Preliminary results 2011: ElringKlinger propels net income by 42.3%

03/12/2012 - Ad-hoc-Announcement pursuant to Section 15 WpHG - ISIN DE0007856023

Dettingen/Erms, March 12, 2012 +++ Generating significant growth, the ElringKlinger Group managed to outpace the global vehicle markets by a considerable margin in 2011. Based on preliminary figures, the Group saw its sales revenue expand by 29.8% to EUR 1,032.8 (795.7) million. The Group's operating result stood at EUR 151.1 (116.0) million, thus exceeding the previous year's figure by 30.3%. Net income after minority interests rose at a more pronounced rate, up 44.7% to EUR 94.9 (65.6) million.

Tangible effect of acquisitions and sale of industrial park
Alongside market growth and the introduction of new products, acquisitions transacted in 2011, which included the purchase of the metal flat gaskets business from the Freudenberg Group as well as the Swiss exhaust treatment specialist Hug Engineering AG and the Hummel-Formen Group, contributed EUR 83.6 million in total to sales revenue. At minus EUR 5.0 million, earnings before taxes contributed by the acquired entities were as yet in negative territory. This figure included EUR 2.1 million relating to purchase price allocations. The non-recurring negative purchase price allocation attributable to Hummel in the fourth quarter amounted to EUR 0.5 million.

In parallel, however, ElringKlinger AG disposed of its Ludwigsburg industrial park in 2011, as it no longer formed an integral part of the automotive supplier's core business. The sale resulted in a one-time gain of EUR 22.7 million, which was accounted for in other operating income.

Significant R&D costs for new products and E-Mobility
At EUR 49.9 (40.6) million, ElringKlinger's research and development expenditure continued to rise. Newly established in 2010, the E-Mobility division was further expanded over the course of 2011 in response to development contracts for cell contact systems used in lithium-ion batteries. Whereas general and administrative expenses as well as selling expenses rose at a slower rate than sales, other operating expenses surged by 107.1% to EUR 11.6 (5.6) million. Of this total, an amount of EUR 9.1 million alone was attributable to the fourth quarter.

One-time write-downs in fourth quarter
On the back of significant investments within the Group, depreciation, amortization and write-downs rose to EUR 96.8 (82.2) million. Depreciation of assets categorized as property, plant and equipment, included a one-time impairment loss of EUR 1.7 million recognized in the fourth quarter in connection with merger surpluses. This was attributable to the merger of Elring Klinger GmbH into the parent company ZWL Grundbesitz- und Beteiligungs-AG back in the year 2000. Additionally, losses on the disposal of assets and write-downs attributable to receivables accounted for a total of EUR 4.1 million.

In the context of the extension of Management Board contracts finalized in December 2011, pension provisions were raised in the fourth quarter. This resulted in a one-time effect on general and administrative expenses of EUR 0.8 million. More extensive flexitime accounts as a result of higher capacity utilization necessitated an increase in provisions in the fourth quarter.

The Group's operating result rose by EUR 35.1 million year on year to EUR 151.1 (116.0) million in fiscal 2011. This figure included the above-mentioned income from the sale of the industrial park. Without this item, the operating result including the write-downs in connection with purchase price allocations would have been EUR 128.4 million.

Adjusted EBIT up by 18.1%
Earnings before interest and taxes (EBIT), which in contrast to the operating result takes account of foreign exchange gains and losses, were adversely affected by net foreign exchange losses of EUR 2.4 million in 2011. Thus, EBIT rose by 39.4% to EUR 148.7 (106.7) million. Adjusted for the one-time gain, Group EBIT rose by 18.1% to EUR 126.0 million. This figure includes the negative effect of EUR 2.1 million attributable to the purchase price allocation for the acquisitions. Adjusted EBIT before purchase price allocation stood at EUR 128.1 million.

Despite foreign exchange losses of EUR 2.4 million, net finance costs fell to EUR 14.5 (22.1) million. As a result, earnings before taxes for the ElringKlinger Group amounted to EUR 136.6 (94.0) million. Compared to the previous financial year, this represented an increase of 45.3%. The tax rate rose to 28.6% (27.0%).

