STS Group AG publishes figures for first half-year of 2020 - Business development in Europe impacted by COVID-19 - China segment with good performance in second quarter of 2020
 

- Revenue decline to 136.0 mEUR (minus 29.8%), mainly due to plant closures in Europe caused by COVID-19

- China with strong sales growth in the second quarter of 2020

- EBITDA down to minus 3.9 mEUR (H1/2019: 10.1 mEUR)

- Adjusted EBITDA down to minus 2.2 mEUR (H1/2019: 10.1 mEUR)

- Positive net cash flow from operating activities of 2.5 mEUR (H1/2019: 4.5 mEUR)

- Free cash and cash equivalents of 22.8 mEUR at June 30, 2020 (December 31, 2019: 17.2 mEUR)

- Outlook 2020: significant decline in revenues and resulting lower adjusted EBITDA margin expected

Hallbergmoos/Munich, August 6, 2020. STS Group AG (ISIN: DE000A1TNU68), a global system supplier for the automotive industry, listed in the Prime Standard of the Frankfurt Stock Exchange, today publishes its half-year report 2020.

Mathieu Purrey, CEO of STS Group AG: "STS Group's business development in the first half of the year was largely influenced by the global spread of coronavirus and the resulting temporary plant closures. The markets developed differently after the reopening of the plants. While European customers showed only a slow recovery, the business performance of the Chinese segment was very encouraging. In China, we were able to considerably exceed the previous year's figure of 11.6 mEUR with sales revenues of 24.7 mEUR in the second quarter of 2020. As previously announced, in the coming weeks and months we will continue the extensive optimization and cost-cutting measures that have been initiated and, if necessary, sharpen them up. In addition, we can rely on government-guaranteed loans in France and soon also in Italy. This means that our operating units have sufficient liquidity."

Revenue Performance
STS Group generated revenues of 136.0 mEUR in the period from January 1 to June 30, 2020, compared with 193.8 mEUR (minus 29.8%) in the same period of the previous year. The COVID-19 pandemic impacted in particular the market environment of STS Group in Europe, North and South America. In these regions plants temporarily closed from mid-March 2020 and gradually resumed production between April 14 and May 11, 2020. This led to a significantly negative revenue performance in the related Business Units. On the other hand, the China segment performed well, generating sales revenues of 36.4 mEUR in the first half of 2020 despite COVID-19-related plant closures in February and March, resulting in a revenue increase of 58.3% compared to the same period of the previous year (23.0 mEUR). As a result of the high customer demand in the commercial vehicle sector, the Chinese STS plants have been operating at full capacity since mid-March.

Earnings Performance
Earnings before interest, taxes, depreciation and amortization (EBITDA) fell to minus 3.9 mEUR in the first half of 2020 (H1/2019: 10.1 mEUR). In the reporting period, extraordinary expenses for reorganization measures in the amount of 1.7 mEUR were incurred, including 1.5 mEUR related to the closure of the Group headquarter in Hallbergmoos and the resulting layoffs of employees for operational reasons. In addition, the severance costs of the Management Board members were also fully taken into account. No extraordinary expenses were incurred in the same period of the previous year.

The adjusted operating result (adjusted EBITDA) fell to minus 2.2 mEUR in the reporting period, compared to 10.1 mEUR in the same period of the previous year. The decrease in adjusted EBITDA is due to lower business volume. STS Group took numerous countermeasures to reduce costs, but these only partially compensated for the volume-related negative earnings effects.

Earnings in the Acoustics and Plastics segments were impacted by COVID-19-related revenue declines in the first half of 2020. The China segment, on the other hand, achieved a significant increase in earnings and margins despite the plant closures caused by COVID-19. This was mainly due to a more profitable product mix and a better distribution of fixed costs as a result of new start-ups and increased revenue volume. The adjusted EBITDA of the China segment improved to 7.6 mEUR in the first six months of 2020 (H1/2019: 3.0 mEUR).

The consolidated result for the period under review amounted to minus 27.7 mEUR (H1/2019: minus 2.3 mEUR).

Financial and Asset Situation
In the first half of 2020, STS Group generated a positive net cash flow from operating activities of 2.5 mEUR (H1/2019: 4.5 mEUR). The COVID-19 pandemic had a positive impact on the development of working capital compared to the same period of the last year. As a result of production interruptions caused by the worldwide shutdown, there was a lower inventory build-up than in the same period of the previous year. Trade receivables decreased due to the revenue decline in the first half of 2020, compared to the previous year. In addition, government aid measures, such as deferral of social security contributions and taxes, were used to maintain liquidity.

The Group's net financial debt increased by 3.9 mEUR to 43.0 mEUR as of June 30, 2020 (December 31, 2019: 39.1 mEUR). The increase was mainly due to the raising of government-guaranteed loans from France in the Plastics segment. This was offset by an increase in unrestricted cash and cash equivalents as of June 30, 2020 (22.8 mEUR) compared to December 31, 2019 (17.2 mEUR).

The balance sheet total as of June 30, 2020 dropped by 3.8 mEUR to 252.7 mEUR compared to December 31, 2019 (256.5 mEUR).

Equity decreased by 28.6 mEUR to 40.0 mEUR as of June 30, 2020, compared to December 31, 2019 (68.6 mEUR). The main reason for the decrease in equity was the strong impact of the COVID-19 pandemic on consolidated net income. The equity ratio fell to 15.8% as of June 30, 2020 (December 31, 2019: 26.8%).

Outlook 2020
In view of the high level of uncertainty concerning the development of the COVID-19 pandemic, the Management Board expects a significant decline in revenues for the 2020 fiscal year compared to the previous year. Despite the Company having already initiated extensive cost reduction measures, the Management Board expects a declining adjusted EBITDA margin in line with the decline in revenues.

It is currently not possible to predict how the COVID-19 pandemic will affect the future overall economic development, the commercial vehicle and the automotive sector. As soon as it will be possible to make sufficiently reliable statements about this, the Management Board will refine its forecast and keep the capital market informed in accordance with legal requirements.

The complete 2020 half-year report of STS Group AG is available for download at ir.sts.group.

About STS Group:
STS Group AG, www.sts.group (ISIN: DE000A1TNU68), is a leading system supplier to the automotive industry with a focus on solutions in the acoustics, thermal and structural engineering sectors. It employs more than 2,500 people worldwide and generated revenues of 362.8 mEUR in the financial year 2019. The STS Group ("STS") produces and develops plastic and acoustic components such as solid and flexible vehicle and aerodynamic trim, noise and vibration-damping materials, entire interior and exterior trim systems, as well as lightweight construction and battery components for electric vehicles at its 17 plants and four development centres in France, Italy, Germany, Poland, Mexico, Brazil, China and, in the future, also in the USA. STS is considered as a technology leader in the manufacture of special acoustic products, plastic injection moulding and components made of composite materials (Sheet Molding Compound - SMC). STS has a large global footprint with plants in four continents. The customer portfolio comprises leading international manufacturer of commercial vehicles, passenger cars and electric vehicles.

STS Group AG
Stefan Hummel
Head of Investor Relations
Zeppelinstrasse 4
85399 Hallbergmoos
+49 811 1244 9412
[email protected]
www.sts.group

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