-8 percent increase in revenue to a new record of EUR 1.37 billion
-Net profit up 14 percent to EUR 33.6 million
-High up-front costs and investments for global expansion and optimization
-Dividend to be increased by 15 percent to EUR 0.75 per share
Amberg, March 30, 2015 – The Grammer Group, a leading supplier of interior components for passenger vehicles and seating systems for commercial vehicles, continued to perform successfully last year, recording a substantial increase in revenue as well as net profit. The final annual financial statements for 2014 show consolidated revenue of EUR 1.366 billion (2013: 1.266). This is an increase of 8 percent over the previous year and also marks the fourth all-time high in a row. In view of high up-front costs and investments for the global expansion program and capacity optimization in all regions, the company achieved consolidated EBIT of EUR 57.0 million (2013: 58.0). However, thanks to an improved financial result, net profit rose substantially more quickly compared with the previous year, coming to EUR 33.6 million (2013: 29.6), while earnings per share also increased to EUR 3.09. Reflecting this favorable performance, the company is proposing to increase its dividend by 15 percent to € 0.75 per share (2013: 0.65).
“With the extensive expansion and optimization measures which we took as well as the fluctuation in markets of key importance for us, 2014 was a very challenging year for us. However, the fact that despite these underlying conditions we were able to achieve a new revenue record and post higher profit reflects Grammer’s good international position and improved stability,” says Hartmut Müller, Chief Executive Officer of Grammer AG.
Revenue in the Far East greater than in the Americas for the first time
The substantial increase in business was materially underpinned by strong growth in the region Far East. In this region, revenue rose by a very strong 26 percent to EUR 227.7 million (2013: 181.0) thanks to new products and further gains in market shares. Consequently, the region Far East made a greater contribution to group revenue than the Americas did for the first time. In the Americas, revenue fell slightly by 3.1 percent to EUR 226.3 million (2013: 233.6) as a result of a further slump in the Brazilian commercial vehicle market. On the other hand, business in North America continued to expand but was unable to completely compensate the sharp decline in Brazil. The European markets also grew by an encouraging 7 percent to EUR 911.9 million (2013: 851.1).
Sharp growth in the Automotive Division
The Automotive Division, which develops and produces headrests, armrests and center consoles for passenger vehicles, again stepped up its global growth course in 2014, with revenue rising by 12 percent over the previous year to EUR 911.6 million (2013: 813.3). Grammer benefited from a positive global automotive sector as well as numerous serial ramp-ups and new projects in all product segments. Reflecting the heavy up-front efforts for plant and capacity expansion as well as structural optimization in all regions, EBIT in the Automotive Division came to EUR 28.9 million, thus falling short of the previous year (2013: 33.1) as expected. Accordingly, the decline in the EBIT margin to 3.2 percent (2013: 4.1) reflects the global expansion program and high growth as a result of new business.
Seating Systems impacted by sharp contraction in some core markets
The Seating Systems Division, in which Grammer as a global leading company develops and produces seating systems for commercial vehicles, recorded revenue of EUR 478.7 million, up a small 1 percent over the previous year (2013: 472.8), despite very challenging conditions in some markets. At the same time, the individual commercial vehicle sub-markets performed very disparately. Whereas the agricultural machinery market saw a sharp decline in global demand, the market for material handling vehicles as well as aftermarket business expanded. The global truck market showed strong regional variation, with Europe and South America reporting substantial declines in sales and production figures. Thanks to its broad range, superb international positioning and new products and customers, Grammer was able to completely offset these adverse effects on its revenue. The aforementioned market shifts and extensive expansion spending in the United States and China caused EBIT in the Seating Systems Division to drop slightly to EUR 36.2 million (2013: 37.6). However, at 7.6 percent, the EBIT margin remained at a very high level (2013: 8.0).
Investments in global growth strategy
Last year, Grammer increased its investments in property, plant and equipment as well as intangible assets by 10 percent to EUR 51.5 million (2013: 46.8). This spending reflects the implementation of the global growth strategy and particularly entailed production expansion in all regions as well as capacity optimization in Eastern Europe. Despite the higher volume of investments, cash flow rose over the previous year.
Increased equity, further reduction in net financial liabilities
As of December 31, 2014, the Grammer Group had total assets of EUR 836.5 million, thus constituting an increase over the previous year (2013: 766.0). The reason for this was the ongoing set-up and expansion of production locations together with increased business volumes. Equity also rose, coming to EUR 231.8 million on the reporting date (2013: 224.7) and resulting in an equity ratio of 28 percent (2013: 29). At the end of the year, the Grammer Group’s net financial liabilities were valued at EUR 86.7 million (2013: 93.2) and were thus 7 percent down on the end of the previous year. This was accompanied by an improvement in gearing (net debt to equity) to 37 percent (2013: 41).
Forecast for 2015: Revenue of more than EUR 1.4 billion; EBIT on previous year’s level
“We expect revenue to continue growing appreciably and to exceed EUR 1.4 billion in 2015. The generally good order situation and additional customer projects in the Automotive Division will particularly allow us to continue on our growth trajectory,” says Hartmut Müller, Chief Executive Officer of Grammer AG.
On the one hand, operating profit will be influenced by further costs as a result of the expansion and optimization projects that are still ongoing as part of the global growth strategy in 2015 and will leave traces on the bottom line. Moreover, the sustained weakness of the market for agricultural machinery and the uncertain outlook for the Brazilian truck market are likely to exert pressure on operating profit. On the other hand, the Automotive Division should make a positive contribution to earnings, underpinned by a mildly positive outlook for the global passenger vehicle markets. Against this backdrop, the Grammer Group expects to be able to report a substantial positive EBIT on a par with the previous year in 2015. However, given the expected revenue growth, the possibility of slight contraction in the operating margin cannot be entirely ruled out.