Stabilus S.A.: Industrial business partially offsets weakness of automotive market in Q3 FY2019

CORPORATE NEWS

Stabilus S.A.: Industrial business partially offsets weakness of automotive market in Q3 FY2019

- Persisting weakness in the global automotive market also weighs on the results for the third quarter of FY2019: Revenues in Q3 at EUR 241.6m, after EUR 250.2m in Q3 FY2018

- Adjusted EBIT^[1] in Q3 at EUR 37.1m, after EUR 39.5m in Q3 FY2018

- Q3 result at EUR 19.3m (Q3 FY2018: EUR 25.3m) and free cash flow before acquisitions (Adj. FCF^[1]) at EUR 31.4m (Q3 FY2018: EUR 40.4m)

- Revenue forecast for FY2019 (EUR 950m - 960m) in line with market expectations; adjusted EBIT margin of approx. 15.0 % confirmed

- Strengthening of industrial business through three successfully completed acquisitions in Q3 FY2019

Luxembourg/Koblenz, August 5, 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 the general market trend of the global automotive industry in the third quarter of FY2019 (which ended on June 30, 2019) and despite its solid industrial business activities reported a decline in total revenues.

A comparison with the same quarter of the previous year shows with EUR 241.6 million 3.4 percent lower Group revenues in the third quarter of FY2019 (Q3 FY2018: EUR 250.2 million). Following adjustment for USD/EUR currency translation and acquisition effects, group revenues declined by 7.1 percent.

Mark Wilhelms, CFO of Stabilus, said: "The unexpectedly prolonged weakness in the global automotive industry, particularly the still disappointing performance in Germany and China, continued to be reflected in our results in the third quarter. What we are also seeing, however, is the beneficial effect of our diversification across our industrial business. This performed significantly better in the first nine months of the financial year. We have also strengthened it further in the current year through successfully completed acquisitions."

Weak automotive industry weighs on revenues in all regions

In the Europe region, revenues in Q3 FY2019 decreased by 3.3 percent to EUR 124.5 million (Q3 FY2018: EUR 128.8 million). This development was due to a weakening automotive market, in particular in Germany. In the NAFTA region, revenues of EUR 90.4 million were 1.7 percent higher than in the same quarter of the previous year (Q3 FY2018: EUR 88.9 million), with the strong US dollar having played a supporting role here. The average exchange rate was 1.12$/EUR in Q3 FY2019 compared with 1.19$/EUR in Q3 FY2018. Adjusted for USD/EUR currency effects, the NAFTA region reported a decline in revenues of 4.2 percent in Q3 FY2019. In Asia/Pacific and RoW (Rest of World), revenues dropped by 17.5 percent year-on-year to EUR 26.8 million (Q3 FY2018: EUR 32.5 million). This was particularly due to a significant reduction of the light vehicle production in China.

Industrial business partially offsets weakness in automotive business

In the third quarter of fiscal year 2019, Stabilus posted an increase in revenues in its industrial business, partially offsetting the decline in its automotive business. In the automotive segment, which accounted for 60 percent of consolidated revenues, sales fell by 9.1 percent to EUR 146.1 million (Q3 FY2018: EUR 160.7 million). Adjusted for USD/EUR currency effects, revenues declined by 11.3 percent. The company has been unable to decouple from broader automotive market trends as the number of light vehicles produced worldwide decreased by 7.5 percent to 22.3 million units in Q3 FY2019. These developments had a significant impact on both Automotive Powerise and the Automotive Gas Spring division. The industrial business, which in Q3 FY2019 reported a year-on-year growth in revenues of 6.7 percent to EUR 95.5 million (Q3 FY2018: EUR 89.5 million), accounted for 40 percent of group revenues. In addition to stable operating performance, the increase was due in particular to positive currency effects and the acquisitions of General Aerospace, which was completed in the third quarter. Growth in the solar damper, production and construction technology as well as medical segments was offset by declines in the segments independent aftermarket, office furniture and agricultural machinery. Adjusted for currency effects and before taking acquisitions into account, sales in this segment remained stable year-on-year with growth of 0.3 percent.

Adjusted EBIT margin of 15.4 percent in the third quarter

The adjusted profit from operating activities (adjusted EBIT^[1]) decreased in Q3 FY2019 by 6.1 percent to EUR 37.1 million (Q3 FY2018: EUR 39.5 million). This is equivalent to an adjusted EBIT margin of 15.4 percent, down from 15.8 percent in the same quarter of the previous year, Q3 FY2018.

In Q3 FY2019, a profit of EUR 19.3 million was reported, after EUR 25.3 million in Q3 FY2018. Free cash flow before acquisitions (Adj. FCF^[1]) stood at EUR 31.4 million in Q3 FY2019, after EUR 40.4 million in Q3 FY2018.

Successfully completed acquisitions strengthen industrial business

Stabilus successfully completed three acquisitions in the first nine months of fiscal 2019 (General Aerospace GmbH, Clevers S.R.L. and Piston Gas Springs), further strengthening its position in the industrial business. General Aerospace, which generated annual sales of EUR 11 million in its 2018 fiscal year, is a recognised supplier of motion control solutions to the aircraft industry. Clevers is a South American manufacturer of gas springs and dampers; it posted sales of around EUR 1 million in 2018. Piston, a Turkish manufacturer of gas springs and dampers, achieved sales of around EUR 5 million in 2018.

Dr. Stephan Kessel returns to the Supervisory Board after transition period

As announced, Dr. Stephan Kessel stepped down as interim CEO of Stabilus with effect from July 31, 2019, and returned to the Supervisory Board as planned. In this context, the Supervisory Board and Management Board would like to thank Udo Stark for his outstanding work. His Supervisory Board mandate ended as planned with the reappointment of Dr. Kessel, who was elected as the new Chairman of the Supervisory Board on August 1, 2019. Dr. Michael Büchsner, who was announced in March as the new Chief Executive Officer of the Management Board, will take up his appointment to the Management Board on October 1, 2019. During the transition phase, business will be managed by the other members of the Management Board and the international management team on the basis of the STAR 2025 strategy.

Revenue forecast for FY2019 in line with market expectations; EBIT margin confirmed

Against the background of the continued challenging market conditions of the automotive industry Stabilus updates its forecast for the full fiscal year. Revenue is now expected to be between EUR 950 million and EUR 960 million. The revenue forecast is thus in line with current market expectations. Previously, the company had expected revenue to be at the level of approx. EUR 960 million. The anticipated adjusted EBIT margin remains unchanged at around 15 percent.

The Q3 FY2019 quarterly statement 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, free cash flow (FCF) and free cash flow before acquisitions (adj. FCF) provided in the quarterly statement Q3 FY2019, pp. 7 and 12, and in the Q3 FY19 results presentation 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:
Tobias Eberle
Tel.: +49 69 794090 24
E-Mail: Tobias.Eberle@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 eleven 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.