SHW AG / Key word(s): Half Year Results

25.07.2014 / 07:10


PRESS RELEASE

SHW AG: Full year sales and earnings forecast raised

- Sales in the first half of 2014 increase 20.2 percent to EUR 212.1 million

- EBITDA advances to EUR 19.0 million

- Working capital ratio at 10.1 percent

Aalen, 25 July 2014. Today, SHW AG, one of the leading automotive suppliers of CO2-relevant pumps, engine components and brake discs, published its key financial figures for the first half of 2014.

Due to successful new product launches and a high level of customer call orders, SHW AG was able to increase Group sales in the first half of 2014 by 20.2 percent to EUR 212.1 million (first half of 2013: EUR 176.4 million). Incoming orders rose 13.5 percent year-on-year from EUR 195.1 million to EUR 221.4 million. New passenger car registrations in the European Union gained 6.5 percent to 6.62 million vehicles.

The high level of customer call orders during the first half of 2014 led to logistical and operational pressures on the existing technical capacity at both our suppliers and in the Powder Metallurgy division at the Aalen-Wasseralfingen site. It also adversely affected the productivity of the pump production activities at the Bad Schussenried site, which is the main customer of the Powder Metallurgy division.

Group earnings before interest, taxes, depreciation and amortisation of tangible and intangible assets (adjusted EBITDA) improved from EUR 17.1 million to EUR 19.0 million in the period from January to June 2014 compared to the same period in the previous year. This represents an EBITDA margin of 9.0 percent (first half of 2013: 9.7 percent).

"With the achievement of the half year results, we are fully within our target range", said CEO Dr. Thomas Buchholz, who is responsible for the Pumps and Engine Components business segment.

Working capital ratio at 10.1 percent

The positive development in working capital was reinforced during the course of the first half of 2014.

Working capital declined by 21.7 percent year-on-year to EUR 40.4 million (previous year: EUR 51.6 million), while at the same time sales grew 20.2 percent. The working capital ratio - that is the ratio of working capital to the Group's trailing twelve months sales - of 10.1 percent means that the 11 percent target was exceeded. "We can be very pleased with the results of improvements in our logistics processes achieved to date, which are reflected in the significant reduction in our inventories. We see the potential for further improvements in the area of receivables management", stressed Sascha Rosengart, CFO of SHW AG.

Pumps and Engine Components business segment: sales at record level

The Pumps and Engine Components business segment achieved sales of EUR 163.1 million in the first half of 2014 (first half of 2013: EUR 131.9 million) which is the highest level in the Company's history. Sales in the Passenger Car division grew 26.5 percent to EUR 131.3 million (first half of 2013: EUR 103.8 million). This can be attributed to a high level of customer call orders, particularly for oil/vacuum pumps (tandem pumps), and to an expansion in capacity of an auxiliary pump for the start-stop function. New product launches in the Passenger Car division were consistently stable and on schedule. The Truck & Off Highway division benefited from sustained high demand from agricultural and construction machinery manufacturers and generated sales of EUR 15.6 million (first half of 2013: EUR 14.3 million). The Powder Metallurgy division was able to end the first half of 2014 with sales growth of 17.0 percent to EUR 16.2 million (first half of 2013: EUR 13.8 million) following the ramp-up of components for a camshaft phaser and an increase in customer call orders.

The high level of customer call orders during the first half of 2014 led to logistical and operational pressures on the existing technical capacity at both our suppliers and in the Powder Metallurgy division at the Aalen-Wasseralfingen site. This adversely affected the productivity of the pump production activities at the Bad Schussenried site, which is the main customer of the Powder Metallurgy division. The business segment's earnings before interest, taxes, depreciation and amortisation (adjusted EBITDA) improved from EUR 13.6 million to EUR 15.6 million in the first half of 2014 compared to the same period of the previous year. This figure includes scheduled start-up costs of EUR 0.4 million for the establishment of business activities in North America and Brazil. The corresponding EBITDA margin declined from 10.3 percent to 9.5 percent.

With the implementation of the three-year investment programme and action plan adopted by the Supervisory Board, the powder metallurgy segment should return to a path of profitable growth in the coming year and thus lead to an overall sustainable improvement in the profitability of the Pumps and Engine Components business segment.

Brake Discs business segment: EBITDA exceeds previous year's level

On the back of increasing sales figures, the Brake Discs business segment generated sales growth of 10.1 percent in the first half of 2014, achieving sales of EUR 48.9 million (first half of 2013: EUR 44.5 million). Earnings before interest, taxes, depreciation and amortisation (adjusted EBITDA) rose from EUR 4.1 million to EUR 4.3 million. The EBITDA margin declined to 8.7 percent after 9.2 percent in the first half of 2013.

