DGAP-Ad-hoc: H&R GmbH & Co. KGaA / Key word(s): Preliminary Results/Profit Warning H&R GmbH & Co. KGaA publishes preliminary results for first half of 2018 01-Aug-2018 / 20:55 CET/CEST Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Insider information under Article 17 of the Market Abuse Regulation [MAR] H&R KGaA Neuenkirchener Str. 8 48499 Salzbergen H&R GmbH & Co. KGaA: Preliminary figures for the first half of 2018 - EUR 41.2 million of operating income (EBITDA) was lower than in previous year - All three segments made positive contributions to EBITDA - Weaker prospects at mid-year require us to abandon our previous guidance range - Economic and political environment continue to be challenging Salzbergen, Germany, 1 August 2018. H&R GmbH & Co. KGaA (abbrev.: H&R KGaA; ISIN DE000A2E4T77) has finished the first half of the year with mixed results. According to preliminary calculations, consolidated operating income (EBITDA*) declined again compared to the beginning of the year to EUR 17.5 million in the second quarter, and therefore was below the level reported for the stronger prior-year quarter (Q2 2017: EUR 25.6 million). EBIT totaled EUR 9.0 million, compared to EUR 16.7 in the previous year. The other earnings figures also decreased significantly again in the second quarter of 2018: Income before tax (EBT) for the second quarter of 2018 amounted to EUR 7.1 million (Q2 2017: EUR 14.8 million), while consolidated income attributable to shareholders totaled EUR 5.0 million (Q2 2017: EUR 10.9 million). The final phase of the second quarter of 2018, in particular, was disappointing and fell significantly short of the Management Board's expectations. Due to prices of raw materials, sales revenue for the second quarter of the current financial year rose to EUR 279.5 million (Q2 2017: EUR 260.2 million). For the first half of 2018 as a whole, the decreases were somewhat more moderate. Here, too, the final weeks affected the overall picture. Based on preliminary figures, the company's operating income (EBITDA) totaled EUR 41.2 million (first half of 2017: EUR 52.9 million). EBIT totaled EUR 24.4 million (first half of 2017: EUR 35.2 million). The trend was similar for income before tax (EBT), which amounted to EUR 20.9 million (first half of 2017: EUR 30.3 million). Consolidated income attributable to shareholders totaled EUR 14.9 million for the first half (first half of 2017: EUR 21. 4 million). H&R KGaA therefore generated earnings per share of EUR 0.41, of which only EUR 0.14 was attributable to the second quarter of 2018 (first half of 2017: EUR 0.58; Q2 2017: EUR 0.30). Due to prices of raw materials, sales revenue of EUR 550.3 million exceeded the prior-year figure (first half of 2017: EUR 527.7 million). The ChemPharm Refining segment, which contributed a major portion of income, experienced a significant loss of momentum with price and volume effects together causing EBITDA to drop to EUR 9.4 million in the second quarter of 2018 (Q2 2017: EUR 17.1 million). In particular, the necessary price increases could not be implemented adequately or promptly enough, due to also less dynamic prospects of our customers. Overall, the segment generated EUR 25.2 million of EBITDA for the six-month period (first half of 2017: EUR 33.1 million). Due to prices of raw materials, segment sales revenue increased by 9.1% to EUR 347.5 million (first half of 2017: EUR 318.6 million), of which EUR 172.2 million was attributable to the second quarter of 2018 (Q2 2017: EUR 156.8 million). The international businesses included in the ChemPharm Sales segment posted consistent (but overall lower) operating income of EUR 7.5 million in the second quarter of 2018 and EUR 14.8 million in the first half (Q2 2017: EUR 9.0 million; first half of 2017: EUR 19.0 million). In particular, the political and economic environment remained challenging for various H&R markets. Sales revenue decreased slightly from EUR 183.5 million in the first half of 2017 to EUR 177.1 million in the first half of 2018, but performed somewhat better in the second quarter, increasing to EUR 95.0 million (Q2 2017: EUR 91.2 million). The Plastics segment generated positive EBITDA both in the second quarter (EUR 1.4 million) and in the first half (EUR 2.7 million) of 2018 (Q2 2017: EUR 1.0 million; first half of 2017: EUR 2.7 million). Sales revenue was likewise stable, totaling