Kendrion reports 9.9% EBITA margin and 17% profit growth in solid
- Revenue growth of 2% to EUR 120.6 million (Q1 2017: EUR 118.3 million) and 4% at
constant rates of exchange
- Normalised EBITA growth of 12% to EUR 11.9 million in Q1 2018 (Q1 2017: EUR 10.6
- Normalised net profit growth of 17% to EUR 8.1 million in Q1 2018 (Q1 2017: EUR 6.9
- Normalised EBITA margin increases to 9.9% in Q1 2018 from 9.0% in Q1 2017
- Continued implementation of simplification measures: Q1 non-recurring costs of
EUR 1.1 million with annualised savings of EUR 0.5 million
Progress on strategy
Kendrion's strategy for 2016 - 2018 announced in May 2016 comprises three pillars: "Simplify, Focus,
Grow". The primary objective is to deliver sustainable profitable growth for the business in the medium
to long term.
The implemented simplification measures focus on complexity reduction and cost-efficiency. The
transfer of production from the Toluca operation in Mexico to Kendrion's Shelby facility in the USA has
almost been completed.
Additional simplification measures were taken in our Passenger Cars business unit in the first quarter
as we continued to reduce overhead. The cost reductions and restructuring measures implemented
in Q1 resulted in one-off costs of EUR 1.1 million, with corresponding savings on an annualised basis
of EUR 0.5 million. We will continue to focus on efficiency across all business units and the additional
opportunities we have identified will be implemented throughout 2018. For the full year 2018, we
anticipate one-off costs of around EUR 2.5 million with corresponding savings of EUR 2.5 million on
an annualised basis.
As before we will focus our resources and investments in Passenger Cars, specifically in the areas of
electrification, autonomous driving, safety and comfort, in permanent magnet brakes for robots and in
China where we see healthy growth opportunities.
Revenue in the first quarter increased by 1.9% compared to the strong first quarter of 2017 (+4.2% at
constant rates of exchange). Growth was 6.7% in the Industrial activities (+7.8% at constant rates of
exchange). Automotive posted a decrease of 0.6% (+2.3% at constant rates of exchange) as it
continued to be slightly impeded by the closure of our Indian facility in Q2 last year.
The Industrial activities recorded solid revenue growth with higher activity levels across all business
units driven by favourable market conditions. Especially growth in Industrial Control Systems was
strong during the first quarter of 2018. Within Automotive, Passenger Cars continued to benefit from
higher revenues from the production of the active damping valves for ThyssenKrupp Bilstein. Our
pipeline is healthy and benefiting from strong momentum in China in both Industrial and Automotive.
The normalised operating result before amortisation (EBITA) increased by 12% to EUR 11.9 million
(Q1 2017: EUR 10.6 million). Profit growth was fully attributable to our Industrial activities. Normalised
staff costs decreased by EUR 0.6 million, despite the higher activity level and inflationary influences.
Normalised other operating expenses decreased by EUR 1.2 million compared to last year. The more
streamlined and direct way in which we run our operations combined with solid top-line growth resulted
in further improvement of the normalised EBITA margin to 9.9% (Q1 2017: 9.0%). The normalised
effective tax rate in Q1 2018 was 23.7% (Q1 2017: 24.4%).
Normalised net profit in the first quarter of 2018 was EUR 8.1 million, an increase of 17% compared
to EUR 6.9 million in Q1 2017.
The net debt position at the end of the first quarter was EUR 73.4 million. Excluding the effects of the
adoption of IFRS 16, net debt amounted to EUR 57.1 million, an increase of EUR 2.6 million compared
to year-end 2017. This increase is in line with the negative free cash flow of EUR 2.0 million in the first
Investments amounted to EUR 5.5 million in the first quarter at a depreciation level of EUR 5.7 million.
Investments for the year 2018 as a whole are expected to be higher than the depreciation level, largely
due to new automotive projects.
Kendrion's financial position is strong, with a solvency ratio of 50.2% at the end of March 2018.
Excluding the effects of IFRS 16, the solvency ratio improved to 52.6%, which is an increase of 2.1%
compared to the same period last year.
Number of employees
The number of employees (in FTEs) decreased by 30 from the end of 2017 to 2,615 (including 141
temporary employees) in the first quarter of 2018. The number of indirect employees decreased by
The overall outlook for the global economy remains good. Kendrion's most important market,
Germany, is expected to continue to perform well, which is reflected in a strong German machinebuilding
index. Against this backdrop, Kendrion expects its revenue to increase in 2018, driven mostly
by growth in the Industrial activities and the Passenger Cars business unit.
Going forward, we remain confident about our business fundamentals, with our main objective being
to deliver sustainable profitable growth for the business in the medium to long term. We reiterate our
expectation to grow annual revenue by an average of 5% and to deliver an EBITA margin of 10% as
from the end of 2018.