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Grammer AG with a successful first quarter despite challenging conditions in the automotive industryAmberg, )
- 17.5 percent increase in revenue to EUR 534.1 million
- Growth in EBIT to EUR 24.0 million
- Strong performance in the Commercial Vehicles Division in particular; Automotive Division spurred by acquisition of TMD
- New Executive Board lineup complete: Thorsten Seehars appointed CEO and Jurate Keblyte CFO
- Market conditions set to remain challenging in the current financial year
Grammer AG entered the new business year on a positive note despite the still challenging conditions facing the automotive industry. In the first quarter of 2019, the Group improved its revenue as well as its operating earnings. Revenue rose by 17.5 percent to EUR 534.1 million (2018: 454.4). This encouraging performance was chiefly due to the acquisition of the TMD Toledo Molding & Die, Inc., which had been completed successfully in October 2018, together with the strong growth achieved by the Commercial Vehicles Division in all of its core markets. The first quarter of 2019 was influenced by the still challenging conditions in the automotive industry and the related general slump in sales by passenger vehicle OEMs in Europe in particular. Group earnings before interest and taxes (EBIT) climbed by 17.6 percent to EUR 24.0 million (2018: 20.4). At 4.5 percent, the EBIT margin was unchanged over the previous year (2018: 4.5).
Adjusted for currency-translation and exceptional effects, operating EBIT came to EUR 23.0 million, thus also exceeding the previous year’s figure of EUR 20.5 million with a virtually unchanged operating EBIT margin of 4.3 percent (2018: 4.5). Group net profit came to EUR 11.6 million, thus falling only slightly short of the previous year’s figure of EUR 12.2 million.
Strong revenue increase in the Americas region
In the first three months of 2019, Grammer revenue more than doubled in the United States and Mexico. Revenue in the Americas region increased to EUR 154.9 million (2018: 66.0). The reason for this was the acquisition of the TMD Group together with organic growth as a result of the ramp-up of new projects in the Nafta region. In its domestic EMEA region, Grammer recorded a substantial decline in revenue in the Automotive Division due to the difficult market situation. However, this was almost completely offset by the continued encouraging performance of the Commercial Vehicles Division. Overall, however, EMEA revenue dropped slightly to EUR 307.0 million (2018: 316.2). In APAC, revenue came to EUR 72.2 million, thus remaining on a par with the previous year (2018: 72.2).
Higher revenue in both Divisions
Despite the lower revenue in Europe, the Automotive Division expanded by 20.5 percent to EUR 378.3 million in the first three months of 2019 (2018: 313.9). This substantial increase resulted primarily from the acquisition of the TMD Group, which had been consolidated for the first time in October 2018. EBIT in the Automotive Division also rose, climbing by 26.8 percent to EUR 12.3 million (2018: 9.7 million), yielding a slightly improved EBIT margin of 3.3 percent (2018: 3.1) despite the strain on earnings caused by the muted revenue performance in Europe.
The Commercial Vehicles Division performed very successfully again: Driven by rising volume sales in nearly all core markets, it posted a 9.6 percent increase in revenue to EUR 168.5 million (2018: 153.8). Division EBIT widened by 12.4 percent to EUR 17.2 million (2018: 15.3) in tandem with an EBIT margin of 10.2 percent, which was virtually unchanged over the previous year (2018: 9.9).
Increased capital expenditure due to the construction of new Corporate Headquarters as well as new accounting rules
At EUR 32.4 million, the Grammer Group’s capital expenditure was substantially higher in the first quarter of 2019 than in the same quarter of the previous year (2018: 10.0). This increase was primarily due to capital expenditure for the new Grammer Technology Center and the new Group Headquarters in Ursensollen near Amberg, work on which began in 2018. In addition, as of January 1, 2019, rental and lease agreements for new long-term contracts are accounted for as investments in accordance with the accounting provisions of IFRS 16, which are applied for the first time.
New Executive Board lineup now complete
In the first few months of the current financial year, the vacancies that had arisen on the Executive Board at the end of the previous year were filled. In March 2019, the Supervisory Board of Grammer AG appointed Ms. Jurate Keblyte to the position of CFO. In addition, Mr. Thorsten Seehars was appointed new CEO of Grammer AG in April. The two new Executive Board members will be commencing their duties effective August 1, 2019. Executive Board member Manfred Pretscher extended his term of office, which was initially to expire on June 30, 2019, until August 31, 2019 in the interest of a smooth hand-over to the new Executive Board members. Jens Öhlenschläger had previously assumed the position of COO effective January 1, 2019. With these new appointments, Grammer AG’s new long-term Executive Board lineup is now complete.
Full-year forecast unchanged in a still challenging automotive market
Grammer’s Executive Board still expects macroeconomic conditions to remain challenging in 2019 as a whole. In particular, conditions in the European automotive market as well as the impact of a possible Brexit and other geopolitical problems may have an adverse impact on business and earnings of Grammer. A small increase in Group revenue in the Grammer Group’s pre-existing core business and substantial growth as a result of the acquisition of the TMD Group are expected for 2019. Accordingly, the Executive Board expects Group revenue to grow to over EUR 2.1 billion, accompanied by a very positive EBIT well in excess of the figure achieved in 2018.
The Grammer Group’s full interim management statements on the first three months of 2019 are available from the corporate website at the following link:
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