Elringklinger Ag

Yeah, thank you very much. Ladies and gentlemen, a warm welcome to our conference call on the second quarter and the first half of 2021. As always, I will start with some headlines on the second quarter. After that, my colleague Thomas Heselat, our CFO, will present the financial figures on the second quarter. And I will then close with the confirmation of our outlook on the rest of the year. And of course, at the end, you will have the opportunity to ask questions and we are more than pleased to answer your questions. Klinger continued its strong start to the year in the second quarter of 2021. The group generated revenues of 394 million euros plus of 56% compared to the prior year quarter, but you have to see that this was a real bad quarter in the Corona year 2020. If foreign exchange rates had remained unchanged, the figure would have been up by as much as 58%, while global light vehicle production is seen at 49% in the same period. After the pandemic-related slump in revenues last year, the group managed to improve its earnings performance noticeably. In the second quarter of 2021, It generated earnings before interest and taxes of 23 million euros, up 55.4 million euros of the prior year figure. At 5.9% in the quarter, our EBIT margin is within the targeted range of around 5% to 6% for the full year 2021. In addition, we generated sustainable operating free cash flow in the first six months, allowing us to further reduce our net financial liabilities. Net financial debt was slashed by €217 million to €363 million. Upon introduction of the efficiency enhancement program at the end of the first quarter of 2019, net debt had amounted to €796 million. So that's quite a step down if you compare those figures. Moreover, our syndicated loan facility has been expanded by further 100 million euros. In this context, the entire loan of now 450 million euro has been extended until early 2026. From a financial perspective, this puts us in an even more robust position than before in support of the ongoing transformation process and our future endeavors. As we have mentioned in our conference call on the first quarter figures, EKPO Fuel Cell Technologies, the new entity which both Erling Klinger and the French supplier Plastic Omnium hold interest, started operations on March 1, 2021. Over the past months, we have seen nominations which underline the outstanding technology. First of all, EKPO has been awarded by Green Corp Connection to supply stacks for industrial applications of high power systems and for the use in the 2023 Dakar Rally. This implies that an NM12 fuel cell stack from the Erlenklinger Group is taking part in this Dakar Rally, fulfilling highest output requirements in an environmental-friendly way by emitting water vapor as exhaust gas. The specific racing conditions are a uniquely tough proving ground for our products. Moreover, EKPO has received a high-volume series production order for the supply of fuel cell stacks. The contract awarded by Aachen-based mobility company AE Drive Solutions covers a total volume in the high double-digit million euro range over a period of several years. The fuel cell stacks of the type NM5 Evo, ordered by the company, will be used in delivery vehicles, the aim being to offer environmental-friendly drive technology in urban areas. Ceres production is scheduled to start in the first half of 2022. Having been hit by dramatic slumps in the first half year of the previous year as a result of the coronavirus pandemic, global automotive markets saw a major increase in vehicle production and sales in the first half year of 2021. Global light vehicle production grew by 28% in the first six months. Faster market recovery has also been prevented recently by bottlenecks in the semiconductor market. You all know that from the news. In the second quarter, global production of light vehicle increased by 48.6% to 18.8 million units. However, Europe and North America have not yet regained the pre-crisis levels seen in 2019, when 22.1 million vehicles were produced worldwide in the same period. Well, ladies and gentlemen, those are my preliminary remarks on the markets and on the situation at the El Quino Group overall. And I would like now to hand over to my colleague, our CFO, Thomas Desulat, who will guide you through the numbers.

