SHW AG: significant margin improvement in the first quarter

DGAP-News: SHW AG / Key word(s): Quarterly / Interim Statement/QuarterResults2016-05-03 / 07:53The issuer is solely responsible for the content of this announcement.---------------------------------------------------------------------------PRESS RELEASE SHW AG: significant margin improvement in the first quarter* Sales after three months lower than previous year, as expected* Operating margin increased to 10.1 per cent* Sales and earnings forecast for the year as a whole confirmed Aalen, 3 May 2016. SHW AG, one of the leading automotive suppliers ofCO2-relevant pumps and engine components as well as composite brake discs,published its financial results for the first three months of 2016 today."Our measures to boost productivity are paying off," says Dr Frank Boshoff,Chief Executive Officer of SHW AG, commenting on the figures. "Byconsistently implementing productivity-boosting measures, we haveeliminated the operational and logistical bottlenecks at ourAalen-Wasseralfingen plant. We have thereby established the basis for acontinuous improvement in profitability in our Pumps and Engine Componentsbusiness segment. We can therefore confirm our sales and earnings forecastfor the Group for the year as a whole."In the first quarter of 2016, SHW AG reported Group sales of EUR 106.6million (previous year: EUR 117.0 million). As well as the expected declinein sales in the Pumps and Engine Components business segment, sales in theBrake Discs segment suffered due to factors including significantly lowerscrap prices on account of reduced material surcharges.Adjusted consolidated earnings before interest, taxes, depreciation andamortisation (EBITDA adjusted) amounts to EUR 10.8 million (previous year:EUR 11.0 million). At 10.1 per cent, the corresponding operating margin issignificantly higher than the previous year's level of 9.4 per cent, andslightly exceeds the figure of 10.0 per cent for the fourth quarter of2015. Over the last few years, to help safeguard the future, SHW AG hasinvested in capacity and productivity-boosting production facilities andthe establishment and expansion of international plants in North America,South America and China. As a result, depreciation increased in comparisonto the previous year. The quarterly profit declined accordingly by 19 percent to EUR 3.3 million (previous year: EUR 4.1 million). Earnings pershare came to EUR 0.51 (previous year: EUR 0.67).Robust financial profile underpins growth strategyThe net liquidity position amounted to EUR 5.6 million at the end of thefirst quarter. This represents an improvement of EUR 14.4 million on theprevious year's figure. In particular, this is due to an operating freecash flow in the amount of EUR 21.3 million, which was generated over thepast twelve months.Equity increased by EUR 6.6 million compared with the previous year andamounts to EUR 119.1 million. With a virtually unchanged balance sheettotal of EUR 233.5 million, this caused the equity ratio to increase from48 per cent to 51 per cent.Efficiency programmes implemented in Powder MetallurgyThe Pumps and Engine Components business segment reported sales of EUR 85.9million in the first three months of 2016 (previous year: EUR 92.5million). Revenue in the Passenger Car segment declined from EUR 77.0million to EUR 71.2 million. The anticipated decline in sales results,inter alia, from the termination of a contract for camshaft phasers fordiesel vehicles as part of a customer's changeover to the urea injectionsystem (SCR technology). The Industry segment contributed EUR 7.4 millionto sales (previous year: EUR 7.5 million). The Powder Metallurgy segmentclosed the first quarter of 2016 with consolidated sales of EUR 7.3 million(previous year: EUR 8.0 million).Despite the decline in sales, the Pumps and Engine Components businesssegment recorded improved adjusted EBITDA of EUR 9.5 million in the periodunder review (previous year: EUR 9.3 million). The corresponding EBITDAmargin increased from 10.0 per cent to 11.1 per cent.The measures to boost productivity in Powder Metallurgy were implemented asscheduled at the Aalen-Wasseralfingen plant at the end of the first quarter2016. The operational and logistical bottlenecks in pump assembly at theBad Schussenried plant have thereby also been eliminated. Considerablylower costs for external processing, finishing and special shipments havemade a significant contribution to an improved EBITDA margin.The business of the foreign subsidiaries in Canada and China developed asplanned. The operating result for the segment suffered due to the costs forthe establishment and expansion of these two foreign plants, as well as tothe weak Brazilian automobile market.Significantly improved product mix largely makes up for lower level ofutilisationIn the Brake Discs business segment, sales declined by 16 per cent to EUR20.7 million in the first three months of the 2016 fiscal year. This waspartly due to the clear decline in sales of one-piece brake discs, incontrast to an increase in composite brake discs.Considerably fallen cost prices for scrap also contributed to the declinein sales. These prices are passed on to customers as a variable pricecomponent in the form of reduced material surcharges.Thanks to positive product mix effects, the lower level of utilisation waslargely made up for. Adjusted EBITDA in the Brake Discs business segmentdeclined by EUR 0.5 million in the period under review to EUR 1.6 million.However, the corresponding EBITDA margin only decreased from 8.7 per centto 7.7 per cent. Since they were passed on to customers, the lower costprices for scrap did not have any significant impact on earnings."Under these circumstances, we can be satisfied with