Grammer scores clear sales and earnings growth in first-quarter 2000

Favourable forecasts for the year as a whole confirmed

Amberg, May 18, 2000 - Grammer AG, Amberg, a manufacturer of seats, seating systems, and car interior fittings, active world-wide, is able to report increasing sales and earnings figures for the first quarter of 2000, thus confirming the forecasts for the year as a whole. From today’s point of view, financial 2000 will see Group sales rise about 13 percent to DM 1.25 billion (as against DM 1.1 billion in 1999) and EBIT of DM 40 million, a clear increase in earnings, compared with the loss before interest and taxes of DM 4.8 million the prior year.

In the period under review, the restructuring concept has already started to impact favorably and Grammer expects that bringing it to bear will restore the Group’s customary earnings power. The focus was on both short-term measures to lower costs and devising long-term activities to enhance structures.

Favorable EBIT and earnings after tax

EBIT in the Grammer Group rose as of end of March to DM 14.6 million (as against DM 7.8 million in the same period in 1999), and thus surpassed the target set in the restructuring agenda. Earnings from ordinary activities improved in a year-on-year basis by 23 percent from DM 6.1 million to DM 7.5 million - whereby the scope of consolidation also increased by four companies. A surplus was even generated after taxes in first-quarter 2000, which amounted to DM 4.3 million as against DM 2.8 million for the same period the prior year. Calculated by the DVFA/SG method, EPS came to DM 0.60 as compared with DM 0.40 as at the end of March 1999.

Divided by segment, gross EBIT excluding the central divisions was as follows: the Car Fittings Division scored earnings of DM 9.1 million in Q1, 2000, the Drivers’ Seat Division DM 5.0 million, and Passenger Seats DM 2.1 million.

Sales rise 10 percent

Grammer Group consolidated sales rose in Q1 to DM 303.6 million, thus some 10 percent up on the corresponding 1999 figure of DM 276.1 million. While the increase outside Germany was almost 26 percent, with sales climbing from DM 99.7 million to DM 125.1 million, inside Germany sales only rose slightly from DM 176.4 million to DM 178.5 million owing to the high business volume the prior year as a result of first-time inclusion in the consolidation of the Butz companies which the Group had acquired.

The strongest growth in Q1 2000 was scored by the Passenger Seats division, where sales rose 40 percent from DM 20.4 percent to DM 28.6 million. The Drivers’ Seats division recorded an increase of some 27 percent from DM 65.9 million to DM 81.8 million; the Car Interior Fittings saw year-on-year growth of about two percent, from DM 188.2 million to DM 191.2 million. The latter segment is still the main sales pillar of the Grammer Group, accounting for 63 percent of total Group volume, as against 68 percent in Q1, 1999, followed by Drivers’ Seats with 27 percent (as against 34 percent the prior year) and Passenger Seats with nine percent, up from seven percent. Other sales totaled DM 2.0 million, a gain on DM 1.6 million the previous year.

New orders

In the Drivers' Seats division, one of the first-quarter highlights was the market launch of the new MAN truck generation - completely outfitted with Grammer’s MSG 90.5 seat. This model was developed exclusively for MAN and sets new standards as regards ergonomics, user comfort, design, and passive safety. Grammer, which is already the 100-percent supplier for MAN’s light vehicles segment, is now also exclusive equipper of all its utility vehicle models.

Moreover, Grammer is now supplying truck manufacturer Iveco Magirus in Ulm, and has developed a double-seat for the Renault V.I. "Midlum" series, which since February has been installed in 60 percent of the trucks on the passenger side of the cab. Another highly gratifying new order was taken from Brazil covering the supply of two different truck seat models for the Navistar International Corp. do Brasil Ltda.

At the Passenger Seats division, call orders in Germany for the high-speed ICE 3 and ICT trains were brought forward. Moreover, in the bus segment, a large order volume was booked from Italy and Turkey.

Investments financed from own funds

In Q1 2000, a total of DM 19.6 million was invested in the Grammer Group. After adjusting for the impact of first-time consolidation, investments in tangible assets for the quarter came to just under DM 10 million, as against DM 13.1 million for the same period in 1999. Cash flow rose from DM 15.0 million to DM 20.0 million for the period, and all investments were thus sourced from own funds. Group depreciation increased from DM 12.2 million to DM 14.4 million.

Group payroll: 6,696 staff

As at March 31, 2000 the Grammer Group employed 6,696 staff world-wide, compared with 5,428 on the same date the prior year. Since Dec. 31, 1999 the payroll has risen by 253 - while staffing levels were cut in the German central divisions, new plants and new products led to hirings. Personnel expense rose on a quarterly comparison from DM 62.8 million to DM 72.5 million.

Stronger equity capital base planned

Strengthening the equity capital base remains a key task in 2000. The goal: a ratio of 17 percent from compound earnings in 2001. As at March 31, 2000 the figure was 9.7 percent. Moreover, activities will center on pressing ahead with the restructuring agenda.