First oil pumps delivered in Brazil

The implementation of the internationalisation strategy is on track. In Brazil, the first oil pumps were delivered to a US automotive manufacturer in mid-July. The Canadian subsidiary has received a further prototype order from a North American automotive manufacturer and is currently a candidate in the selection process for various large-scale projects. In China, a new production hall was rented in Kunshan. The production start-up for engine oil pumps for a prestigious European motor manufacturer for truck and off-highway applications is expected to take place at this site in the first half of 2015. In preparation for this project, the first local employees were hired in the areas of purchasing, quality assurance and sales. As part of their training, each will have a prolonged stay at the site in Bad Schussenried.

Full year 2014 sales and earnings forecast raised

Based on the half year figures, the Management Board has revised its outlook for the full year of 2014 as follows:

Assuming a continued stable order situation, SHW AG now expects Group sales in fiscal year 2014 to be in the range of EUR 390 million to EUR 415 million (previously: EUR 380 million to EUR 400 million). Additionally planned product launches and a shift in the product mix towards more complex pumps should lead to sales in the Pumps and Engine Components business segment of between EUR 297 million and EUR 320 million (previously: EUR 287 million to EUR 305 million). In the Brake Discs business segment, the target is to further increase the share of processed brake discs and higher-value composite brake discs and thus achieve sales in the order of EUR 93 million to EUR 95 million (unchanged vs. previous forecast).

The Management Board's focus in the second half of 2014 will be primarily on acquiring new orders, further optimising logistical and operational business processes at all locations, and on establishing and expanding the business in Brazil, China, and North America. With the achievement of the sales growth planned, the Company now expects to reach adjusted Group earnings before interest, taxes, depreciation and amortisation (adjusted EBITDA) in the order of EUR 39 million to EUR 41.5 million in 2014 (previously: EUR 38 million to EUR 40 million).


About SHW

The Company was established in 1365 making it one of the oldest industrial companies in Germany. Today, SHW AG is a leading automotive supplier providing products that make a substantial contribution to reducing fuel consumption and, consequently, to lowering CO2 emissions. In its Pumps and Engine Components business segment, the SHW Group develops and produces pumps for passenger vehicles and so-called truck and off-highway applications (e.g., trucks, agricultural and construction vehicles, stationary engines and wind farms) as well as engine components. The Brake Discs business segment develops and produces monobloc ventilated brake discs made of cast iron and composite brake discs made of a combination of an iron friction ring and an aluminium pot. The SHW Group's customers include renowned automotive manufacturers, manufacturers of commercial, agricultural, and construction vehicles as well as other suppliers to the automotive industry. Currently, the SHW Group has four production sites in Germany. These are located in Bad Schussenried, Aalen-Wasseralfingen, Tuttlingen-Ludwigstal and Neuhausen ob Eck. With just over 1,000 employees, the Company generated Group sales in fiscal year 2013 of EUR 366 million. Further information is available at: www.shw.de

Contact person
Michael Schickling
Head of Investor Relations & Corporate Communications
SHW AG
Telephone: +49 (0)7361 502 462
Email: michael.schickling@shw.de

Future-oriented statements
This press release contains certain future-oriented statements that are based upon current assumptions and forecasts made by the management of SHW AG. Various known and unknown risks, uncertainties and other factors may lead to the actual results, financial position, development or performance of the company deviating considerably from the appraisals specified here. The company assumes no obligation to update future-oriented statements of this nature or adapt them to future events or developments.

Note
This announcement does not constitute an offer to sell securities in the United States of America, Canada, Australia, Japan or any other jurisdictional territory where offers are subject to statutory restrictions. The securities named in this announcement may only be sold or offered for sale in the United States of America following their prior registration in accordance with the provisions of the version of the US Securities Act of 1933 currently in force (the "Securities Act") or, without prior registration, only on the basis of an exemption. Unless provided for by certain exceptions within the Securities Act, the securities named within this announcement may not be sold or offered for sale in Australia, Canada or Japan, nor may they be sold or offered for sale to or for account of residents of Australia, Canada or Japan. No registration of the offer or sale of the securities named in this announcement will take place, as stipulated by the relevant statutory provisions in Canada, Australia and Japan. There is no public solicitation to buy securities in the United States of America.



End of Corporate News


25.07.2014 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de



279334  25.07.2014