Kendrion's Q3 reSULTS lower THAN EXPECTED IN A DIFFICULT AUTOMOTIVE market; MID-TERM TARGETS unchanged
Revenue in Q3 2018 of EUR 107.1 million, 8.2% less than in Q3 2017 (EUR 116.7 million) mostly due to weaker sales in Passenger Cars
Normalised EBITA of EUR 7.7 million, 23% lower than in Q3 2017 (EUR 10.0 million)
Normalised EBITA margin of 7.2% in Q3 2018 (Q3 2017: 8.6%)
Normalised EBITA margin for the first nine months of 2018 of 9.0%, slightly higher than 8.9% in the same period in 2017
Full-year revenue now anticipated to come in slightly lower than in 2017, as a result of difficult conditions in the automotive market
Expected underlying EBITA margin as from the end of 2018 of more than 9%, compared to the earlier expectation of 10%*
Simplification measures in Automotive on schedule to be fully implemented by 1 January 2019
Mid-term targets unchanged: Return on Investment target of at least 20% and EBITDA margin of more than 15% by 2023
Joep van Beurden, Kendrion CEO:
"We had a difficult quarter as the market for Passenger Cars has deteriorated over the past few months. Weaker than expected passenger car sales in both Europe and China affected our leading Automotive customers. The backlog in test and validation procedures to comply with the new Worldwide Harmonised Light Vehicles Test Procedures (WLTP) and pressure on diesel sales persisted as well. This led to a EUR 9.6 million or 8% drop in total revenue in Q3 compared with last year, and a reduction of EUR 2.3 million or 23% in EBITA.
We are implementing the simplification measures we announced earlier in the Passenger Cars business unit and expect all measures to be effective on schedule as of 1 January 2019. Notwithstanding the short-term pressure, we continue to focus our resources and investments in Passenger Cars, specifically in the areas of electrification, autonomous driving, safety and comfort, in permanent magnet brakes for robotics and in China where we see and tap into healthy growth opportunities. In China, where our business is subject to the same market pressure as in Europe, we continued to realise double-digit revenue growth in Q3, as the ramp-up of new projects more than compensates for the downward pressure on existing production.
Looking ahead, we expect the difficult market conditions to impact our 2018 total revenue and EBITA margin. For the mid-term, we remain positive about the fundamentals of our business, and reiterate our objective to deliver sustainable profitable growth and our targets of an ROI of at least 20% and an EBITDA margin of more than 15% by 2023.
We are looking at the future with confidence as our simplified, leaner organisation is resilient in the face of significant market headwinds, while our pipeline momentum, underlying business fundamentals and financial position remain strong."
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