Elringklinger Ag

Thank you very much. Ladies and gentlemen, a very warm welcome to our conference call today regarding the first quarter figures of the first quarter 2021. As the conference call of several companies have overlapped today, we moved this conference call up an hour just for your convenience. As always, I will start with some headlines of the first three months. And after that, my colleague Thomas Jesulat, our CFO, will discuss financial figures on the first quarter. I will then close with the outlook on the current year. At the end, of course, you have the opportunity to ask questions, as always, and we are more than pleased to take your questions then. Well, with regard to the financial figures of the first quarter 2021, Part of them have already been published along with the ad hoc announcement in April and we also had a conference call that day. In Q1 2021, sales increased by 7% to 424 million euros due to the strong demand that we saw here at the Erich Klinger Group. If exchange rates had remained unchanged, group revenues would have been up by 10.7%. Due to the strong sales development, efficiency gains and the sale of our Austrian subsidiary, EBIT increased by more than 30 million to 48.4 million euros year on year. This results in an EBIT margin of 11.4% compared to a margin of 4% one year ago. The operating free cash flow increased to 28.6 million euros from a level of minus 2.2 million euros in previous year's first quarter. By the way, this does not include the sale of our Austrian subsidiary as well as the payment received by Plastic Omnium with regard to the agreement on our new joint venture company EKPO Fuel Cell Technologies. We further continued to optimize our net working capital to a level of 430 million euros. We managed to reduce net financial debt to 400 million euros, which means that the net debt EBITDA ratio decreased to 1.9 compared to last year's figures of 3.1. As part of our agreement with Plastic Omnium that we signed last year in October, We have started the business activities of EKPO Fuel Cell Technologies for harnessing the market potential. We have very strong ambitions. We target for revenues of 700 million to 1 billion euro and a market share of 10 to 15% by 2030. In the context of this agreement, we also executed the disposal of our Austrian subsidiary to Plastic Omnium and realized a gain of 10.9 million euros. In the past months, you might have noticed some news of Erling Klinger on the battery business, which underline our competencies in this area. First of all, in March, we announced a major order for cell contacting systems by a global battery manufacturer. Our cell contacting systems, which will be included in a series platform of a German premium car manufacturer. This large scale order totals a volume in the mid triple digit million euro range over a term of approximately nine years. We will start the production for this order in the first half of 2022. This brings me to the next news. We will ramp up this order at our new site in Neufen, which is really close to our headquarter here in Dettingen. We have established this location on January 1st, 2021, and we'll bundle our activities in battery technology there. Another news, actually, is part of the second quarter, as the corresponding event took place only 10 days ago. We received an so-called IPSAI funding by the Federal Ministry of Economic Affairs and Energy, as well as by the Ministry of Economic Affairs of the State of Baden-Württemberg for our innovative battery cell house design. The total funding volume amounts to 33.8 million euros and this will be paid in the years to come until the end of 2026. Applying core skills, we are able to produce cell lit with less components, require less materials and thus shrink the carbon footprint by about 40%. This is an important contribution on the global path towards climate neutrality. Well, ladies and gentlemen, so far from my side, and let me now hand over to my colleague, Mr. Jeselat, our CFO, and he is going to explain the figures of the first quarter 2021.

