Stabilus S.A.: Market slowdown impacts Q1 FY2019, growth forecast for fiscal 2019 scaled back
DGAP-News: Stabilus S.A. / Key word(s): Quarter Results/Change in Forecast
Stabilus S.A.: Market slowdown impacts Q1 FY2019,
- Weaknesses in the global automotive market affect first quarter of FY2019: Revenues in Q1 at EUR 225.0m, after EUR 230.6m in Q1 FY2018
- Adjusted EBIT in Q1 at EUR 30.8m, after EUR 33.9m in Q1 FY2018
- Q1 result at EUR 17.7m (Q1 FY2018: EUR 21.7m) and free cash flow (FCF) at EUR 12.4m (Q1 FY2018: EUR 14.7m)
- Offsetting effects expected: Updated guidance for FY2019 forecasts revenue growth of approx. 2 % and an adjusted EBIT margin of approx. 15 %
Luxembourg/Koblenz, February 4, 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 broader developments across the global automotive industry, revenues in its first quarter, which ended on December 31, 2018, dipping slightly as a result.
Group revenues in the first quarter of FY2019 fell in a year-on-year comparison by 2.4 percent to EUR 225.0 million (Q1 FY2018: EUR 230.6 million). Following adjustment for USD/EUR currency effects, the decline in group revenues stood at 3.6 percent.
Dr. Stephan Kessel, CEO of Stabilus, stated: "The entry into our new business year was negatively impacted particularly by the poorer performance of the automotive industry in Germany and China. The scaled-back expectations for the business year as a whole take account of trends in key sales markets as they stand right now. Yet we expect that, in the quarters to follow, we will be able to make up for part of the lost revenue."
Heterogeneous developments across the different regions
In the Europe region, revenues in Q1 FY2019 dipped by 2.9 percent to EUR 112.6 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 were virtually unchanged vis-à-vis the same quarter in the previous year, standing at EUR 83.7 million, the strong US dollar supported this development (average exchange rate of 1.14$/EUR in Q1 FY2019 vs. 1.18$/EUR in Q1 FY2018). Excluding USD/EUR currency effect, the NAFTA region reported a decline of -3.0 percent in Q1 FY2019. In Asia / Pacific and RoW (Rest of World), the revenue decreased by 7.4 percent year-on-year to EUR 28.7 million. This was largely due to weaker markets in China, resulting in a decline in the Automotive Gas Springs and Vibration & Velocity Control business.
Market factors impact automotive and industrial business
A breakdown by markets shows that Stabilus posted softer revenues in both the automotive and industrial business in the first quarter of the 2019 business year. In the automotive segment, which accounts for 64 percent of group revenues, sales volumes contracted by 2.8 percent to EUR 143.4 million (Q1 FY2018: EUR 147.6 million). Excluding USD/EUR currency effect, the revenue declined by 4.1 percent, as the business could not decouple from broader automotive market trends while the number of light vehicles produced worldwide fell in Q1 FY2019 by 3.4 percent to 24.4 million. The poorer performance of the global automotive industry is largely due to uncertainties arising from the switch to the WLTP testing cycle, the Brexit debate, and the ongoing trade standoff between the USA and China. These developments had a noticeable impact on both Automotive Powerise and the Automotive Gas Springs division. The industrial business, which in Q1 FY2019 reported a moderate decline in revenues of 1.7 percent to EUR 81.6 million (Q1 FY2018: EUR 83.0 million), accounted for 36 percent of group revenues. Once currency effects are factored in, revenues in the segment softened by 2.7 percent. Growth in the segments construction machinery and engineering/production technology, together with an improvement in the solar damper business, were not sufficient to offset weaknesses in the agricultural machinery and transportation markets.
Adjusted EBIT margin of 13.7 percent in the first quarter
The adjusted operating result (adjusted EBIT) fell in Q1 FY2019 by 9.1 percent to EUR 30.8 million. This is equivalent to an adjusted EBIT margin of 13.7 percent, down from 14.7 percent in the same quarter of the previous year, Q1 FY2018.
In Q1 FY2019, profits stood at EUR 17.7 million, after EUR 21.7 million in the same quarter of the previous year. However, it should be noted that Q1 FY2018 contained a positive one-off effect of EUR 4.1 million from the re-evaluation of the US tax liabilities. Free cash flow (FCF) amounted to EUR 12.4 million in Q1 FY2019 after EUR 14.7 million in Q1 FY2018.
Guidance revised to reflect current market developments
Owing to the market situation, Stabilus has revised the guidance published in its 2018 annual report and is now expecting revenues for the full fiscal year 2019 to grow by approx. 2 percent to approx. EUR 980 million (assuming a constant year-on-year USD/EUR exchange rate of 1.19), as opposed to the previously projected growth rate of 5 percent. An adjusted EBIT margin of approx. 15 percent is now anticipated, the earlier forecast having been for a margin of 15.5 percent. This revision is due to weaknesses in China's automotive market, the continuing WLTP and diesel emissions issues in Germany, the increasing uncertainties surrounding Brexit, and the ongoing trade standoff between the USA and China.
The Q1 FY2019 quarterly statement can be downloaded from the company website at Investors / Financial Reports & Presentations 2019.
 Cf. definition/calculation of KPIs 'adjusted EBIT' and 'free cash flow (FCF)' provided in the quarterly report for Q1 FY2019, pp. 5 and 9, and on the company website at Investors / Financial Reports & Presentations 2019.
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.
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.
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