DGAP-News: Grammer AG
/ Key word(s): Quarter Results
Covid-19 Pandemic Significantly Impacts Grammer's Revenue and Earnings
- Effects of the Covid-19 pandemic negatively impact revenue and earnings in the first quarter
- Collapse in demand of customers and production restrictions lead to temporary plant closures around the globe
- Revenue down to 454.9 million euros in the period from January to March
- Operating EBIT at 0.4 million euros; EBIT at -2.1 million euros
- New organization for the Grammer Group successfully started in April
Amberg, April 29, 2020 - As a result of the global Covid-19 pandemic, Grammer AG has started 2020 with significant drops in revenue and earnings. Due to the collapse in demand and product orders in both segments, as well as the customers' production restrictions, group revenue fell by 14.8 percent in the first three months to 454.9 million euros (01-03 2019: 534.1 million euros). The lower demand caused by the effects of the Covid-19 pandemic impacted sales markets that had already been weaker since the second half of 2019.
The temporary plant closures started at the end of January 2020 as a result of government orders in China, where production was however able to gradually restart beginning in March. This was followed by plant closures at European and American locations in mid-March due to customers halting production within those regions. Due to our own plant closures and extraordinary effects from exchange rates, EBIT in the first quarter fell to -2.1 million euros (01-03 2019: 24.0 million euros). The cost-saving measures already introduced were not able to compensate for the gap in revenue. Operating EBIT, adjusted for currency effects in the amount of 2.5 million euros, fell to 0.4 million euros (01-03 2019: 23.0 million euros). Operating EBIT margin was therefore 0.1 percent (01-03 2019: 4.3 percent).
"The Covid-19 pandemic has a massive impact on the global automotive industry and hence also its supply base. As an international partner to the major premium OEMs, Grammer is closely integrated in global supply chains and is directly affected by the drop in demand," says Thorsten Seehars, Chief Executive Officer of Grammer AG, explaining the situation. "Despite the measures taken immediately and the continuous implementation of our performance program together with the introduction of short time working arrangements at all locations, it was not possible to avert the effects of the sharp drop in revenue on the Group's earnings. However, as the new Executive Board we see the current crisis as confirming our decision to position Grammer more firmly on a regional basis and to implement other organizational measures that will make our company swifter and more flexible. Although we cannot prevent such market situations, our new organizational set-up does make it easier and faster for us to adapt to them. We are also seeing the first positive results of our new long-term strategy in the world's largest automotive and commercial vehicle market in China, where our regional sales organization is currently in negotiations with various customers to increase our market shares."
Impact of Covid-19 Pandemic Felt in All Regions
Since mid-March, the increasing infection numbers in Europe and the United States have led to the partial or complete shutdown of production facilities. Accordingly, at 263.5 million euros, revenue in Europe was significantly below the previous year's level (01-03 2019: 307.0 million euros). In the Americas region, revenue decreased to 137.8 million euros (01-03 2019: 154.9 million euros).
In the Commercial Vehicles segment, revenue dropped by 15.5 percent to 142.4 million euros. In addition to the plant closures in China and the restrictions in Europe and the Americas region, the exceptionally high revenue in the previous year's quarter - because the first half of 2019 was characterized by an overall high demand in the Commercial Vehicles segment - also affects the comparative calculation. Operating EBIT amounted to 10.4 million euros (01-03 2019: 16.8 million euros).
Comprehensive Measures as Response to the Covid-19 Pandemic
Equity Ratio Increases to 26 Percent
As of March 30, 2020, a hybrid loan in the amount of 19.1 million euros was granted by Ningbo Jifeng Auto Parts Co., Ltd., a company within the Ningbo Jifeng Group (the majority shareholder of Grammer AG). The hybrid loan was concluded with an indefinite term and has a quasi-equity characteristic.
As of the end of the quarter, the equity ratio amounted to 26 percent (December 31, 2019: 23 percent).
New Organizational Structure at the Grammer Group
Forecasting Development for 2020 as a Whole Not Possible
In the Automotive segment, production has resumed at all Grammer plants in China and is approximately at pre-crisis levels by now. Following the shutdowns in the plants in China, the start-up of the truck seat production progressed more quickly than in the Automotive segment and may hence imply stronger demands in the months to come. In Europe, leading automobile manufacturers announced that they intend to gradually restart production beginning in May. Resumption of operations depends on the ability to ensure the health and safety of employees and the status of the supply chains, as well as the expected customer demands.
The forecast published in the 2019 annual report for the 2020 fiscal year was suspended with the press release on March 30, 2020. The estimations and expectations contained in that forecast are based on market assumptions and internal evaluations from the beginning of 2020. In light of the extremely dynamic nature of developments and the associated uncertainty as part of the Covid-19 pandemic and the accompanying economic effects, forecasting the remainder of the 2020 fiscal year is not currently possible. Grammer will issue a forecast as soon as this is sufficiently possible.
Grammer AG, based in Amberg, Germany, specializes in the development and production of components and systems for car interiors as well as driver and passenger seats with suspension for on- and off-road vehicles. In the Automotive segment, we supply headrests, armrests, center consoles, high-quality interior components, and control systems as well as innovative thermoplastic solutions for the automotive industry to renowned premium car manufacturers and to system suppliers to the automotive industry. The Commercial Vehicles segment comprises the business areas for seats for trucks and off-road vehicles (tractors, construction vehicles, forklifts) and for train and bus seats.
Phone: 0049 9621 66 2200
29.04.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
|Phone:||+49 (0)9621 66-0|
|Fax:||+49 (0)9621 66-1000|
|Listed:||Regulated Market in Frankfurt (Prime Standard), Munich; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Stuttgart, Tradegate Exchange|
|EQS News ID:||1032331|
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