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euro adhoc: ElringKlinger AG
quarterly or semiannual financial statement /
ElringKlinger records double-digit growth in sales revenues and earnings over
first nine months of 2007
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Dettingen/Erms (Germany), November 8, 2007 - - - The ElringKlinger Group succeeded in further expanding both its sales revenues and earnings in the first nine months of the 2007 financial year. The automotive supplier propelled Group sales revenues upwards by EUR 62.0 million or 15.6% to EUR 460.0 (398.0) million. Sales revenues also developed favorably over the course of the third quarter of 2007. Despite the general downturn witnessed in the Western European and North American automotive markets, ElringKlinger was able to increase Group sales revenues by 16.6% to EUR 150.0 (128.7) million in the third quarter. The most substantial percentage increases were achieved in Asia, North America and the non-domestic European markets. Product ramp-ups, the continuing rise in diesel share of new car registrations and buoyant demand for specialty gaskets and thermal shielding components for the exhaust tract proved to be the principal growth drivers. The expansion of ElringKlinger's business activities in Asia, led first and foremost by China and Korea as well as India, where the company will be opening a new plant in the coming weeks, also produced forward momentum.
Within the Original Equipment segment, sales revenue rose by 16.7% to EUR 327.1 (280.3) million in the first nine months of 2007. In the third quarter, ElringKlinger lifted OEM sales revenue by 20.5% to EUR 106.0 (88.0) million. An expansion of the overall product range and more dynamic demand from Eastern Europe, the Middle East and South America combined to produce revenue growth of 14.7% in the Aftermarket segment, taking the figure to EUR 73.8 (64.4) million in this segment. In the third quarter sales revenues within this area amounted to EUR 24.2 (22.1) million, 9.4% up on the figure posted for the same period a year ago. The Engineered Plastics segment, which focuses on the development and manufacture of products made of high-performance PTFE, managed to increase sales revenues by 10.8% in the first nine months of 2007 to EUR 49.7 (44.8) million. In the third quarter, sales revenues within this area rose by 6.8% to EUR 16.5 (15.5) million.
Investments in the expansion of production capacity and projects aimed at process streamlining have risen significantly in the financial year to date. Over the course of the first nine months of 2007, a total of EUR 58.4 (31.7) million was channeled into property, plant and equipment as well as investment property.
Substantial energy costs and high material prices, particularly in the case of nickel, continued to have an adverse effect on margins. Although prices for nickel listed on the commodities futures exchanges began to decline from mid-2007 onwards, this favorable trend has yet to have a positive effect on business. In the first nine months, the cost of sales rose by 16.9%, as a result of which the gross margin receded slightly to 34.5% (35.3%). In the third quarter, the cost of sales stood at 35.1%. Selling as well as general and administrative expenses climbed at a slower rate than sales revenues. In the first nine months of 2007, research and development costs within the ElringKlinger Group rose by EUR 1.7 million to EUR 22.6 (20.9) million. Within the development area of diesel particulate filters and fuel cell components the company has earmarked pre-expenses in excess of EUR 3 million for 2007.
The damage caused by a fire and the associated operational interruptions at the company's plant in Runkel in mid-April 2007 are covered by insurance compensation. In view of the fact that the insurance proceeds were in excess of the residual amounts to be written off in connection with damaged machinery, plant and buildings, the company earned non-recurring extraordinary income of EUR 4.7 million, which was accounted for in the second quarter.
Earnings performance benefited from higher capacity utilization and the growing proportion of new products within the portfolio. Having accounted for negative foreign currency effects equivalent to EUR 0.9 million, EBITDA rose by 19.8% to EUR 123.4 (103.1) million in the first nine months of 2007. Adjusted for extraordinary income from insurance proceeds, EBITDA growth stood at 15.2%. In the third quarter negative foreign currency effects amounted to EUR 0.4 million. During this period EBITDA increased by 10.3% to EUR 39.7 (36.0) million.
In the first nine months, EBIT rose by 32.4% to EUR 91.2 (68.9) million. Having deducted extraordinary income, EBIT growth amounted to 25.6%. In the third quarter EBIT increased by 26.0% to EUR 29.1 (23.1) million, with the EBIT margin rising to 19.4% (17.9%).