Net income at EUR 97.6 million
Net income rose by 42.3% year on year to EUR 97.6 (68.6) million. As a result of the additional ownership interests acquired by ElringKlinger AG in 2011, minority interests were scaled back. Therefore, net income after minority interests (i.e. profit attributable to the shareholders of ElringKlinger AG) increased by 44.7% to EUR 94.9 (65.6) million. Correspondingly, earnings per share stood at EUR 1.50 (1.11) in 2011, based on the higher figure of 63,359,990 shares outstanding.

Order intake remains buoyant
As regards its order books, the Group's business remains robust. Order intake rose by 22.8% to EUR 1,089.0 (886.6) million in 2011. At EUR 272.6 (227.3) million, order intake for the fourth quarter of 2011 was also well up on the figure recorded in the buoyant final quarter of 2010. As at December 31, 2011, order backlog for the ElringKlinger Group totaled EUR 448.4 (333.1) million, which corresponds to year-on-year growth of 34.6%.

Additional revenue and adjusted earnings growth planned for 2012
Based on the assumption that global vehicle production will continue to expand slightly, the ElringKlinger Group anticipates organic revenue growth of 5 to 7% in 2012. Within this context, it should be noted that the level of revenue growth achieved in fiscal 2011 was significantly higher than originally forecast.
The Group also expects to see an additional revenue contribution of around EUR 20 million from the consolidation of recently acquired Hug Engineering AG and Hummel-Formen Group, which in 2012 will be included in the consolidated group for a full annual period for the very first time.

The consolidated entities acquired will see an improvement in their overall earnings situation in 2012, having contributed negative aggregate earnings in 2011. However, the EBIT margin of the Group's core business will nevertheless be diluted to some extent in 2012 as a result of the as yet weaker margins recorded by the acquired entities and the purchase price allocations associated with these acquisitions as well as the lead costs incurred in the field of battery technology. Despite these effects, ElringKlinger anticipates that earnings before interest and taxes, adjusted for non-recurring items, will expand at a faster rate than sales revenue. Adjusted earnings before interest and taxes for the Group as a whole (EUR 126.0 million in fiscal 2011) are expected to be in a range of EUR 145 to 150 million.

Preliminary and un-audited results for fiscal 2011 and the fourth quarter 2011

EUR mn

Q4

FY

2011

2010

Change in %

2011

2010

Change in %

Sales revenue

269.6

209.5

+ 28.7%

1,032.8

795.7

+ 29.8%

Gross profit

78.2

58.8

+ 33.0%

288.7

238.6**

+ 21.0%

Selling expenses

19.0

14.6

+ 30.1%

67.4

54.3

+ 24.1%

General and administrative expenses

14.9

12.8

+ 16.4%

43.4

33.7**

+ 28.8%

Research and development costs

12.9

8.8

+ 46.6%

49.9

40.6**

+ 22.9%

Other operating income

4.9

3.6

+ 36.1%

34.7*

11.6

+ 199.1%

Other operating expenses

9.1

1.8

+ 405.6%

11.6

5.6

+ 107.1%

Operating result

27.2

24.4

+ 11.5%

151.1*

116.0

+ 30.3%

Net finance costs

2.9

6.6

- 56.1% 

14.5

22.1

- 34.4%

Earnings
before taxes

24.3

17.9

+ 35.8%

136.6*

94.0

+ 45.3%

Net income

14.6

12.2

+ 19.7%

97.6

68.6

+ 42.3%

Profit attributable to shareholders of
ElringKlinger AG

14.3

11.7

+ 22.2%

94.9

65.6

+ 44.7%

Earnings per share (in EUR)

0.23

0.17

+ 35.3%

1.50

1,11

+ 35.1%

EBITDA

58.0

44.1

+ 31.5%

245.5*

188.9

+ 30.0%

Depreciation and amortization

31.0

23.1

+ 34.2%

96.8

82.2

+ 17.8%

EBIT

27.0

21.0

+ 28.6%

148.7*

106.7

+ 39.4%

*Incl. one-time gain of EUR 22.7 mn due to sale of industrial park
**Allocation to R&D costs adjusted

The announcement of full results for fiscal 2011 is scheduled for March 29, 2012.