Stabilus S.A. maintains profitable growth path in first half of FY2018

CORPORATE NEWS

Stabilus S.A. maintains profitable growth path in first half of FY2018

- Revenues in H1 FY2018 +5.7 percent to EUR 481.5 million

- Adjusted EBIT^[1] in H1 +8.0 percent to EUR 73.2 million

- H1 profit +6.5 percent to EUR 47.3 million (H1 FY2017: EUR 44.4 million)

- Free cash flow (FCF^[1]) in H1 rises to EUR 31.5 million (H1 FY2017: EUR 22.1 million)

- Operating revenue guidance increased from 7.1 percent to 8.8 percent organic growth (at constant $/EUR rate), adjusted EBIT margin of 15.5 percent for FY2018 confirmed as previously forecast

Luxembourg/Koblenz, May 7, 2018 - Stabilus S.A. (ISIN: LU1066226637), one of the world's leader suppliers of gas springs, damping solutions and electromechanical drives for motion control, has successfully concluded the second quarter of its 2018 fiscal year, which ends on September 30.

In the period under review, group revenues were 2.5 percent higher than in the same quarter of the previous year, rising to EUR 251.0 million (Q2 FY2017: EUR 244.9 million). Stripping out currency effects, operational group revenues grew by 8.0 percent, testifying to the robust demand for Stabilus motion control solutions. In the first half of the current fiscal year, Stabilus S.A. thus reported aggregate revenues of EUR 481.5 million, up from EUR 455.5 million in the first half-year of FY2017 (+5.7 percent; adjusted for currency movements +10.4 percent), continuing its profitable growth path.

Dietmar Siemssen, CEO of Stabilus, stated: "We are constantly striving to improve our operational performance, as evidenced once again by a strong set of figures for the first half of our fiscal year. In the period under review, Stabilus posted singnificant across-the-board gains in all regions and markets. We are especially pleased by the excellent performance of our industrial division. Under the umbrella of Stabilus, new markets and opportunities have opened up for the industrial suppliers we acquired in 2016, which positively impacted our group's development. To pursue further growth opportunities, we are investing in our business in both Germany and internationally. We have every reason to believe that the positive momentum seen in the first half will be sustained in the second half of fiscal 2018, and are therefore increasing our operational growth forecast."

Solid operational growth across all regions

In the Europe region, revenues in Q2 FY2018 advanced by 4.8 percent to EUR 132.2 million, driven primarily by the strong industrial business. In the NAFTA region, revenues for the quarter decreased year-on-year by 4.6 percent to EUR 89.4 million, a decisive factor shaping this development having been the weakness of the US dollar in the past quarter (average exchange rate of 1.23$/EUR in Q2 FY2018, as opposed to 1.07$/EUR in Q2 FY2017). Factoring out these currency movements, revenues in NAFTA during Q2 FY2018 rose by +9.9 percent. Viewed in operative terms, i.e. on a currency-neutral basis, all Stabilus business divisions in NAFTA posted solid growth (Capital Goods business unit +24.2 percent, Vibration & Velocity Control +13.4 percent, Automotive +6.3 percent). In Asia / Pacific and RoW (Rest of World), the company's quarterly revenues climbed year-on-year by 17.6 percent to EUR 29.4 million. Positive impetus here came especially from the growth in sales of Powerise systems, which advanced from EUR 0.5 million in Q2 FY2017 to EUR 5.2 million in Q2 FY2018, and the positive trend in the Vibration & Velocity Control unit, where sales revenues more than doubled, rising to EUR 2.4 million in Q2 FY2018.

Strong industrial business

When considered by market segments, revenues in the second quarter of the 2018 fiscal year grew particularly strongly in the industrial division, where the company posted an increase of 9.0 percent, revenues advancing from EUR 87.7 million during the same period in the previous year to EUR 95.6 million. Following adjustment for currency fluctuations, growth stood at 13.9 percent. Stabilus saw a surge in revenues in the segments agricultural and construction machinery, buses, commercial vehicles, and the independent aftermarket. To meet the strong demand for industrial solutions, Stabilus has been investing in this segment in the current quarter. In Aichwald, the home of Hahn Gasfedern GmbH, a subsidiary of Stabilus since 2016, an adjacent property has been acquired to provide the company with additional space of 3,500 sqm that will be used for both production and administration purposes. To be available from early in 2019, this new facility will enable production capacity in the location to be gradually ramped up by some 50 percent. Hahn Gasfedern manufactures innovative gas springs, tension springs, locking gas springs, double-stroke gas springs, and oil dampers used in sophisticated industrial applications.

In all, the industrial business accounted for 38 percent of revenues in the second quarter of fiscal 2018. The remaining 62 percent is generated by the automotive segment, where revenues declined marginally by 1.1 percent to EUR 155.4 million (Q2 FY2018: EUR 157.1 million). After adjustment for currency movements, growth stood at 4.8 percent and thus continued to clearly outperform the automotive market, with car production going down by 0.7 percent in Q2 FY2018 to 24.2 million units. The automotive business continues to benefit particularly from the sustained trend towards SUVs and large-hatchback vehicles, and a correspondingly solid demand for comfort solutions in the shape of gas springs, dampers, and Powerise drives.

Adjusted EBIT margin of 15.7 percent in Q2

Adjusted profit from operating activities (adjusted EBIT^[1]) rose in Q2 FY2018 by 2.3 percent to EUR 39.3 million. This is equivalent to an adjusted EBIT margin of 15.7 percent, the figure for the comparative quarter in the previous fiscal year having also been 15.7 percent. In the first half-year of fiscal 2018, the company therefore posted an adjusted EBIT of EUR 73.2 million, up from EUR 67.8 million (+8.0 percent) during the same period in the previous year, equivalent to an EBIT margin of 15.2 percent, thus improving on the figure of 14.9 percent for the comparable period in the previous year.

Profit for Q2 FY2018 stood at EUR 25.6 million, 75.3 percent higher than in the same quarter of the previous year (EUR 14.6 million). Included in these figures are non-cash losses deriving from currency conversions amounting to EUR 4.3 million in Q2 FY2018 and EUR 8.4 million in Q2 FY2017. Income for the first half-year FY2018 totalled EUR 47.3 million, advancing from EUR 44.4 million in the first six months of the previous year.

Free cash flow (FCF^[1]) in Q2 FY2018 stood at EUR 16.8 million, up from a figure of EUR 15.3 million in the prior year's second quarter. For the first half-year of FY2018, aggregate FCF^[1] of EUR 31.5 million (H1 FY2017: EUR 22.1 million) was reported.

Forecast lifted

While the company had hitherto assumed for fiscal 2018 an organic revenue growth (at constant $/EUR rate) of 7.1 percent, Stabilus is now expecting a growth of 8.8 percent (i.e. organic revenue growth at constant $/EUR rate of 1.10 $/EUR, the average rate in FY2017). Assuming an average $/EUR exchange rate in fiscal year 2018 of 1.20, this corresponds to a revenue increase of 5.5 percent to around EUR 960 million. An expected adjusted EBIT margin of approx. 15.5 percent, as previously forecast, has been confirmed.

The Interim Report Q2 FY2018, which also contains further details of the second quarter and the first half of fiscal year 2018, can be downloaded from the Investor Relations section at www.ir.stabilus.com.
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^[1] Cf. definition/calculation of KPIs 'adjusted EBIT' and 'free cash flow (FCF)' provided in the interim report Q2 FY2018, pp. 7 and 12, which can be accessed through the following link: http://ir.stabilus.com/websites/stabilus/English/4006/financial-reports-_amp_-presentations-2018.html.

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 910.0 million in the 2017 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.