Earnings before taxes rose by 33.6% in the first nine months of 2007, up from EUR 65.2 million to EUR 87.1 million. Excluding extraordinary income, EBIT growth amounted to 26.4%. In the third quarter earnings before taxes rose by 26.3% to EUR 27.4 (21.7) million.
The corporate tax reform passed by the German government requires a revaluation of deferred tax assets and liabilities accounted for by companies, which ElringKlinger performed as of September 30, 2007. Within this context, the calculation is conducted on the basis of the cumulative domestic corporate tax rate to be applied effective from the 2008 financial year, which will be reduced from approximately 37.0% to 27.3%. The aforementioned revaluation led to non-cash extraordinary income of EUR 5.9 million, which in turn resulted in a corresponding increase in consolidated net income.
Thus, the income tax rate decreased to 28.4% (35.6%) in the first nine months of 2007. Consolidated net income rose by 48.6% to EUR 62.4 (42.0) million. Adjusted for extraordinary income of EUR 2.9 million, after taxes, from the above-mentioned insurance claim and non-recurring income from the revaluation of tax items amounting to EUR 5.9 million, consolidated net income totaled EUR 53.6 million, thus exceeding the figure posted for the same period a year ago by 27.6%. Based on a tax rate of 14.6% (35.9%), consolidated net income for the third quarter rose by 68.3% to EUR 23.4 (13.9) million. Adjusted for extraordinary income, consolidated net income increased by 25.8% to EUR 17.5 million.
After deducting minority interests, consolidated net income for the first nine months stood at EUR 58.9 (38.8) million, which represents growth of EUR 20.0 million compared with the same period a year ago. Adjusted for extraordinary income, ElringKlinger was able to increase consolidated net income after minority interests by 28.9% to EUR 50.1 million.
In the third quarter of 2007, consolidated net income after minority interests increased by 76.6% to EUR 22.5 (12.7) million. Minority interests accounted for EUR 0.9 million in the third quarter of 2007, down from EUR 1.2 million in the same period a year ago, mainly as a result of the purchase of an additional stake in ElringKlinger Kunststofftechnik GmbH in August 2007. Adjusted for extraordinary items, consolidated net income after minority interests rose by 30.2% to 16.6 million.
Earnings per share calculated in accordance with IFRS rose by 51.6%, up from EUR 2.02, to EUR 3.07 in the first nine months of 2006. Adjusted for extraordinary items, earnings per share improved by 28.9% to EUR 2.61. In the third quarter, ElringKlinger increased earnings per share by 76.6%, from EUR 0.66 a year ago to EUR 1.17. Adjusted for extraordinary items, ElringKlinger achieved earnings per share of EUR 0.86, which represents a 30.2% increase compared with the third quarter of 2006.
ElringKlinger's order intake and order backlog continued to develop on a solid basis. Order intake increased by 14.9% to EUR 486.2 (423.3) million in the first nine months. Order intake for Q3 2007 was 13.6% higher than in the same quarter a year ago. At the end of the third quarter order backlog stood at EUR 234.4 (203.0) million, which represents a year-on-year increase of 15.5%.
On the back of positive results for the first nine months, the ElringKlinger Group is well on track to exceed its original targets for 2007. The plan was to raise consolidated sales revenues by 5 to 7% and consolidated net income after minority interests by around 10%. However, ElringKlinger has now defined a new target of approximately 11% revenue growth for the 2007 financial year as a whole. Adjusted for non-recurring items, consolidated net income after minority interests is to rise by 17 to 19% year on year. Over the course of 2007, ElringKlinger has generated extraordinary income from insurance proceeds in the amount of EUR 2.9 million as well as from the revaluation of deferred taxes in the amount of EUR 5.9 million as a result of Germany's corporate tax reform. In 2006 a corporation tax credit amounting to EUR 5.3 million had contributed to consolidated net income after minority interests as a non-recurring item. Provided that the general economic climate remains stable, ElringKlinger anticipates that both revenue and adjusted consolidated net income after minority interests will continue to grow in 2008.
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ots Originaltext: ElringKlinger AG
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