Yeah, thank you, Dr. Wolf. A warm welcome also from my side. I would like to comment the financial results for the second quarter, starting on slide number five. The global recovery is also reflected in Erwin Klinger's order books with an order intake of 430 million euros in the second quarter. This represents a significant increase compared to the same period last year when the group recorded incoming orders worth 193 million euros against the backdrop of lockdown measures. On the back of solid order intake, the group's order backlog also increased. The order book was expanded once again in the period under review, taking the figure to €1,222,000,000 at the end of the first half. Movements in foreign exchange rates played only a minor role. In the second quarter of 2021, Behring Klinger Group generated sales revenues of 393.6 million euros a sharp increase to the same quarter last year. Revenue was €141.4 million or 56.1% higher than in the second quarter of 2020, which of course had been impacted by the fallout from the coronavirus pandemic, particularly in Europe and North America. In the second quarter, revenue was diluted by €4.9 million or 3% as a result of currency effects. Excluding these foreign exchange movements, organic revenue growth was €146.3 million or 58%. There was no impact from M&A activities in 2021. On slide number six, you see the sales split in the region in more detail. After a sharp drop in revenue in the previous year, there are now signs of recovery in all regions at a profound level in most cases. In Germany, as well as in the rest of Europe, the second quarter of 2020 in particular had been affected by the impact of pandemic-induced restrictions. Compared to this period, revenue in the second quarter of 2021 therefore surged by 37%. to €87.6 million. In the region encompassing the rest of Europe, the group saw revenue increase by 92%, year-on-year taking the figure to €124.2 million. A similar pattern can be seen in North America, where revenue increased significantly in the period under review, up 67% to €89 million. The Asia-Pacific region recorded strong revenue growth in the second quarter of 2021, up 12.8% euro or 20% to 75.5 million euro, particularly as China, unlike all the other regions, had already returned to the path of recovery as early as the second quarter of 2020. At 78.5%, the original equipment segment continued to represent the largest share of group revenue in the first half of 2021. The individual business units also grew significantly in terms of revenue during the quarter under review. In the e-mobility segment, Revenue almost tripled compared to the same period of the previous year. The revenue amounted to €16.5 million in the second quarter of 2021. At €23.8 million, revenue for the first half of 2021 almost doubled compared to the previous year. Among the classical business units, metal ceiling systems and drivetrain components, achieved particularly strong growth in the second quarter of 2021. It grew by 85%. After the lightweighting elastomer technology unit has proved robust in the second quarter of 2020, due in part to business centered around lightweight structural components, Demand increased significantly again in the quarter under review up by 55%. And last but not least, the shielding technology unit also recorded strong growth of 35%. Slide number eight now presents the earnings figures for the first quarter. Following the slump in revenue last year and the successful continuation of the efficiency measures, the group was able to improve its earnings performance. The group recorded earnings before interest in taxes of 23 million euro in the second quarter of 2021. The increase of 55.4 million euro was mainly driven by sales growth and in addition by further results from the Global Efficiency Enhancement Program within the group. So far, the impact on group's earnings from the global search of raw material prices was limited to €3 million. At 5.9%, the EBIT margin in the second quarter of 2021 was within the target range of about 5% to 6% for the full annual period of 2021. including the strong first quarter of 2021, the EBIT margin for the first half of 2021 was 8.7%. Net finance costs were lower in the period under review, down by 1.7 million euro to minus 4.6 million euro. And this was attributable mainly to lower interest expenses. Slight changes in the net result from currency translation were offset by corresponding changes in the share of the net result of associated companies. As for June 30th, 2021, earnings per share attributable to the shareholders of Erling Klinger AG amounted to 13 Euro cents in the second quarter and 72 Euro cents in the first six months. Let me now turn to slide number 10, showing the performance of our segment. After the pandemic induced losses recorded in the second quarter of 2020, the original equivalent segment as a whole considerably improved earnings to an EBIT of 7.3 million euro after minus 40.5 million euro in the second quarter of 2020. The visible recovery in revenues also prompted a significant expansion of earnings performance of all three major units operating within the classical areas of business. The future-oriented e-mobility unit, which in addition to the fuel cell business also includes battery technology and electric drive units, posted negative EBIT in the quarter under review as well as in the first half of 2021. This was mainly due to a new series ramp-up and pre-series production. The aftermarket segment contributed 53.3 million euro to group revenue in the quarter on the revenue. At 36% year-on-year growth within this area was significant and the more pronounced upturn in the business after the easing of pandemic related restrictions coincided with higher costs for freight and logistics within the segment as well. Nevertheless, the bottom line result remained at a high level, which was due in part to sustained cost discipline. Therefore, the segments saw earnings grew by €2.3 million in the second quarter, taking EBIT to €10 million. This corresponds to an EBIT margin of 18.8%. With revenues totaling €31.8 million in the second quarter of 2021, the engineered plastic segment was again able to show pre-pandemic performance. In particular, sales