DGAP-News: ElringKlinger AG / Key word(s): Final Results/Forecast ElringKlinger maintains strong growth during fiscal year with key strategic milestones 27.03.2018 / 09:32 The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- ElringKlinger maintains strong growth during fiscal year with key strategic milestones - Revenue grows substantially by 6.8% to EUR 1,664 million and by as much as 8.1% in organic terms - EBIT before purchase price allocation up slightly year on year at EUR 142 million; EBIT margin of 8.5% before purchase price allocation - Proposed dividend stable at EUR 0.50 - Key strategic milestones: closing of transaction for investment in hofer, cooperation agreement with Chinese battery manufacturer CITC, sale of Hug Group agreed - Guidance for 2018: organic revenue growth of 2 to 4 percentage points above market growth; EBIT margin before purchase price allocation around 9% - New dedicated Management Board role for E-Mobility as of April 1, 2018 Dettingen/Erms (Germany), March 27, 2018 +++ Over the course of the 2017 financial year, ElringKlinger AG achieved a number of important strategic milestones for the sustained development of its business. In February and March, a transaction covering its investment in the hofer Group was formally concluded. As a result, the ElringKlinger Group now produces complete electric drive systems, primarily for the premium sports and luxury car segment. Within the area of battery technology, ElringKlinger signed a cooperation agreement in November with Chinese battery manufacturer CALB via that entity's parent company CITC. Together, the focus will be on supplying battery systems to automotive markets around the globe. Additionally, ElringKlinger reached an agreement in December with a major French automotive supplier covering the sale of Hug Engineering AG. This divestment will allow ElringKlinger to concentrate fully on efforts to further develop its e-mobility business. As CEO Dr. Stefan Wolf pointed out: "In implementing these strategic measures, we have brought the Group further in line with the mobility market of the future. Thus, ElringKlinger's product portfolio includes high-performance fuel cell systems as well as battery systems and complete electric drive units." The Group's prospects are outstanding in all these areas. "We are currently working on a string of projects covering all of these fields, and there is significant potential with regard to new drive technologies," said Dr. Wolf. Strong growth in revenue ElringKlinger AG again recorded strong revenue growth in the fourth quarter of 2017. Compared with the particularly solid final quarter of 2016, the Group managed to lift its sales revenue by a further 3.0% in the last three months of 2017, taking the quarterly total to EUR 419.3 (407.2) million. Against this backdrop, revenues totaled EUR 1,664.0 million in the 2017 financial year as a whole. This corresponds to a year-on-year increase of 6.8%. Taking into account the effects of foreign exchange movements and acquisitions, organic growth was as much as EUR 126 million or 8.1% in the financial year just ended. EBIT up slightly year on year At EUR 141.8 million, EBIT before purchase price allocation was slightly up on the previous year's figure (EUR 140.4 million). This corresponds to an EBIT margin of 8.5 (9.0)%. The Group benefited from the favorable effects of revenue growth as well as cost streamlining at the Swiss site in Sevelen. However, these positive contributions to earnings were almost completely offset by additional costs incurred in connection with the implementation of a Group-wide ERP system in Sevelen, the visible increase in commodity prices, and the follow-on costs associated with consistently high volumes ordered by customers in the NAFTA region as part of their production scheduling. As became evident over the course of the year, the impact of foreign exchange movements on net finance costs, which stood at EUR 27.3 (11.5) million, also had a dilutive effect on Group earnings. With lower income tax expenses of EUR 36.3 (41.5) million and a slight reduction in non-controlling interests of EUR 3.9 (4.1) million, net annual income attributable to shareholders totaled EUR 69.9 (78.6) million. Calculated on this basis, earnings per share stood at EUR 1.10, which was down on the prior-year figure of EUR 1.24. Proposed dividend payment remains stable A fundamental principle adopted by ElringKlinger is to provide shareholders with an appropriate return on their investment. In keeping with this policy, the Supervisory Board and Management Board will jointly propose to the Annual General Meeting, scheduled for May 16, 2018, a stable dividend payment of EUR 0.50 per share. The dividend ratio will therefore improve to 45 (40)%. Highly successful placement of Schuldscheindarlehen The Group's key performance