EDAG Engineering Group AG:
- Revenue decrease of 14.8% in H1
- Adjusted EBIT margin at -4.5%, mainly due to one-off effects
- Positive Free Cash Flow of EUR 14.1 million
- Significant reduction in net financial debt
- Comprehensive performance improvement measures decided
Arbon, 27 August 2020 EDAG, a leading independent engineering services provider to the global automotive industry, has published its figures for the first half of 2020, today. Business development in the reporting period was strongly influenced by the Corona pandemic. Particularly in the second quarter, lockdowns in individual countries, protective measures both within the company and on the customer side, as well as travel restrictions and a resulting overall unprecedented decline in global economic activity were affecting the EDAG Group's financial figures.
At EUR 332.5 million, revenues were 14.8 percent below the previous year's level of EUR 390.4 million. While segments Vehicle Engineering (-16.5 percent) and Production Solutions (-14.4 percent) recorded a stronger decline in revenues, Electrics/Electronics was able to generate almost stable revenues (-0.1 percent). At EUR -14.9 million, adjusted EBIT was consequently down on the previous year's figure of EUR 16.9 million. This corresponds to an adjusted EBIT margin of -4.5 percent (previous year: 4.3 percent).
Free cash flow increased to EUR 14.1 million and was therefore around EUR 39.3 million above the previous year's figure of EUR -25.2 million. Net financial debt (w/o leasing) was significantly reduced to EUR 72.5 million at June 30 (previous year: EUR 136.9 million). On the reporting date, EDAG had 8,089 employees (previous year: 8,653 employees).
"In view of the economic impact of the Corona pandemic, the Management has decided on comprehensive performance improvement measures, which include both a realignment of capacities and investments into training and education", explains Holger Merz, CFO of the EDAG Group. "In fiscal year 2020, we expect one-off costs of up to EUR 12 million if the agreed measures are fully implemented. From 2021 onwards, savings of up to around EUR 13 million per year can be achieved in return. This will lead to a sustained improvement in the company's cost structure and competitiveness. We are thus preparing for an economic recovery under changed framework conditions from 2021 onwards."
In addition to the performance improvement measures, EDAG is actively investing in expanding digitalization. The conversion and expansion of the Ingolstadt site will create one of the largest hubs for software and digitalization within the EDAG Group. The extension is scheduled to be completed by the end of 2022 and will then have a total area of over 18,500 square meters of office, testing and storage space. The company will thus merge several of its locations in Ingolstadt and provide space for over 850 highly innovative and future-proof jobs.
"The corona pandemic has presented the EDAG Group with massive challenges in the first half of the year. Thanks to flexible working models, strict cost management and the acquisition of new, international customers, we succeeded in significantly limiting the impact of the pandemic on our company", states Cosimo De Carlo, CEO of the EDAG Group. "With the newly resolved package of measures, we have made further significant adjustments and are thus consistently aligning the company to the requirements of the future. The first signs of an economic recovery and the upturn in automobile sales allow us to look to the second half of the year with cautious optimism, so that we currently assume that the worst is behind us."
A decline in sales and earnings is still expected in the 2020 financial year compared to the previous year, which in the worst case can have a material impact on the earnings situation. On the basis of the negative earnings after taxes at June 30, 2020 and the year-on-year decline in order intake, as well as the restructuring expenses to be taken into account in the second half, it cannot be assumed that the accumulated loss after taxes can be compensated for in the course of H2.
The Management continually monitors possible effects on the business and takes comprehensive measures to ensure the protection of employees and the continuation of business operations in the group companies.
EDAG is an independent engineering services provider to the global automotive industry. The company serves leading domestic and international vehicle OEMs and sophisticated automotive suppliers through a global network of about 60 sites in major automotive centres of the world.
EDAG offers complementary engineering services across its Vehicle Engineering, Electrics/Electronics and Production Solutions businesses. Based on these extensive capabilities, EDAG can support clients across the entire value chain from the original design idea to product development and prototype construction all the way to the delivery of turnkey production systems. As a technology and innovation leader, EDAG also operates established centres of excellence that design landmark technologies for future applications in the automotive industry: lightweight construction, electric mobility, digitalization, integral safety, cyber security and new production technologies.
In financial year 2019, the company generated revenues of EUR 781 million and an adjusted EBIT of EUR 33.0 million. As at 31 December 2019, 8,488 employees (including apprentices) worked for EDAG all over the world.
This release contains forward-looking statements. These statements are based on current estimates and projections of EDAG Executive Board and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict, and are based upon assumptions as to future events that may not be accurate. Many factors could cause the actual results, performance or achievements of EDAG to be materially different from those that may be expressed or implied by such statements. EDAG does not assume any obligation to update the forward-looking statements contained in this release.
End of Media Release
Issuer: EDAG Engineering Group AG
Key word(s): Services
27.08.2020 Dissemination of a Press Release, transmitted by DGAP - a service of EQS Group AG.
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