Nine month figures: Tognum right on target for 2008
Posted on November 11, 2008
At the end of the third quarter, Tognum, the specialist for propulsion and power solutions, is right on target for the 2008 financial year.
- Order intake up 3 % to € 2,512 million in the first nine months of the year
- Revenues grow 13 % to € 2,304 million
- Adjusted EBIT reaches € 324 million (+ 7 %)
- Full-year forecast reaffirmed
Friedrichshafen, 11 November 2008. At the end of the third quarter, Tognum, the specialist for propulsion and power solutions, is right on target for the 2008 financial year. Order intake, influenced by project business, in the first nine months 2008 was up 3 % to € 2,512 million year-on-year (Q1-Q3 2007: € 2,428 million), while revenues increased by 13 % to € 2,304 million (Q1-Q3 2007: € 2,045 million). If there had been no negative currency exchange effects as a result of the weak US dollar, the order intake would have risen by over 6 % and revenues by 16 %. Both the Engines and the Onsite Energy Systems & Components segments contributed to this positive development.
“We are reaffirming our forecast for the full year”, said Volker Heuer, Chairman of the Executive Board of Tognum AG. The company had predicted revenue growth for 2008 in the lower region of the target corridor of 11 to 13 % and an adjusted EBIT margin at the bottom end of the target corridor of 13 to 15 %. “As a result of our diversified business portfolio, we are well prepared to deal with economic fluctuations. We operate in all regions of the world in 22 very different end markets, and we generate about half of our revenues in non-cyclical markets, which gives us additional stability“, Heuer added.
EBIT grows in Q3 as a result of high-margin revenue mix
Adjusted earnings before interest and taxes (EBIT) increased in the first nine months of 2008 by 7 % to € 324 million (Q1-Q3 2007: € 302 million). This was accompanied by an increase in revenues of 13 %, resulting in a stable adjusted EBIT margin of over 14 %. In the third quarter alone, adjusted EBIT was up 29 % to € 124 million (Q3 2007: € 96 million). This positive performance is due primarily to a revenue mix with higher average margin engines for upper performance applications like marine and power generation. Year-to-date however, Tognum, as an export-oriented company, was affected from the weak US dollar.
Significant increase in group net profit
Tognum achieved an adjusted net profit for the Group of € 202 million in the first nine months of 2008. This is equivalent to an increase of 29 % year-over-year (Q1-Q3 2007: € 156 million), that resulted primarily from an improvement in adjusted EBIT linked with lower interest expenses and a reduced effective tax rate.
Strong increase in free cash flow
Free cash flow (made up of cash flow from operating activities and cash flow from investing activities) improved during the 9-month period, rising to € 87 million from € 12 million year-over-year. A positive effect on cash flow resulted from a much smaller increase in net working capital, but also from further inflows from the operating business.
Higher revenues in both segments
Both segments reported increased revenues year-over-year. Revenues of the Engines segment in the first nine months were up 11 % to € 1,959 million (Q1-Q3 2007: € 1,758 million). Adjusted EBIT increased by 15 % to € 322 million in the 9-month period (Q1-Q3 2007: € 280 million).
The Onsite Energy Systems & Components (OES&C) segment generated revenues of € 453 million in the first nine months of 2008, which is around 24 % more year-over-year (Q1-Q3 2007: € 365 million). The highest growth was achieved in the decentralised energy systems business. The revenues in this sub-segment increased by 54 % year-over-year, due primarily to the acquisition of the former Katolight Corp. in the United States (today: mtu Onsite Energy Corp.). The fuel injection systems and propeller shaft areas mainly made for the organic growth. At € 25 million, adjusted EBIT was up 14 % year-over-year (Q1-Q3 2007: € 22 million).
Equity ratio up again
The equity ratio was up slightly compared with the end of the previous year, amounting to around 24 % as at 30 September 2008. The net financial debt amounted to € 307 million (31 December 2007: € 294 million), which resulted in a debt-equity ratio of 0.5 by the end of September. “With very low debt and solid long-term credit lines with predominantly European banks, our corporate financing stands on very firm foundations“, CEO Volker Heuer explained.
Number of employees increased further
As at 30 September 2008, the Tognum Group employed 8,847 employees worldwide. This is 668 people (or 8 %) more than at the end of 2007. This increase results primarily from new hires and from the acquisition of SKL Motor GmbH in Magdeburg.
Full year forecast for 2008 reaffirmed
For the full year of 2008, Tognum continues to assume there will be stable growth in the off-highway markets that are relevant for the company. Generally speaking, however, the global financial crisis, the overall weak US dollar throughout the year, the increased prices for energy and pre-products as well as the current capacity bottlenecks experienced by suppliers have had a restrictive effect.
Despite such developments and the possibility of strikes related to the present round of collective bargaining, Tognum sticks to its forecast and continues to expect revenue growth for the full year of 2008 in the lower region of its target corridor (11 to 13 %). Tognum also continues to assume it will achieve an adjusted EBIT margin at the bottom end of the target corridor (13 to 15 %).
On the basis of these expectations and assuming an effective tax rate of around 30 %, the Executive Board continues to expect an increase in adjusted earnings per share of over 25 % year-over-year to more than € 2.00.
The interim report as at 30 September 2008 is available at www.tognum.com/investors.
Tognum Group – key figures
|In € millions||Q1-Q3 2007||Q1-Q3 2008||Change||Q3 2007||Q3 2008||Change|
|Order intake||2,428||2,512||+3 %||828||864||+4 %|
|Revenues||2,045||2,304||+13 %||709||787||+11 %|
|EBIT (adjusted)||302||324||+7 %||96||124||+29 %|
|EBIT margin (adjusted)||14.8 %||14.1 %||---||13.5 %||15.8 %||---|
|Net profits (adjusted)||156||202||+29 %||51||69||+35 %|
|Earnings per share (adjusted) in €||1.26||1.54||+22 %||0.39||0.53||+36 %|
|Free cash flow||12||87||+625 %||36||34||-6 %|
|Equity ratio||20.6 %||23.8 %||---||20.6 %||23.8 %||---|