indicators with regard to its balance sheet remain solid. Its equity ratio was 44.0 (47.2)% at the end of the financial year, which is still well within the target range of 40 to 50% of total assets. Furthermore, the financial year just ended saw the Group complete the very first placement of a Schuldscheindarlehen (loan granted to the company against a form of promissory note) in its corporate history. Due to strong demand, the issue volume originally planned was doubled to EUR 200 million; the average interest rate is 1.23%. The cash proceeds were used for the purpose of extinguishing existing liabilities. The Schuldscheindarlehen replaces the overnight maturities of short-term liabilities with maturities of five, seven, and ten years, thus considerably improving the Group's overall debt maturity structure. Capex ratio scaled back substantially, operating free cash flow down year on year At 9.3%, the capex ratio (capital expenditure on property, plant, and equipment and on investment property) for the 2017 financial year was well below the prior-year figure of 11.0%. Despite a disciplined approach, ElringKlinger put in place key measures over the course of the year and made targeted investments for future growth. In Fremont, USA, for example, a new production facility was equipped for the manufacture of lightweight structural components. At the same time, a new plant was built at the Hungarian site in Kecskemét, which will focus on the production of door module carriers and shielding parts. Last but not least, a new logistics building commenced operations at the company's headquarters in Dettingen/Erms. As regards working capital, the Group initiates and continuously implements measures aimed at optimizing procurement processes and inventory levels, while also actively controlling trade payables. Overall, net working capital amounted to EUR 553.3 (524.6) million, which corresponds to 33.3% of Group revenue. Due to the Group's earnings performance and the level of net working capital, and despite a disciplined capex approach, its operating free cash flow has not improved. Instead, as expected, operating free cash flow was down on the prior-year figure at EUR -66.6 (-3.8) million. Outlook: industry operating in a challenging environment - ElringKlinger anticipates sustained growth Looking to the future, the level of global uncertainty in recent months has become more pronounced. National interests are becoming more widespread, thereby undermining the position of multinational institutions and eroding trade agreements. At the same time, tariffs or barriers to entry pose a threat to free trade. Meanwhile, the automotive industry is having to contend with stricter emission standards - a genuine challenge for the sector as a whole. Additionally, ongoing debate surrounding an inner-city ban on diesel-powered vehicles as well as recent court judgments and a wave of new accusations against manufacturers or suppliers are causing uncertainty among consumers. The result is a challenging industry backdrop exposed to a number of influencing factors. Operating within this environment, it is increasingly difficult to make projections that go beyond a short-term horizon. Given its very solid order books and its extensive portfolio of innovative products, the Group remains confident that it can outpace growth within the global automotive market in the short and in the medium term. For 2018, ElringKlinger expects to expand at a rate that is 2 to 4 percentage points above global market growth. Industry experts predict global market growth of between 1.9 and 4.3%, while ElringKlinger's projections point to growth of 2 to 3%. Projected revenue growth - together with further cost streamlining at the Swiss site - will have a positive impact on earnings, while elevated commodity prices and consistently strong demand in the NAFTA region will have a dilutive effect on earnings. Overall, ElringKlinger is targeting an EBIT margin before purchase price allocation of around 9%. In the medium term, the Group will be looking to achieve a step-by-step improvement in profitability. New dedicated Management Board role for E-Mobility ElringKlinger recently confirmed its strong strategic commitment to electromobility in organizational terms, too, by creating a dedicated function within the Management Board for the areas of battery technology and fuel cell technology as well as for the integration of its hofer investees. Former Chief Operating Officer Theo Becker will assume overall responsibility for this future-looking field of business as from April 1, 2018. At the same time, Reiner Drews, who has until now headed the Cylinder-head Gaskets and Specialty Gaskets divisions, will take up the role of Chief Operating Officer. In addition, at its recent meeting the Supervisory Board extended by five years, i.e., up to January 31, 2023, the contract of Chief Financial Officer Thomas Jessulat. EUR FY 2017 FY 2016 ∆ ∆ Q4 2017 Q4 ∆ ∆ million abs- rel. 2016 abs- rel. . . Order 1,732.0 1,693.7 +38- +2.3% 443.4 444.9 -1.