBIT) were particularly burdened by the aforementioned exceptional effects amounting to a total of EUR 29.9 million (2017: 7.3), and, at EUR 48.7 million in 2018, fell short of the previous year's figure of EUR 66.5 million. Reflecting this, the EBIT margin contracted to 2.6 percent (2017: 3.7).
Adjusted for currency effects and other non-recurring or exceptional effects, operating EBIT remained almost at the previous year's level, coming to around EUR 76 million (2017: 80) despite these difficult conditions. Accordingly, the operating EBIT margin of 4.1 percent was only slightly below the previous year's level (2017: 4.5).
Group earnings after taxes were also influenced by exceptional effects and amounted to EUR 23.2 million (2017: 32.4).
Proposed dividend of EUR 0.75 per share
In line with Grammer AG's lower net retained profit and dividend policy, the Executive Board and the Supervisory Board have decided to propose a dividend of EUR 0.75 to the shareholders. Based on consolidated earnings per share of EUR 1.90 (2017: 2.67), this corresponds to a continued high payout ratio of 39 percent. In terms of Grammer share's year-end price of EUR 37.70, it translates into a dividend yield of 2 percent.
Change in the Executive Board
In September 2018, all the members of the Executive Board announced that they would be resigning from their positions under their contractual change-of-control rights. Hartmut Müller, Chief Executive Officer, and Gérard Cordonnier, Chief Financial Officer, left the Company on December 31, 2018. Manfred Pretscher, hitherto Chief Operating Officer, has provisionally assumed the position of Chief Executive Officer, Human Resources Director and Chief Financial Officer until a decision has been made on his successor for the vacant positions on the Executive Board.
Jens Öhlenschläger assumed the position of Chief Operating Officer effective January 1, 2019. At its meeting on March 15, 2019, the Supervisory Board of Grammer AG appointed Ms. Jurate Keblyte to the Executive Board and assigned her to the position of Chief Financial Officer with effect from August 1, 2019. The position of CFO will continue to be filled interimistically by Mr. Pretscher until the assumption of office by Ms. Keblyte.
Outlook for 2019
The Grammer Group continues to anticipate a challenging economic environment in 2019. In the Automotive Division in particular, markets around the world are expected to perform disparately, although conditions in Europe remain uncertain. The Executive Board expects Group revenue to grow to over EUR 2.1 billion. Assuming the absence in 2019 of any significant exceptional expenses of the type that arose in 2018, the GRAMMER Group expects to be able to report an EBIT this year, which is clearly higher than in 2018 (EUR 48.7 million). Accordingly, operating profitability is expected to continue growing, thus surpassing the previous year's level.
The Grammer Group's full annual report for 2018 is available on the Company's website at the following link:
Located in Amberg, Germany, Grammer AG specializes in the development and production of components and systems for automotive interiors as well as suspended driver and passenger seats for onroad and offroad vehicles.
In the Automotive Division, we supply headrests, armrests, center console systems, high-quality interior components, operating systems and innovative thermo-plastic solutions to premium automakers and automotive system suppliers.
The Commercial Vehicles Division comprises seats for the truck and offroad seat segments (tractors, construction machinery, forklifts) as well as train and bus seats.
With round about 15,000 employees, Grammer operates in 19 countries around the world. Grammer shares are listed in the Prime Standard and traded on the Frankfurt and Munich stock exchanges via the electronic trading system Xetra.
Phone: 0049 9621 66 2200
18.03.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de