Grammer AG: Automotive with dynamic growth, Seating Systems under pressure from market weakness

6% increase in Group revenue to EUR 710.2 million in the first half-year
Group EBIT of EUR 24.6 million in the first half-year

Amberg, August 5, 2015 – For Grammer, the first half of 2015 was characterized by continued dynamic growth in the automotive business while its commercial vehicle business came under pressure from weak conditions in key markets. Consolidated revenue increased by 6.1 percent over the previous year to EUR 710.2 million in the first half of the year (2014: 669.6). Accordingly, Grammer AG, a global supplier of automotive interiors and a leading producer of seating systems for commercial vehicles, has continued to maintain its growth momentum also in 2015.

Despite the continued growth, however, consolidated EBIT in the first half of 2015 declined to EUR 24.6 million compared with the previous year (2014: 30.9) due to the unexpectedly sharp contraction in important markets of the higher margin Seating Systems division. Accordingly, the EBIT margin came to 3.5 percent (2014: 4.6). The negative trends simultaneously occurring in several key markets lead to a strong downturn in Seating Systems revenue and earnings. On the other hand, EBIT in the Automotive Division was only slightly lower despite the ongoing implementation of the globalization strategy. Reflecting EBIT, net profit came to EUR 13.6 million in the first half of 2015 (2014: 18.3).

Automotive business still the growth driver
The continued high number of new product launches and generally strong demand for premium cars provided the basis for further dynamic growth for the Automotive Division in the first half of 2015. The Division contributed EUR 494.9 million (2014: 427.9) to consolidated revenue, achieving a strong increase of 15.7 percent over the previous year. Despite the still high up-front costs for implementing global expansion strategy with plant optimization and capacity additions, operating profit in this Division remained largely stable, with EBIT coming to EUR 14.4 million in the first half of the year (2014: 15.1), accompanied by an EBIT margin of 2.9 percent (2014: 3.5).

Seating Systems suffered from sharp contraction in demand for trucks and agricultural machinery
The downward trend in some important markets left noticeable traces on Grammer’s Seating Systems Division. Current market data indicates that after the already weak previous year new truck registrations in Brazil continued to slump by almost another 50 percent since the beginning of the year. Truck registrations in China were also down 30 percent. At the same time, the Chinese market for construction machinery contracted at an unexpectedly sharp rate. Also a further significant downswing in the global market for agricultural machinery occurred, which exerted considerable pressure on OEMs and, hence, also Grammer as a leading global supplier of suspended seating systems for commercial vehicles. These simultaneous weaknesses in several different markets caused revenue in the Seating Systems Division to drop by 7.9 percent to EUR 233.1 million (2014: 253.0). As product segments with higher margins were disproportionately affected by this trend, segment EBIT fell substantially to EUR 16.0 million (2014: 21.8). Despite this heavy burden, the EBIT margin still came to 6.9 percent (2014: 8.6).

Capex focused on expansion measures in the Automotive Division
In the first half of 2015, Grammer primarily invested in new production capacities in the Automotive Division. In response to weak market conditions, capex in the Seating Systems Division were duly scaled back. Total Group capex came to EUR 15.9 million, 27.1 percent down on the same period of the previous year (2014: 21.8).

Slight increase in equity and net debt
As of the reporting date, consolidated equity was EUR 247.1 million, up on the previous year (2014: 228.6). This resulted in a slightly higher equity ratio of around 29 percent (2014: 28). Net debt as of June 30, 2015 was EUR 131.5 million (2014: 122.4), translating into a gearing of 53 percent (2014: 54).

Outlook for 2015
Looking forward to 2015 as a whole, the performance of the Automotive Division will continue to be influenced by new product launches and projects for the implementation of the globalization strategy. In the Seating Systems Division, the decline in revenue will continue throughout the rest of the year given the persistent weakness of the Brazilian and Chinese truck market as well as in the agricultural machinery sector. A recovery in the second half is unlikely to materialize. Accordingly, revenue in the Seating Systems Division will probably be noticeably lower than in 2014 while Automotive revenues are expected clearly higher than previous year. Overall, Grammer reaffirms its existing forecast for consolidated revenue of more than EUR 1.4 billion in 2015. However, due to the sustained decline in demand for commercial vehicles and the absence of any recovery in the markets in the second half of the year, Grammer expects full-year EBIT to decline by around EUR 15 million compared to the previous year to around EUR 42 million in 2015.

Company Profile
GRAMMER AG, Amberg, Germany, specializes in the development and production of components and systems for automotive interiors as well as driver and passenger seats for offroad vehicles. In the Automotive Division, we supply headrests, armrests and center console systems to premium automakers and automotive system suppliers. The Seating Systems Division comprises the truck and offroad seat segments as well as train and bus seats.
Grammer is represented in 20 countries worldwide with a workforce of over 10,700 employees across its 30 subsidiaries.
The GRAMMER share is listed in the SDAX and traded on the Frankfurt and Munich stock exchanges via the electronic trading system, Xetra, as well as in over-the-counter trading at the Stuttgart, Berlin and Hamburg stock exchanges.

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