ElringKlinger revises earnings guidance for current financial year
- Earnings under pressure primarily from high commodity prices and follow-on costs associated with consistently strong demand in NAFTA region
- EBIT margin before purchase price allocation now expected to be around 7% in 2018, revised downward from original guidance of approx. 9%
- Revenue guidance for 2018 unchanged
Dettingen/Erms (Germany), June 25, 2018 +++ ElringKlinger AG conducted a reassessment of its opportunities and risks for the 2018 financial year as a whole on the basis of consolidated earnings for the months of April and May 2018 and against the backdrop of persistently high levels of general uncertainty - both in political and macroeconomic terms but also with regard to operating activities. This reassessment revealed that raw material prices, particularly for polyamide, steel, and aluminum, have continued to surge. This is to be a seen as a significant additional expense factor within the Group as a whole. Additionally, the consistently high follow-on costs associated with sustained buoyancy in demand within the NAFTA region will continue to exert pressure on earnings. These factors may account for up to two percentage points of ElringKlinger's earnings margin in 2018, as a result of which the company now expects its earnings margin before interest, taxes, and purchase price allocation to be around 7% for the 2018 financial year as a whole. Prior to this adjustment, the Group's guidance in respect of its earnings margin had been around 9%. The Group's revenue expectations for 2018, i.e., to exceed growth in global automobile production by 2 to 4 percentage points in organic terms, remain unchanged.
ElringKlinger initiated a number of measures in 2017 to address the situation in the NAFTA region. In particular, it established the necessary foundations for capacity expansion. Additionally, measures aimed at process optimization were successfully executed by the company. Pursuing a consistent policy with regard to supplier selection and operating with a balanced structure of contractual terms, the Group is also looking to counteract commodity price development for the purpose of mitigating associated risk.
Global demand for ElringKlinger products remains strong. Against this backdrop, the company has confirmed its revenue guidance for the 2018 financial year, the aim being to outpace growth in global automobile production by 2 to 4 percentage points in organic terms. At present, global automobile production is expected to expand by 2 to 3% in 2018.
In connection with this press release, a conference call will be arranged with CFO Thomas Jessulat on Tuesday, June 26, 2018, at 10:00 hrs (CEST) for the purpose of elucidating the points presented above.
For further information, please contact:
Dr. Jens Winter
72581 Dettingen/Erms | Germany
Phone: +49 7123 724-88335
Fax: +49 7123 724-85 8335
About ElringKlinger AG
As an automotive supplier, ElringKlinger has become a trusted partner to its customers - with a firm commitment to shaping the future of mobility. Be it optimized combustion engines, high-performance hybrids, or environmentally-friendly battery and fuel cell technology, ElringKlinger provides innovative solutions for all types of drive systems. ElringKlinger's lightweighting concepts help to reduce the overall weight of vehicles. As a result, vehicles powered by combustion engines consume less fuel and emit less CO2, while those equipped with alternative propulsion systems benefit from an extended range. In response to increasingly complex combustion engine technology, the Group also continues to make refinements with regard to gaskets in order to meet the highest possible standards. This is complemented by solutions centered around thermal and acoustic shielding technology. Additionally, the Group's portfolio includes products made of the high-performance plastic PTFE which are also marketed to industries beyond the automotive sector. These efforts are supported by a dedicated workforce of more than 9,600 employees at 45 ElringKlinger Group locations around the globe.
This release contains forward-looking statements. These statements are based on expectations, market evaluations and forecasts by the Management Board and on information currently available to them. In particular, the forward-looking statements shall not be interpreted as a guarantee that the future events and results to which they refer will actually materialize. Whilst the Management Board is confident that the statements as well as the opinions and expectations on which they are based are realistic, the aforementioned statements rely on assumptions that may conceivably prove to be incorrect. Future results and circumstances depend on a multitude of factors, risks and imponderables that can alter the expectations and judgments that have been expressed. These factors include, for example, changes to the general economic and business situation, variations of exchange rates and interest rates, poor acceptance of new products and services, and changes to business strategy.
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