DGAP-News: Novem Group S.A.: HY 2021/22 figures well up on prior year despite difficult market environment in second quarter

Novem Group S.A.: HY 2021/22 figures well up on prior year despite difficult market environment in second quarter

• HY 2021/22 revenue of €295.3 million, +15.2% above HY 2020/21
• Adj. EBIT of €38.2 million, +66.3% above HY 2020/21
• Difficult trading conditions put strain on operational effectiveness
• Unpredictable market environment will last longer than expected

Luxembourg, 16 December 2021 - Novem Group S.A. today published its half-year figures for the financial year 2021/22. Strong recovery following the onset of the pandemic led to solid revenue growth and a double-digit Adj. EBIT margin of 12.9% with Novem showing resilience despite challenging market conditions.

HY 2021/22 top line recovered from impact of Covid-19

Half-year total revenue of €295.3 million underlined positive development compared with the same reporting period last year. Revenue was up 15.2% or €39.1 million, driven by the Company's rebound after the global lockdown in spring 2020. At €269.4 million, revenue Series contributed more than 90% of the total figure. Tooling added €25.9 million to total revenue, slightly below 2020/21, a figure impacted by the pandemic-related standstill of project work with OEMs.

Revenue growth was driven by both Europe (+16.2% year-on-year) and Americas (+33.2% year-on-year). Both regions profited from a rebound compared to the lockdown period last year. Asia fell by 20.2% against last year as business in the region picked up strongly in the immediate aftermath of the Covid-19 crisis. The second quarter of the financial year 2021/22 therefore reflected a weaker market environment.

The second quarter of the financial year 2021/22 showed worsening trading conditions in the automotive industry. Due to lower and strongly fluctuating production volumes, Novem generated total revenue of €139.2 million, down 18.3% compared to the same reporting period last year.

In the first six months, Novem achieved an Adj. EBIT of €38.2 million (PY: €22.9 million). As a result, Adj. EBIT was up €15.2 million or 66.3% on last year's figure, which translated into a re-strengthened margin of 12.9% (8.9% PY). This rebound was largely attributable to the broadened revenue base in Q1 2021/22. However, looking at the second quarter, Adj. EBIT margin of 8.9% - a decrease of 5.2 percentage points compared to Q2 2020/21 - was negatively impacted by the volatile call-offs which led to inefficiencies in managing labour costs. Separately, inflationary pressures on raw materials and higher freight expenses further contributed to the Q2 decrease in Adj. EBIT. Limited visibility made it difficult to amend production and personnel capacities while maintaining operational flexibility. Nonetheless, pronounced recovery in the first quarter 2021/22 enabled a positive development of the year-to-date performance.

Working capital affected by market conditions

Working capital for the half-year recorded at 139.3 million, +8.2% compared with the same period last year. The increase was due to higher tooling net (€-23.9m), higher inventories (€-14.3m) as well as higher trade payables (€+2.2m), conversely affected by lower trade receivables (€+22.1m) and contract assets (€+3.3m). Given the challenging market conditions, Novem deliberately kept inventories at high levels across all regions to be able to cushion the impact of supply chain issues in the automotive sector. Nonetheless, trade working capital showed a favourable decline of 19.2% from €52.1 million to €42.0 million.

Capital structure strongly improved post-IPO

As stated in the context of the Company's Q1 results, Novem successfully completed its refinancing process subsequent to the listing. The negative equity of €-505.1 million as of 31 March 2021 turned positive to €19.9 million as of 30 September 2021. Following the redemption of the €400.0 million bond and the drawdown of the €250.0 million term loan, gross financial debt decreased by €152.1 million compared to 31 March 2021. Cash and cash equivalents lowered by €103.9 million compared to the end of financial year 2020/21. Reduction in net financial liabilities led to a marked improvement of net leverage from 2.2x as of 31 March 2021 to 1.6x in the first half-year 2021/22. Principal sources of funds were €71.4 million cash (€175.3 million as of 31 March 2021) and €51.5 million non-recourse factoring (€40.1 as of 31 March 2021).

Further growth opportunities tapped and in preparation

With the award of a luxury SUV business from Hongqi (FAW), Novem won the next Chinese premium customer after Geely. The Company's efforts in further building its position in Asia were also underlined by establishing a new sales function in Japan to serve the local customer base more effectively. In addition, a considerable part of Faurecia's available aluminium interior trim business was taken over, thus contributing to further growth in the near future.

The interim statement for the first half of financial year 2021/22 can be found on the Investor Relations website under Reports & Presentations.

About Novem
German-headquartered Novem is a globally leading supplier of decorative interior trim parts for the premium automotive industry. Across the range of key materials such as genuine wood, aluminum, carbon and premium synthetics, the Company offers unrivalled quality, technology and innovation to a growing customer base of 18 automotive OEMs. Founded in Vorbach, Germany, back in 1947, the Company has continuously expanded its global footprint in Germany, Italy, Czech Republic, Slovenia, China, USA, Honduras and Mexico. Novem employs about 5,700 people at 12 locations and achieved revenues of more than €600 million in FY 2020/21.

For more information, please visit www.novem.com.

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