Stabilus S.A.: Challenging market conditions reflected in figures for Q2 FY2019

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Stabilus S.A.: Challenging market conditions reflected in figures for Q2 FY2019

- Persisting weakness in the global automotive market weighs on results for the second quarter of FY2019: Revenues in Q2 at EUR 239.1m, after EUR 251.0m in Q2 FY2018

- Adjusted EBIT^[1] in Q2 at EUR 35.7m, after EUR 39.3m in Q2 FY2018

- Q2 result at EUR 20.4m (Q2 FY2018: EUR 25.6m) and free cash flow (FCF^[1]) at EUR 6.6m (Q2 FY2018: EUR 16.8m)

- Updated forecast for FY2019 assumes sales at previous year's level; adjusted EBIT margin of approx. 15 % confirmed

Luxembourg/Koblenz, May 6, 2019 - Stabilus S.A. (ISIN: LU1066226637), one of the world's leading suppliers of gas springs, damping solutions and electromechanical drives for motion control, was unable to decouple from persistently challenging market conditions and broader developments across the global automotive industry in its second quarter (which ended on March 31, 2019) and reported a decline in revenues.

A comparison with the same quarter in the previous year shows with EUR 239.1 million 4.7 percent lower group revenues in the second quarter of FY2019 (Q2 FY2018: EUR 251.0 million). Following adjustment for USD/EUR currency effects, group revenues declined by 7.4 percent.

Dr. Stephan Kessel, Interim CEO of Stabilus, stated: "The persistently challenging market environment, most notably a disappointing performance in the European and Chinese automotive industry during the period under review, are reflected in our numbers for the first six months of the business year. Irrespective of current market conditions, however, Stabilus, the globally leading supplier of gas springs, damping solutions, and electromechanical drives for motion control, remains excellently positioned. We are therefore confident that we shall be able to make up for the greater part of the revenue shortfall once our end markets begin to recover. We therefore reaffirm our medium- and long-term STAR 2025 forecast."

Weak automotive industry depresses revenues across all regions

In the Europe region, revenues in Q2 FY2019 dipped by 4.7 percent to EUR 126.0 million, a development primarily due to the weaker automotive market (factors here including a switch to the WLTP testing cycle). In the NAFTA region, revenues of EUR 88.5 million were 1.0 percent lower than in the same quarter of the previous year, with the strong US dollar having played a supporting role here (average exchange rate of 1.14$/EUR in Q2 FY2019 vs. 1.23$/EUR in Q2 FY2018). Excluding USD/EUR currency effects, the NAFTA region reported a decline of -8.5 percent in Q2 FY2019. In Asia / Pacific and RoW (Rest of World), revenue decreased by 16.3 percent year-on-year to EUR 24.6 million. This was largely due to a significant reduction of the light vehicle production in China.

Automotive and industrial business impacted by current market conditions

Stabilus posted weaker revenues in both the automotive and industrial business in the second quarter of the 2019 business year. In the automotive segment, which accounts for 60 percent of group business, revenues contracted by 7.2 percent to EUR 144.2 million (Q2 FY2018: EUR 155.4 million). Excluding USD/EUR currency effects, sales declined by 10.2 percent, the company has been unable to decouple from broader automotive market trends as the number of light vehicles produced worldwide fell in Q2 FY2019 by 6.7 percent to 22.7 million units. The poorer performance by the global automotive industry is largely due to uncertainties surrounding the switch to the WLTP testing cycle, the Brexit debate, and the ongoing trade standoff between the USA and China. These developments had a perceptible impact on both Automotive Powerise and the Automotive Gas Springs division. The industrial business, which in Q2 FY2019 reported a slight year-on-year reduction in revenues of 0.8 percent to EUR 94.8 million (Q2 FY2018: EUR 95.6 million), accounted for 40 percent of group revenues. Excluding USD/EUR currency effects, revenues in the segment softened by 2.9 percent. The reduction was primarily due to the weaker business with distributors and lower revenues in the transportation and independent aftermarket sectors. Growth in the construction machinery, engineering/ production technology and office furniture segments was insufficient to completely offset declines in the previously named areas.

Adjusted EBIT margin of 14.9 percent in the second quarter

The adjusted operating result (adjusted EBIT^[1]) decreased in Q2 FY2019 by 9.2 percent to EUR 35.7 million. This is equivalent to an adjusted EBIT margin of 14.9 percent, down from 15.7 percent in the same quarter of the previous year, Q2 FY2018.

In Q2 FY2019, a profit of EUR 20.4 million was reported, after EUR 25.6 million in the same quarter of the previous year. Free cash flow (FCF^[1]) stood at EUR 6.6 million in Q2 FY2019, down from EUR 16.8 million in Q2 FY2018.

Full-year revenue guidance updated; EBIT margin confirmed

Against the background of the persistently challenging market environment in the automotive industry, Stabilus is updating its full-year 2019 guidance and now expects revenue to reach the previous year's level of approx. EUR 960 million. The revenue forecast includes a positive currency effect of 1 percent (based on the assumption of a USD/EUR exchange rate of 1.14). Excluding this effect and acquisitions, Stabilus is forecasting revenue growth of -1 percent. Stabilus had previously been assuming that revenue would grow by approx. 2 percent to EUR 980 million. It is anticipated that the adjusted EBIT^[1] margin will remain unchanged at approx. 15 percent.

Furthermore, Stabilus confirms its STAR 2025 mid- and long-term guidance for average annual growth of at least 6 percent.

The Q2 FY2019 interim report can be downloaded from the company website at Investors / Financial Reports & Presentations 2019.

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^[1] Cf. the definition/calculation of KPIs 'adjusted EBIT' and 'free cash flow (FCF)' provided in the interim report Q2 FY2019, pp. 7 and 12, and on the company website at Investors / Financial Reports & Presentations 2019.

Investor contact:
Andreas Schröder
Tel.: +352 286 770 21
E-Mail: anschroeder@stabilus.com

Press contact:
Peter Steiner
Tel.: +49 69 794090 27
E-Mail: stabilus@charlesbarker.de
Charles Barker Corporate Communications

About Stabilus

As one of the world's leading suppliers of gas springs, damping solutions and electromechanical drives, Stabilus has for eight decades been demonstrating its expertise in the automotive industry and a variety of other sectors. Gas springs, dampers and electromechanical POWERISE drives from Stabilus optimize opening, closing, lifting, lowering and adjusting operations, and also protect against vibrations. Employing a workforce of more than six thousand worldwide, the company has its operational headquarters in Koblenz. Stabilus has reported sales revenues of EUR 962.6 million in the 2018 fiscal year. Stabilus has a global production network encompassing plants in nine countries. Additionally, the Group maintains regional offices and relations to sales partners in over fifty countries in Europe, North, Central and South America, and in Asia Pacific. Stabilus is listed in the Prime Standard segment of the Frankfurt Stock Exchange and included in the SDAX index.

Important Notice

This press release may contain forward-looking statements based on current assumptions and forecasts made by Stabilus Group management and other information currently available to Stabilus. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here.