- -0.3% intake .3 5 Order 1,000.6 932.5 +68- +7.3% 1,000.6 932.5 +68- +7.3% backlog .1 .1 Revenue 1,664.0 1,557.4 +10- +6.8% 419.3 407.2 +12- +3.0% 6.6 .1 of which -28- -1.8% -16- -4.2% FX .7 .9 effects of which +9.- +0.6% +2.- +0.5% acquisit- 3 0 ions of which +12- +8.1% +27- +6.7% organic 6.0 .1 EBITDA 238.4 231.2 +7.- +3.1% 55.9 64.5 -8.- -13.3% 2 6 EBIT 141.8 140.4 +1.- +1.0% 30.7 39.5 -8.- -22.3% before 4 8 purchase price allocati- on EBIT 8.5 9.0 -0.- - 7.3 9.7 -2.- - margin 5PP 4PP before purchase price allocati- on (in %) Purchase 4.5 4.8 -0.- - 1.0 1.1 -0.- - price 3 1 allocati- on EBIT 137.3 135.6 +1.- +1.3% 29.7 38.4 -8.- -22.7% 7 7 Net -27.3 -11.5 -15- >-100% -8.0 1.0 -9.- >-100% finance .8 0 result EBT 110.1 124.1 -14- -11.3% 21.6 39.4 -17- -45.2% .0 .8 Income 36.3 41.5 -5.- -12.5% 10.4 18.1 -7.- -42.5% taxes 2 7 Effectiv- 33.0 33.4 -0.- - 48.0 45.9 +2.- - e tax 4PP 1PP rate (in %) Net 69.9 78.6 -8.- -11.1% 10.3 19.7 -9.- -47.7% income 7 4 (after non-cont- rolling interest- s) Earnings 1.10 1.24 -0.- -11.3% 0.16 0.31 -0.- -48.4% per 14 15 share (in EUR) Dividend 0.50* 0.50 +0.- - per 0 share (in EUR) Investme- 155.5 171.3 -15- -9.2% nts (in .8 property- , plant, and equipmen- t) Operatin- -66.6 -3.8 -62- >-100% g free .8 cash flow ROCE (in 8.2 8.7 -0.- - %) 5PP Net 553.3 524.6 +28- +5.5% working .7 capital Equity 44.0 47.2 -3.- - ratio 2PP (in %) Net 655.3 538.8 +11- +21.6% financia- 6.5 l liabilit- ies Employee- 9,611 8,591 +1,- +11.9% s (as of 020 Dec. 31) * Proposal to 2018 AGM For further information, please contact: ElringKlinger AG Dr. Jens Winter Investor Relations / Corporate PR Max-Eyth-Straße 2 D-72581 Dettingen/Erms Phone: +49 7123 724-88335 [IMAGE] Fax: +49 7123 724-85 8335 [IMAGE] E-mail: [email protected] About ElringKlinger AG As an automotive supplier, ElringKlinger has become a trusted partner to its customers - with a firm commitment to shaping the future of mobility. Be it optimized combustion engines, high-performance hybrids, or environmentally-friendly battery and fuel cell technology, ElringKlinger provides innovative solutions for all types of drive systems. ElringKlinger's lightweighting concepts help to reduce the overall weight of vehicles. As a result, vehicles powered by combustion engines consume less fuel and emit less CO2, while those equipped with alternative propulsion systems benefit from an extended range. In response to increasingly complex combustion engine technology, the Group also continues to make refinements with regard to gaskets in order to meet the highest possible standards. This is complemented by solutions centered around thermal and acoustic shielding technology. Additionally, the Group's portfolio includes products made of the high-performance plastic PTFE which are also marketed to industries beyond the automotive sector. These efforts are supported by a dedicated workforce of more than 9,600 employees at 45 ElringKlinger Group locations around the globe. Disclaimer This release contains forward-looking statements. These statements are based on expectations, market evaluations and forecasts by the Management Board and on information currently available to them. In particular, the forward-looking statements shall not be interpreted as a guarantee that the future events and results to which they refer will actually materialize. Whilst the Management Board is confident that the statements as well as the opinions and expectations on which they are based are realistic, the aforementioned statements rely on assumptions that may conceivably prove to be incorrect. Future results and circumstances depend on a multitude of factors, risks and imponderables that can alter the expectations and judgments that have been expressed. These factors include, for example, changes to the general economic and business situation, variations of exchange rates and interest rates, poor acceptance of new products and services, and changes to business strategy. --------------------------------------------------------------------------- 27.03.2018 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 --------------------------------------------------------------------------- Language: English Company: ElringKlinger AG Max-Eyth-Straße 2 72581 Dettingen/Erms Germany Phone: 071 23 / 724-0 Fax: 071 23 / 724-9006 E-mail: [email protected] Internet: www.elringklinger.de ISIN: DE0007856023 WKN: 785602 Indices: SDAX Listed: Regulated Market in Frankfurt (Prime Standard), Stuttgart; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Tradegate Exchange End of News DGAP News Service --------------------------------------------------------------------------- 669083 27.03.2018