EUR 15.2 million in the second quarter of 2018 and EUR 30.4 million in the first half (Q2 2017: EUR 14.9 million; first half of 2017: EUR 30.6 million). Because of our business model, cash flow from operating activities was volatile in the first half of 2018: increases in prices of raw materials delivered around the same time as the reporting date led to an increase in net working capital requirements. Total cash flow from operating activities amounted to EUR -12.7 million in the second quarter of 2018 (Q2 2017: EUR 5.3 million), while free cash flow totaled EUR -23.2 million (Q2 2017: EUR -5.0 million). Due to a weaker earnings situation, currency effects and lower income taxes also affected cash flow from operating activities, which changed from EUR 5.0 million in the first half of 2017 to EUR -15.6 million in the first half of 2018. Partly due to increased investments, free cash flow decreased from EUR -17.4 million to EUR -40.5 million. The balance sheet total increased from EUR 662.6 million at 31 December 2017 to EUR 730.0 million. Equity increased from EUR 342.7 million to EUR 351.0 million over the same period, resulting in an equity ratio of 48.1% as of 30 June 2018 (31 December 2017: 51.7%). Overall, the company ended the first half of 2018 in a robust position, but also significantly below the prior-year level. In particular, the final phase at the end of the second quarter of 2018 and the outlook for the beginning of the second half of the year did not meet management's expectations. As a result, the Executive Board has carefully reviewed its planning and the prospects for the second half of the year. Currently, the company no longer feels sufficiently certain that it can achieve the original earnings targets to maintain the previous EBITDA range of EUR 94.0 million to EUR 106.0 million - in part because of the global economic challenges. Once a solid forecast is possible, H&R will redefine its expectations, but until then the Executive Board will refrain from announcing a forecast. The final financial figures and additional information on 2018 business performance to date will, as planned, be published in the interim report for the first half on 15 August 2018. * Consolidated income before tax, other financial income and expenses and depreciation/amortization, impairment and appreciation of fixed assets and property, plant and equipment Contact information: H&R GmbH & Co. KGaA, Head of Investor Relations/Communications, Ties Kaiser Neuenkirchener Strasse 8, 48499 Salzbergen Tel.: +49 40 43218-301, Fax: +49 40 43218-390 E-mail: [email protected] www.hur.com H&R GmbH & Co. KGaA: H&R KGaA is a specialty-chemicals company listed on the Frankfurt Stock Exchange's Prime Standard segment. It develops and manufactures crude-oil-based chemical and pharmaceutical specialty products and produces high-precision plastic parts. Forward-looking statements and forecasts: This insider information pursuant to Article 17 of the Market Abuse Regulation [MAR] contains forward-looking statements. The statements are based on the current estimates and forecasts by the Management Team and the information available to it at this time. These forward-looking statements do not provide any warranty for the future developments and results contained therein. The future developments and results are dependent on a number of factors; they entail various risks and contingencies and are based on assumptions which could prove to be incorrect. We do not assume any responsibility for updating the forward-looking statements contained in this insider information pursuant to Article 17 of the MAR. --------------------------------------------------------------------------- 01-Aug-2018 CET/CEST The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de --------------------------------------------------------------------------- Language: English Company: H&R GmbH & Co. KGaA Neuenkirchener Str. 8 48499 Salzbergen Germany Phone: +49 (0)40 43 218 321 Fax: +49 (0)40 43 218 390 E-mail: [email protected] Internet: www.hur.com ISIN: DE000A2E4T77 WKN: A2E4T7 Listed: Regulated Market in Dusseldorf, Frankfurt (Prime Standard), Hamburg; Regulated Unofficial Market in Berlin, Hanover, Munich, Stuttgart, Tradegate Exchange End of Announcement DGAP News Service --------------------------------------------------------------------------- 710239 01-Aug-2018 CET/CEST