Friedrichshafen, 13 May 2009. The specialist for propulsion and power solutions Tognum remains on target for the financial year 2009 after its first quarter, confirms its forecast and achieves a net profit.
Order intake, which has been severely affected by the global financial and economic crisis, was down 25.6% in the first three months year-over-year to €651 million (Q1 2008: €875 million). This was due primarily to volatile capacity utilisation and to the change in customers’ ordering behaviour. Many customers are now placing orders at shorter notice or making call-offs from existing frame agreements in smaller batch sizes.
Revenues declined in the first quarter by 11.7% to €642 million (Q1 2008: €727 million).
Forecast for 2009 confirmed
“Despite the continuing difficult economic environment, we are reaffirming our forecast for the full year“, said Volker Heuer, chairman of the executive board of Tognum AG. In terms of revenues, Tognum anticipates scenarios of minus 10 to minus 20% for 2009 compared with 2008. In spite of this, the company expects to maintain its adjusted EBIT margin in the upper single-digit range.
For this purpose, Tognum launched a flexible action package at the end of 2008 designed to stabilise business performance that focuses on the market, employment, cash and risk management, in addition to cost reduction and investment planning. “Our 'Robust Action Plan' is already having an effect; however this does not imply a reduction of strategic investments“, Heuer emphasises. Expenditure for research and development, for example, were up 25% to €30 million in the first quarter. “We will extend our technological lead in order to subsequently emerge from the current market turbulence even stronger“, Heuer added. In the medium term, the company once again anticipates sustainable growth rates, which should again lead to average double-digit returns on sales.
EBIT performance affected by increased R&D expenditure
Adjusted earnings before interest and taxes (EBIT) at the end of the first three months of 2009 were at €64 million, and were thus 36% lower year-over-year (Q1 2008: €100 million). Despite the difficult market situation, Tognum achieved an adjusted EBIT margin of 9.9%.
The decline in the adjusted EBIT resulted primarily from the low revenue volume, which had led to a reduction in capacity utilisation. As a result of the company’s investments in the future, expenditure for research and development also increased. In addition, the difficult market environment in the automotive industry in particular led to a decline in the propeller shafts business.
Applying a tax rate of 29.2%, Tognum achieved in the first three months of 2009 an adjusted net profit of €38 million and adjusted earnings per share of €0.29. This is equivalent to a decline of around 34% year-over-year (Q1 2008: €58 million or €0.44 per share).
Net financial debt further reduced
The equity ratio increased slightly compared with the end of 2008 and as at 31 March 2009 was at 27.4% (31.12.2008: 26.3%). Net financial debt at the end of period was down by around 16% to €283 million (31.12.2008: €336 million). Free cash flow* was up for the 3-month period by almost 15% to €63 million (Q1 2008: €55 million).
* Free cash flow comprises cash flow from operating activities and cash flow from investing activities.
New reporting structure based on three segments
As a result of changes to the corporate and brand strategy last year, and in accordance with the new IFRS 8 accounting standard, Tognum AG has modified its reporting structure for the financial year 2009 and has broken down its business activities into three reporting segments: Engines, Onsite Energy & Components and Distribution.
Engines
Revenues generated by the Engines segment at €451 million in the first three months were down 9% year-over-year (Q1 2008: €498 million). The decline in the Marine business is due primarily to lower revenue levels in the yacht and commercial applications. Governmental and project-related businesses, however, delivered a positive performance. The greatest decline in revenues was in the industrial engines sector, where project-related at the beginning of the year there was a noticeable decline in drives for rail cars. The adjusted segment EBIT in the first three months amounted to €50 million, which represented an EBIT margin of 11.1% (Q1 2008: €82 million or 16.5%).
Onsite Energy & Components
The Onsite Energy & Components segment generated revenues of €189 million in the first three months, which was down around 20% year-over-year (Q1 2008: €236 million). The greatest decline in percentage terms was for propeller shafts in the components business. There was also a noticeable negative effect resulting from strong reductions in call-offs from OEM customers for diesel engines used in power gensets. The adjusted segment EBIT at the end of the quarter was €13 million, which resulted in an adjusted EBIT margin of 6.9% (Q1 2008: €20 million or 8.5%).
Distribution
The Distribution segment includes fully consolidated sales subsidiaries outside Germany, primarily in Europe and Asia/Pacific. Revenues in this segment declined by over 16% to €98 million (Q1 2008: €117 million). The adjusted segment EBIT remained constant in the reporting period at around €8 million, with an adjusted EBIT margin that is now at 8% (Q1 2008: €8 million or 7%). This was due to the stabilising effect of the good profit situation in Asia.
The complete interim report as at 31 March 2009 is at the company’s website www.tognum.com on the Investors pages.
Tognum Group – key figures
In € million | Q1 2008 | Q1 2009 | Change |
Order intake | 875 | 651 | -25.6% |
Revenues | 727 | 642 | -11.7% |
EBIT (adjusted) | 100 | 64 | -36.0% |
EBIT margin (adj.) | 13.8% | 9.9% | -3.9pp |
Net profit (adj.) | 58 | 38 | -34.5% |
EPS* (adj.) in € | 0.44 | 0.29 | -34.1% |
Free cash flow | 55 | 63 | +14.5% |
Equity ratio | 24.0% | 27.4% | +3.4pp |
Employees | 8,354 | 8,971 | +7.4% |