our earnings for thefirst quarter," says Andreas Rydzewski, member of the Management Board withresponsibility for the Brake Discs business segment. "I remain confident ofour ability to achieve an EBITDA margin of 10 per cent over the year as awhole. This is underpinned by the strong growth in our composite brakediscs business as well as our improved process workflows - i.e. thelinking-up of the paint shop and the automation of aluminium casting forbrake disc bells."Forecast confirmed The forecast for the year as a whole is unchanged. Assuming a stable orderssituation, SHW AG expects Group sales of between EUR 440 million and EUR460 million for 2016. It is forecasting sales of between EUR 340 millionand EUR 360 million in its Pumps and Engine Components business segment andsales close to the previous year's level in its Brake Discs businesssegment, assuming similar scrap prices. The proportion of higher-qualitycomposite brake discs will continue to increase.For 2016, the Company continues to expect adjusted EBITDA of between EUR 43million and EUR 47 million. In particular, this reflects the positiveeffects of the implementation of the Group's productivity-boosting measuresin its two business segments.SHW AG's Annual General Meeting will take place on 10 May 2016 inHeidenheim. The financial report for the first six months of 2016 will bepublished on 29 July 2016. About SHWThe Company was established in 1365 making it one of the oldest industrialcompanies in Germany. Today, SHW AG is a leading automotive supplierproviding products that make a substantial contribution to reducing fuelconsumption and, consequently, to lowering CO2 emissions. In its Pumps andEngine Components business segment, the SHW Group develops and producespumps for passenger vehicles and industry applications (e.g., trucks,agricultural and construction vehicles, stationary engines and wind farms)as well as engine components. The Brake Discs business segment develops andproduces monobloc ventilated brake discs made of cast iron and compositebrake discs made of a combination of an iron friction ring and an aluminiumpot. The SHW Group's customers include renowned automotive manufacturers,manufacturers of commercial, agricultural, and construction vehicles aswell as other suppliers to the automotive industry. Currently, the SHWGroup has four production sites in Germany located in Bad Schussenried,Aalen-Wasseralfingen, Tuttlingen-Ludwigstal and Neuhausen ob Eck, one sitein Brazil (Sao Paulo) and China (Kunshan) and has a sales and developmentcentre in Toronto, Canada. Besides, SHW Automotive GmbH also holds a 51 percent interest in the joint venture SHW Longji Brake Discs (LongKou) Co.,Ltd., in LongKou, China. With just over 1,250 employees, the Companygenerated Group sales in fiscal year 2015 of EUR 463 million. Furtherinformation is available at: www.shw.deContact person Michael SchicklingHead of Investor Relations & Corporate Communications SHW AGTelephone: +49 (0) 7361 502 462Email: michael.schickling@shw.deFuture-oriented statementsThis press release contains certain future-oriented statements that arebased on current assumptions and forecasts made by the management of SHWAG. Various known and unknown risks, uncertainties and other factors maylead to the actual results, financial position, development or performanceof the company deviating considerably from the appraisals specified here.The company assumes no obligation to update future-oriented statements ofthis nature or adapt them to future events or developments.NoteThis announcement is for information purposes only and does neitherconstitute an offer to sell, purchase, exchange or transfer any securitiesnor a solicitation of any offer to sell, purchase, exchange or transfer anysecurities.The securities referred to herein have not been and will not be registeredunder the U.S. Securities Act of 1933, as amended (the "Securities Act")and may not be offered or sold in the United States absent registration oran exemption from registration under the Securities Act. SHW AG does notintend to register any securities referred to herein under the SecuritiesAct or with any securities regulatory authority of any state or otherjurisdiction in the United States in connection with this announcement.---------------------------------------------------------------------------2016-05-03 Dissemination of a Corporate News, transmitted by DGAP - aservice of EQS Group AG.The issuer is solely responsible for the content of this announcement.The DGAP Distribution Services include Regulatory Announcements,Financial/Corporate News and Press Releases.Media archive at www.dgap-medientreff.de and www.dgap.de---------------------------------------------------------------------------   Language:    English                                                       Company:     SHW AG                                                                     Wilhelmstrasse 67                                                          73433 Aalen                                                                Germany                                                       Phone:       +49 7361 502-1                                                Fax:         +49 7361 502-674                                              E-mail:      ir@shw.de                                                     Internet:    www.shw.de                                                    ISIN:        DE000A1JBPV9                                                  WKN:         A1JBPV                                                        Listed:      Regulated Market in Frankfurt (Prime Standard); Regulated                  Unofficial Market in Berlin, Dusseldorf, Stuttgart                  End of News    DGAP News Service