generated in the automotive and chemical sectors proved strong in this period. And from a regional perspective, Asia recorded particularly solid growth. Overall, segment revenue in the quarter under review was 34% higher than posted for the same period last year. While revenue increased significantly, costs did not follow suit to the same extent, and this was attributable in part to the policy of strict cost discipline adopted by the group. In total, the engineering plastic segment achieved earnings before interest and taxes 6 million euro in the second quarter of 2021, which corresponds to an even margin of 19%. On slide number 11, you see that the group was able to further optimize net working capital. The ratio in percent of group revenue improved from 27.8% one year ago to 25% at the end of the reporting period. In line with its plans, Erring Klinger is pursuing a disciplined investment policy in 2021. New purchases are targeted particularly at the strategic fields of the future, and the group's capital expenditure amounted to 10.9 million euros in the second quarter of 2021 related to production activities worldwide, and also included expansion investments for new ramp-ups. As of June 30th, 2021, Erwin Klinger generated operating free cash flow of 65.6 million euro in the first half of 2021. This figure does not include exceptional items such as the initial installment paid by Plastic Omnium for its interest in EKPO or proceeds from the sale of the Austrian subsidiary. Operating free cash flow in the second quarter reached Due to the considerable operating free cash flow, Erring Klinger was able to further reduce its financial liabilities in the period under review. Having already scaled net financial debt back by €59 million in the first quarter, the figure was reduced by further €37 million in the second quarter. From a 12-month perspective, net debt fell by €217 million to €363 million as of June 30th, 2021. Against the backdrop of a solid earnings performance and the reduction in debt, the group saw a significant improvement in its debt ratio at the end of the first half. Net debt to EBITDA stood at 1.4 at the end of the reporting period compared to 2.5 at the end of 2020 and 3.8 a year earlier. Moreover, Ehrenklinger agreed an extension to the financing framework with the existing bank partners of the syndicated loan that we concluded in 2019 and as part of this new arrangement agreed an July 2021, in particular after the first half reporting period, the syndicate banks will make a further 100 million Euro available to the group. Additionally, the term of the entire borrowing facility of now 450 million Euro was extended by two years until early 2026. Therefore, the group is comfortably positioned for further business development. especially with regard to the far-reaching transformation of the mobility market. The increase and extension of the existing syndicated loan will further strengthen the group's solid position. Having said this, I now turn back to Dr. Wolf.

Thank you very much, Mr. Jeselat, for explaining the figures. Well, despite the persistently high risk of Infection associated with the coronavirus pandemic global economic activities has been visibly recovering. Fundamentally, this also applies to the automotive industry, although the global markets are subject to significant uncertainties. In this context, bottlenecks of the supply of semiconductors play just as much a role as the tense situation within the commodity markets. Prices for polyamides, especially PA66, which we use for our cam covers and oil pans, and steel, but also for aluminum, remain very high. What is more, the availability of such materials cannot always be guaranteed throughout, which is due partially to the fact that bottlenecks are generated by overbooking within the supply chain. In addition, the flood disaster here in Germany might have an impact on the supply of raw materials, as some raw material providers, especially from the steel sector, have been very much affected in some cases very seriously by the consequences of this flooding. Moreover, there are concerns over the possibility of new waves of COVID infections later in this year, which could again have an impact on the economic activities worldwide. Considering these uncertainties and the strong second half of the previous year, the global market is expected to fall in the third and fourth quarter, Likewise, production figures in the three main markets will decrease, with the exception of North America, which is expected to grow in the fourth quarter. The development of global markets is seen very heterogeneously from the 2021 financial year. While Europe and North America are expected to grow by 9% and 12% respectively, China is expected to grow at a more moderate rate of around 6%. In contrast to the other two markets, however, China will thus exceed its pre-crisis level from 2019. All in all, global light vehicle production is expected to grow by around 10% in the current fiscal year. Regardless of the signs of recovery, the uncertainties for the remainder of the year are still considerable. The situation within commodity markets is tense and bottlenecks in the semiconductor industry may have a regional or global impact on vehicle production output. Against this backdrop, Klinger continues to anticipate a level of organic revenue growth that is likely to roughly match the rate of expansion in global automotive production. In terms of consolidated earnings, Erling Klinger anticipates an EBIT margin of around 5% to 6% calculated in relation to group revenue. Based on the results of the current financial year to date and the impact of the efficiency enhancement program, the group also confirms its expectations of its further key performance indicators. Despite the challenging factors currently driving the business environment in which Ellen Klinger operates, the company considers itself to be well positioned in the medium to long term. Thus, the group can also confirm its medium and long term targets that you are aware of and that you know. Well, that concludes my presentation, ladies and gentlemen. Thank you very much for your attention, and Mr. Yerselat and myself are now more than happy to answer your questions.