Thank you, Dr. Wolf. Also a warm welcome from my side. I would like to comment the financial results for the first quarter starting on slide number five. The sustained demand for Erling Klinger's products around the globe is reflected in the group's strong position with regard to orders. At 577 million euro, order intake was up 222 million euro or 62.5% on the same period in the previous year. This also resulted in a surge in the group's order backlog by 197 million euro or 19.9%. to a billion and 186 million euro. The increase in revenue to 424 million euro is mainly two reasons. First, we have seen a strong increase of around 38% in China and also growth by roughly 5% in Europe. And second, the segments aftermarket and engineered plastics contributed increased sales compared to last year's first quarter. Foreign exchange effects reduced group sales by 3.6%, and this was primarily due to a direction taken by the US dollar, but also the Brazilian real, the Mexican peso, as well as the Turkish lira. No revenue from acquired or divested companies was accounted for in the reporting period. And all in all, we saw an organic increase in sales of 10.7%. On slide number six, you see the sales split by region in more detail. In Asia Pacific, we noticed a strong increase in revenue. While sales in Europe increased by 6.2% on a foreign exchange adjusted basis, group revenue in North America only slightly increased by 0.6% and even went down on a reported basis due to the development of the US dollar. When comparing our sales figures with the markets, we're able to outperform light vehicle production in both Europe and North America, which, by the way, represent the two strongest sales regions of Erlangen. While our geographical sales footprint in Germany and the rest of Europe are almost identical to previous year's period, North America has a share of 24% of the group's revenue compared to 27% in the previous year. The Asia-Pacific region now represents 19% of group revenue compared to 15% in the previous year's period. With regard to our segments in business divisions on slide number seven, we see that original equipment segment is on track. RingClinger generated sales revenues of $300,000. €34 million in the segment, revenue growth of €21 million or 6.8% was attributable primarily to the lightweighting elastomer technology business unit, which saw a disproportionately large increase of around 18%. At around 7%, the increase in revenue related to the metal sealing systems and drivetrain components business unit was roughly in line with a group average while revenues and the shielding technology business unit declined in the period under review. The e-mobility business, which represented around 2% of group revenue, grew by a good 14.6% to 7.3 million euro, but is still a relatively low pace. Slide number eight presents the earnings figures for the first quarter. EBIT reached a strong level of 48.4 million euro and the EBIT margin was at 11.4%. Let me outline the main drivers for this development. As part of the agreement with Plastic Omnium, we sold our Austrian subsidiary and received an earnings effective payment of 10.9 million euro. But even when not including it, we achieved an EBIT margin of 8.8%. And in combination with a favorable product and regional mix, the strong capacity utilization on a relatively low cost basis resulted in a good earnings contribution. We have to consider the high price level for raw materials. The effect in the first quarter was comparably low, but it could have a stronger impact in the upcoming quarters. Our extensive program to improve the efficiency levels had a further impact of €4 million on the EBIT increase. To sum up the earnings situation, Net finance income amounted to €1 million in the quarter under review, an improvement of €10.9 million compared to the same period of the previous year. A large part of this is due to the net result from currency translation, not realized currency effects. as the same quarter of the previous year had included significant net foreign exchange losses, especially for the Mexican peso. In total, the net result from currency translation was positive at 4.7 million euro, while it stood at minus 3.1 million euro in the first quarter of 2020. In addition, interest expenses decreased also thanks to significantly lower net debt. The loss from associates which relates to the interest held in HOFA AG improved by 0.6 million Euro to minus 1.6 million Euro. Income tax expenses increased by 6.4 million Euro to 10.9 million Euro in the first quarter of 2020 and therefore net income attributable to the shareholders of Elring Klinger increased to 37.9 million Euro, coming from 2 million Euro in the first quarter of 2020. Accordingly, the earnings per share increased significantly, amounting to 60 cents after 3 cents in the first quarter of 2020. Let me now turn to slide number 9, showing the performance of our segments. The aftermarket segment, again, developed strongly in the quarter just ended, recording an all-time quarterly high in terms of segment revenue. Particularly Eastern Europe and North America saw a significant expansion in revenues. North Africa and Asia also made visible gains. in total revenue generated by the aftermarket