DGAP-News: GRAMMER Aktiengesellschaft / Key word(s): Quarterly / Interim Statement
Grammer AG: Positive operating performance with improved markets in the third quarter of 2020
- Revenue and earnings benefiting from improved markets and strict cost management in the third quarter
- Group revenue at 461.7 million euros and, thus, only 7.3 percent down on the previous year, after a 30-percent decline in the first half of the year
- Operating EBIT margin of around 5 percent as a result of successful crisis management
- Restructuring measures laying the foundations for a sustainable improvement in competitiveness
- Further milestones achieved in expanding business in APAC
- Resolution passed to issue fresh equity of 40 million euros from authorized capital subject to shareholders' preemptive subscription rights
Significant improvement in operating EBIT
Accordingly, operating EBIT came to -23.3 million euros in the period from January through September 2020 (01-09 2019: 59.2 million euros).
Earnings before interest and taxes (EBIT) amounted to -47.2 million euros in the first nine months (01-09 2019: 61.9 million euros). They were impacted by a significant decline in volumes due to the global COVID-19 pandemic, the negative one-time effects in the first half of the year and restructuring expenses in the third quarter.
Restructuring measures laying the foundations for a sustainable improvement in competitiveness
Among other things, the restructuring measures adopted in the third quarter entail the consolidation of sites in Europe and North America and a reduction of roughly 300 jobs in indirect areas at several German locations, which is to be implemented by mid-2021 with minimum social hardship. To this end, a comprehensive voluntary program has been implemented together with the social partners.
The situation was similar in the Americas, where revenue dropped by 27.3 percent to 332.3 million euros in the first nine months (01-09 2019: 457.4 million euros). Revenue in that region also climbed significantly from 47.1 million euros in the second quarter to 147.4 million euros in the third quarter.
Further milestones achieved in expanding business in APAC
Another focus for Grammer is the strategic partnership with Ningbo Jifeng. Since the beginning of the year, the two companies have been working on a variety of joint projects to harness purchasing and production synergies, to expand the product ranges and to improve market access in certain regions. At the end of March, a contract establishing a worldwide purchasing partnership was signed and promises the two partners savings in the double-digit millions over the next few years. In October, Grammer and Ningbo Jifeng decided to establish a sales partnership for the Japanese market, which Grammer hopes will give it better access to Japanese automotive OEMs.
With a total of seven production and two research and development sites in China, Grammer has an outstanding platform for additionally expanding its customer base in APAC and supporting its growth targets in Asia.
Revenue in the Automotive Division dropped by 24.1 percent to 844.0 million euros in the first nine months (01-09 2019: 1,112.3 million euros). This substantial decline is chiefly due to the effects of the COVID-19 pandemic in the first half of 2020 and coincided with the weakness that had already emerged in the second half of 2019 in the automotive markets. The third quarter saw a substantial recovery in revenue to 344.9 million euros (Q3 2019: 367.3 million euros). Consequently, the third quarter was only 6.1 percent down on the same quarter of the previous year. The measures taken in response to the COVID-19 pandemic merely cushioned the effects on earnings caused by the substantial decline in revenue. Moreover, one-time effects exerted pressure on EBIT in the second quarter. In addition, provisions of 5.0 million euros were recognized for restructuring in the third quarter. EBIT for the period from January through September came to -52.0 million euros (01-09 2019: 34.3 million euros). Adjusted for currency-translation losses, the directly attributable costs of the COVID-19 protection and response measures and termination benefit expenses, operating EBIT stood at -40.5 million euros in first three quarters.
The Commercial Vehicles Division sustained a 17.5 percent decline in revenue in the first nine months to 391.4 million euros (01-09 2019: 474.6 million euros). This decline was also materially caused by the COVID-19 pandemic. It additionally reflects the extraordinarily high demand recorded in the Commercial Vehicles Division in the same period of the previous year. In the third quarter, revenue came to 134.8 million euros, falling 5.3 percent short of the same quarter of the previous year (Q3 2019: 142.4 million euros). However, the measures taken in response to the COVID-19 pandemic were not sufficient to fully offset the substantial decline in revenue and the negative impact of the one-time effects in the second quarter of 2020. EBIT came to 12.1 million euros in the period from January to September. Negative currency-translation effects of 3.3 million euros, directly attributable costs for corona-related protection and response measures and restructuring expenses were eliminated from operating EBIT, which thus came to 20.9 million euros in the period from January through September (01-09 2019: 38.9 million euros).
In addition, the Executive Board passed with the approval of the Supervisory Board a resolution to utilize the authorized capital to issue fresh equity of 40 million euros subject to the shareholders' preemptive subscription rights in order to strengthen the company's equity base. The subscription price is 15.21 euros per new share. The subscription period begins on October 30 2020 and ends at 24:00 hours on November 12 2020. Grammer AG's principal shareholder has undertaken to exercise the subscription rights accruing to it in connection with the equity issue with subscription rights and to subscribe directly to the corresponding new shares. In addition, the principal shareholder will acquire all new shares not subscribed in the offer at the subscription price.
Forecast for the full-year 2020 still suspended
About Grammer AG
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29.10.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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