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Dettingen/Erms, October 29, 2010 +++ The ElringKlinger Group increased its consolidated sales by 39.8% to EUR 586.2 (419.2) million in the first nine months of 2010. The sustained recovery of vehicle markets, in conjunction with new product start-ups and the Group's strong positioning in Asia, had a positive impact on business. Improved capacity utilization at production level and continued cost streamlining helped to propel earnings before interest and taxes (EBIT) by 99.8% compared to the heavily crisis- affected first nine months of 2009, taking EBIT for the period to EUR 85.7 (42.9) million. The third quarter of 2010 saw revenue increase by 33.8% to EUR 202.5 (151.3) million, while EBIT for the same period totaled EUR 31.7 (20.3) million, up 56.2%.
Within the Original Equipment segment, which encompasses OEM business with vehicle producers, sales rose by 49.7% to EUR 443.3 (296.2) million in the first nine months of 2010. The Group achieved above-average growth rates in Asia and South America in particular, but also in the US vehicle market, which recovered visibly following its slump a year ago. Buoyed by an upturn in foreign sales, revenue generated in the Aftermarket segment rose by 14.0% to EUR 81.2 (71.2) million.
Marked improvement in earnings situation despite one-off charges
The ElringKlinger Group saw a continued improvement in its financial performance during the first nine months of 2010. This was attributable to the program of streamlining implemented during the economic crisis and, even more so, to the dynamic increase in the volume of components requested by car manufacturers as part of their production scheduling. Production of components supplied to the commercial vehicle industry also gained momentum, although capacity utilization within this area of business is still considerably lower than before the economic crisis.
The cost of sales rose at a less pronounced rate than revenue, as a result of which the gross profit margin for the first nine months of 2010 increased to 30.7% (25.5%). Due to the partial- retirement scheme for personnel employed in the metal and electrical industry, as enshrined within the 2010 collective wage agreement for this sector, in the first quarter of 2010 the Group had to allocate partial-retirement provisions for the entire term of the agreement until the end of March 2012, which resulted in a non-recurring increase in staff costs of EUR 1.8 million. In addition, provisions in connection with employee benefits agreed retrospectively for the years 2008 and 2009, totaling EUR 2.4 million, were recognized in the first quarter of 2010.
The Group spent EUR 31.8 (28.7) million on research and development in the first nine months of 2010, 10.8% more than in the same period a year ago. The company received EUR 2.0 million (of which EUR 0.6 million in Q3) in government grants for projects relating to fuel cell and battery technology. Having secured its first series production contracts for cell contact systems used in lithium-ion batteries, ElringKlinger has established a solid foundation for future growth within the field of "E-Mobility".
Compared to the severely crisis-affected period last year, operating profit surged by EUR 49.6 million to EUR 91.6 (42.0) million in the first nine months of 2010. Recording EUR 34.0 (21.4) million in the third quarter of 2010, the ElringKlinger Group succeeded in matching the substantial result achieved in the second quarter (EUR 34.3 million), despite fewer working days and lower contributions from government R&D grants.
Impacted by net foreign currency losses of EUR 6.0 million in the first nine months of 2010, earnings before interest and taxes fell slightly short of operating profit. By contrast, the group had recorded positive foreign exchange effects of EUR 0.9 million in the same period of 2009. Consequently, EBIT for the first nine months of 2010 amounted to EUR 85.7 (42.9) million. Despite the above-mentioned exceptional factors, the EBIT margin reached 14.6% (10.2%) in the first nine months of 2010. In the third quarter of 2010, ElringKlinger increased EBIT by EUR 11.4 million to EUR 31.7 (20.3) million. EBIT rose slightly compared to the second quarter of 2010, despite the fact that staffing levels were raised by 4.2% in response to more extensive production. The EBIT margin for the third quarter was 15.7% (13.4%).
Earnings before taxes more than doubled after nine months
Net finance costs amounted to minus EUR 15.5 (-9.9) million for the first nine months of 2010. While the Group's net interest result improved during the first nine months of 2010, the remeasurement at the end of the reporting period of liabilities relating to the financing of ElringKlinger's acquisition of the SEVEX Group, Switzerland, produced finance cost of EUR 6.0 million. Earnings before taxes rose to EUR 76.1 (32.1) million in the first nine months of 2010. In the third quarter, pre-tax earnings increased by 69.6% to EUR 28.5 (16.8) million.
Due to the significant rise in revenue contributed by ElringKlinger Group companies located in countries with below- average tax rates, the income tax rate for the current annual period to date was lower than in the same period a year ago, falling to 25.9% (28.7%). Therefore, after minority interests of EUR 2.5 (1.3) million, net income for the first nine months of 2010 was EUR 53.9 (21.6) million. In the third quarter of 2010, profit attributable to shareholders of ElringKlinger AG increased by 69.8% to EUR 19.7 (11.6) million.
Basic and diluted earnings per share totaled EUR 0.94 (0.37) in the first nine months of 2010. In the third quarter, earnings per share stood at EUR 0.34 (0.20).
Annual forecast revised upward for third time
The increase in incoming orders continued over the course of the first nine months of 2010. In the third quarter, order intake was up 29.4% year-on-year, increasing to EUR 214.7 (165.9) million.
Based on the assumption that automobile markets will continue to recover and the economic climate will remain stable, ElringKlinger has again revised upward its revenue and earnings targets for fiscal 2010. Driven by organic growth, sales revenue is now expected to increase to between EUR 745 and 755 million (previously EUR 690 to 710 million). The cylinder-head gasket and exhaust system division of the Freudenberg Group will not contribute to ElringKlinger Group revenue until the scheduled closing of the acquisition (Q1 2011). Therefore, revenues from this acquisition have not been included in the projected revenue figure for 2010. Earnings before interest and taxes (EBIT) are expected to increase at a more pronounced rate than sales in 2010 to between EUR 105 and 110 million (previously EUR 90 to 95 million).
end of announcement euro adhoc
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