segment in the first quarter of 2021 grew by 3.1 million euro or 5.9% to a total of 55.4 million euro. Segment EBIT was again very high at 11.9 million euro and the EBIT margin of 21.5% was slightly above that seen in the 2020 financial year as a whole, which was 21.4%. The engineered plastic segment increased its revenue in the reporting quarter by 4.2 million Euro of 14.5% to 33.1 million Euro, which represents a disproportionately large increase in relation to group revenue. The segment was therefore able to make good use of its tailwind generated by robust economy while also benefiting from the encouraging performance of the automotive sector as a whole. As regards the segment's bottom line performance, both revenue growth and the continuing commitment to strict cost management had a positive impact. EBIT increased significantly by €3.7 million to €7.2 million as a result of which the margin the ebit margin improved markedly from 12.1 percent in the first quarter of 2020 to 21.8 percent in the period under revu now we come to slide number 10 networking capital entries due to more expensive business in the first quarter of 2021 it amounted to 430 million euro 27 million euro higher than at the end of 2020 but lower than at the end of the same quarter a year ago when it stood at 453 million euro even though sales levels were lower at that time as planned the elfin clinger group has scaled back its investment activities over the past two years without neglecting projects of strategic importance as a result Payments for property, plant and equipment in the first quarter of 2021 were low at 11.6 million Euro. They related to a number of investment projects from all plans worldwide and included expansion investments for new ramp ups, especially dedicated to new technologies. Against the backdrop of an encouraging business performance of the first three months of 2021, Erling Klinger was able to generate operating free cash flow of 28.6 million Euro. This figure does not include the payments associated with the sale of the Austrian subsidiary as well as a payment of 30 million Euro, which Erling Klinger received from the EKPO agreement with Plastic Omnium. As of March 31st, 2021, Elsing Klinger had equity now of €950 million, which corresponds to an equity ratio of 45%. The increase of €137 million within the first three months 2021 was due to the recognition of net income for the first quarter, differences from currency translations, as well as the discounted investment of plastic omnium in the EKPO fuel cell technologies. Among others, due to the positive operating free cash flow, Ehrenklinger was again able to scale back its net financial debt. Compared to the figure posted at the end of 2020, it was down by 59 million euro to now 400 million euro. Compared to the same quarter of the previous year, it was cut by as much as 203 million euro. Ringlinger therefore continued to pursue the steady reduction in debt as initiated in the first quarter of 2019. The net debt to EBITDA ratio improved to 1.9 as of March 31st, 2021, down from 3.1 a year earlier and even 4.7 two years ago. Having said this, I now turn back to Dr. Wolf.

Thank you, Mr. Jesulat, for the explanation of the figures. Well, ladies and gentlemen, let me now draw your attention to the current year. where we are expecting market upswing compared to this really terrible corona year 2020, which comes in the light of various unstable surroundings. North America is expected to grow production numbers by 20% in 2021, while Europe is expected to grow by 12%. And China is expected to grow by 5%. On a global basis, this leads us to an expected growth of global light vehicle production of around 12%. While we are positioned to capitalize on this favorable outlook, there are various factors that lie outside of our sphere of influence. The level of uncertainty for the rest of 2021 remains significant, as the general conditions continue to be very challenging and very difficult. While the pandemic is far from over, measures aimed to relaxing some restrictions are currently being discussed in conjunction with the rate of vaccination. In addition, bottlenecks in the supply of semiconductors are affecting the automotive sector really, really strongly, and made my lead to production cutbacks among manufacturers and of course then consequently also among suppliers. Moreover, supply chains are still not consistently robust and commodity prices remain at a very high level or even increase month over month. In light Of the aforementioned risks and opportunities, we refer to our ad hoc announcement on April 16th, 2021. Reflecting the successful first quarter of 2021, we have adjusted our earnings outlook for the full annual period. We now anticipate an EBIT margin of around 5% to 6%. Previously, we had 4% to 5%. in relation to group revenue, which is expected to come in roughly in line with the change of global automobile production. All further explanations remain unchanged to the numbers we have provided in our full year analyst conference. Well, ladies and gentlemen, so far my final remarks and I thank you very much for your attention. And Mr. Jesulat and myself, of course, are more than happy now to take your questions and answer your questions.