DGAP-News: Grammer AG

Grammer with a further increase in revenue and operating profitability

- Revenue and operating EBIT well up on the previous year

- Operating EBIT of EUR 44.0 million; increase in the operating
EBIT-margin to 4.8 percent

- Full-year outlook for 2017 confirmed

- Lower order intake in Automotive Division due to continued customer reticence

Amberg, August 9, 2017 - For the Grammer Group, a leading international supplier of interior components for passenger vehicles and seating systems for commercial vehicles, the first six months of the current year were characterized by successful measures to avert an attempt by a minority shareholder to gain control over the Company. Given these difficult circumstances, the continued strong growth in operating business in the first half of the year is all the more gratifying.

5 percent increase in Group revenue
In the period under review, Group revenue grew by 5.5 percent to EUR 908.0 million (2016: 860.6), materially driven by growth in the Automotive Division and particularly console business. However, the Commercial Vehicles Division was also able to post an encouraging increase in revenue despite the persistent weakness of the Brazilian truck market. Regionally, the Grammer Group continued to grow in nearly all markets. However, at EUR 625.7 million, revenue in the domestic EMEA market remained flat at the previous year's high level (2016: 628.1). By contrast, revenue in the Americas climbed significantly by 27.1 percent to EUR 147.8 million (2016: 116.3). Grammer also registered strong growth in Asia-Pacific (APAC), with revenue rising by 15.7 percent to EUR 134.5 million (2016: 116.2).

Further substantial increase in operating profitability
A sustained substantial improvement in profitability is reflected in operating EBIT (excluding currency-translation effects and other exceptional items), which climbed by 23.2 percent to EUR 44.0 million (2016: 35.7). Accordingly, the operating EBIT margin also widened substantially from 4.1 percent in the previous year to 4.8 percent, thus coming within Grammer's full-year target corridor of around 5 percent. This favorable performance was particularly underpinned by the steady and effective measures aimed at optimizing fixed costs and process structures.

Group earnings before interest and taxes (EBIT) came to EUR 35.1 million as of June 30, 2017 and were thus virtually unchanged over the same period of the previous year (2016: 36.4). In the first half of the year, this figure was influenced by currency evaluation effects and additional exceptional expenses in connection with an attempted change-of-control at Grammer AG sought by a minority shareholder at the annual general meeting. At 3.9 percent, the EBIT margin was also close to the previous year's figure in spite of the aforementioned burden.

Group net profit came to EUR 20.0 million, thus also almost matching the previous year (2016: 21.2).

"We have had some very busy months with major challenges that we have successfully tackled. Despite the activities to ward off an attempt by a minority shareholder to obtain control over our Group, we were able to improve our operating performance again substantially. At the annual general meeting in May, the shareholders voted with an overwhelming majority in favor of Grammer and in favor of a continuation of the successful corporate strategy, the results of which can be clearly seen in the business figures reported for the first half of the year. This places the Grammer Group firmly in its target corridor for 2017 and means that it is on track for a further sustained increase in revenue and profitability," says Hartmut Müller, Chief Executive Officer of Grammer AG.

Profitable growth in both Divisions
Both Divisions contributed to the substantial increase in revenue and profitability in the first half of the year. The strong pace of growth in the Automotive Division seen in the first quarter slowed somewhat due to the lower number of working days in the second quarter among other things. Even so, revenue in this Division rose by 4.2 percent to EUR 661.9 million (2016: 635.0). The successful implementation of measures to optimize operating performance and the strategic orientation were reflected in the substantial improvement in operating EBIT of EUR 28.2 million (2016: 21.3), accompanied by a correspondingly wider operating EBIT-margin of 4.3 percent (2016: 3.4). EBIT reached EUR 25.0 million in the Automotive Division (2016: 20.7).

As repeatedly reported in the course of the year, order intake for new future projects was lower in the Automotive Division compared with earlier years. This was due to the continued reticence shown by the major passenger vehicle OEMs in view of the attempts made by a minority shareholder to gain control. These attempts were successfully averted at the annual general meeting at the end of May, although this has so far not had a broader effect on order intake in the second and in the current third quarter. Therefore it is important for the future development of the Company that Grammer is able to win major new projects being tendered by the OEMs in the second half year 2017.

Despite the still unsatisfactory development of the Brazilian truck market, Grammer also achieved a gratifying increase in revenue in the Commercial Vehicles Division, which rose by 6.7 percent to EUR 267.2 million in the first half of 2017 (2016: 250.5). Operating EBIT climbed to EUR 22.7 million (2016: 18.6) due to the slight recovery in the EMEA market, expansion in the Americas and growth in business segments characterized by wider margins, resulting in an operating EBIT-margin of 8.5 percent (2016: 7.4). At EUR 21.6 million, EBIT was also up on the previous year (2016: EUR 20.0).

New main shareholder and change in the Supervisory Board
In July 2017, JAP Capital Holding GmbH reported that it held more than 20 percent of Grammer AG's share capital. JAP is affiliated with Chinese automotive component supplier Ningbo Jifeng, with which Grammer is planning a strategic partnership with joint activities in the Chinese market. With a stake of over 20 percent, JAP is now Grammer AG's largest shareholder and thus a strong counterweight to the two investment entities Halog and Cascade, which likewise hold a joint share of around 20 percent. On the basis of the current shareholder structure, the possibility of significant negative influence being exerted or even a change of control in the future can be almost entirely excluded (with the exemption of the always present theoretical possibility of a takeover-offer for a stock market-listed company).

There was also a change in the composition of Grammer AG's Supervisory Board at the end of the first half year: Dr. Hans Liebler stepped down from the Supervisory Board effective June 30, 2017. He is followed by Prof. Dr.-Ing. Birgit Vogel-Heuser, who was appointed to the Supervisory Board by the Local Court of Amberg at Grammer AG's request.

Full-year guidance for 2017 confirmed
Despite the still difficult and volatile economic environment and mounting political uncertainties, management continues to assume that the Grammer Group's operating business will continue to expand. Against this backdrop, the Company expects full-year Group revenue to rise substantially by around 5 percent over the previous year in 2017. Group operating EBIT margin will also grow to around 5 percent and thus exceed the previous year's high figure significantly. The events in connection with the attempted change-of-control sought by a minority shareholder continue to have an adverse effect on order receipts for future products and there is currently no guarantee if a full compensation will be possible. Here it is important for the future development of the Company that Grammer is able to win major new projects being tendered by the OEMs in the second half year 2017.

The Grammer Group's full interim report on the first half of 2017 is available from the corporate website at the following link:
https://www.grammer.com/investor-relations/publikationen/finanzberichte.html

Company profile

Located in Amberg, Germany, Grammer AG specializes in the development and production of components and systems for automotive interiors as well as suspension driver and passenger seats for onroad and offroad vehicles. In the Automotive Division, we supply headrests, armrests, center console systems and high-quality interior components and operating systems to premium automakers and automotive system suppliers. The Commercial Vehicle Division comprises seats for the truck and offroad seat segments (tractors, construction machinery, forklifts) as well as train and bus seats. With over 12,000 employees, Grammer operates in 19 countries around the world.
Grammer shares are listed in the SDAX and traded on the Frankfurt and Munich stock exchanges via the electronic trading system Xetra.