NORMA Group with strong organic sales growth in the first nine months of 2018
- Sales increase by 7.0 percent to EUR 817.1 million
- Strong organic growth of 9.7 percent
- Adjusted EBITA margin at 16.0 percent
- Group forecast for fiscal year 2018 confirmed
Maintal, Germany, November 7, 2018 – NORMA Group, a global market leader in engineered joining technology, increased its Group sales to EUR 817.1 million in the period from January to September 2018. This represents an increase of 7.0 percent compared with the same period last year (Q1 – Q3 2017: EUR 763.4 million). Organic sales growth was strong at 9.7 percent. Additional sales revenues from the acquisitions of Fengfan, Kimplas and Statek contributed 1.4 percent to Group sales growth. Negative currency effects reduced sales growth by minus 4.1 percent.
In the third quarter of 2018, NORMA Group increased its sales by 9.7 percent year-on-year to EUR 268.1 million (Q3 2017: EUR 244.4 million). At 7.1 percent, organic growth remained at a consistently high level. Currency effects had a slightly positive effect in the third quarter for the first time in fiscal year 2018.
“We continued our strong organic growth in the third quarter of 2018,” said NORMA Group CEO Bernd Kleinhens. “Demand for our products remains high. However, the tense situation on the raw materials markets continues to have an impact on earnings and margins.”
Strong growth in the Americas and Asia-Pacific regions
NORMA Group increased sales in the EMEA (Europe, Middle East and Africa) region to EUR 375.7 million from January to September 2018, 1.8 percent higher than the first nine months of 2017 (Q1 – Q3 2017: EUR 369.1 million). Revenues from the acquisition of Statek, completed on August 7, 2018, contributed to this result. Growth in the region weakened in the third quarter of 2018, however. This was mainly due to the generally difficult situation in the European automotive sector with declining production figures.
In the Americas region, sales in the first nine months of 2018 rose by 7.9 percent year-on-year to EUR 334.3 million (Q1 – Q3 2017: EUR 309.7 million). The main reasons for this were the good order volume in the commercial vehicles and agricultural machinery business in the US and positive catch-up effects from NDS’s water business.
In the Asia-Pacific region, NORMA Group increased its sales by 26.5 percent to EUR 107.2 million between January and September 2018 compared with the first nine months of 2017 (Q1 – Q3 2017: EUR 84.7 million). Besides the very good business performance in the Engineered Joining Technology (EJT) division, additional sales revenue generated by the acquisition of Kimplas also contributed to this result.
High raw material prices influence earnings and margin
Adjusted earnings before interest, taxes and amortization of intangible assets (adjusted EBITA) declined in the first nine months of 2018 by 2.9 percent compared to the same period of the previous year to EUR 130.5 million (Q1 – Q3 2017: EUR 134.4 million). The adjusted EBITA margin was 16.0 percent (Q1 – Q3 2017: 17.6 percent).
The main reason for the decline in earnings and margin was the tense situation on the international raw material markets. Higher prices for stainless steel and alloy surcharges, force majeure in the area of important plastic components and the US punitive tariffs on steel had a negative impact on the cost of materials ratio. The increasing shortage of materials on the raw material markets and strong sales growth also temporarily led to variable special costs in the areas of procurement, production and logistics.
In the third quarter of 2018, adjusted EBITA rose by 0.1 percent to EUR 42.8 million (Q3 2017: EUR 42.7 million). The adjusted EBITA margin was 16.0 percent (Q3 2017: 17.5 percent), an increase from the second quarter of 2018 (Q2 2018: 15.2 percent).
Net operating cash flow in the first nine months of 2018 was at EUR 32.6 million, which was EUR 39.4 million lower than in the same period of the previous year (Q1-Q3 2017: EUR 72.0 million). This was primarily due to higher capital expenditure from operating activities, a balance sheet date-related increase in working capital and a decline in adjusted EBITDA.
Forecast for 2018 confirmed at Group level
At Group level, NORMA Group is sticking to its adjusted forecast for fiscal year 2018 published on July 26, 2018. According to this forecast, the company expects to achieve an organic increase in Group sales in 2018 of around 5 to 8 percent compared to the previous year, targeting the upper end of the range. Sales revenues from the acquisitions of Fengfan, Kimplas and Statek are also expected to amount to around EUR 17.0 million (previously: EUR 15.0 million). NORMA Group expects an adjusted EBITA margin for 2018 of between 16 and 17 percent and net operating cash flow of around EUR 130 million.
The forecast for the EMEA region has been adjusted due to the weaker sales growth in the third quarter of 2018 and considering the difficult situation in the European automotive industry with decreasing production volumes: Instead of solid organic sales growth, NORMA Group now expects moderate organic growth.
NORMA Group in figures
*More on adjustments: 1st Quarter 2018 (p. 8); 1st Half Year 2018 (p. 37); 3rd Quarter 2018 (p. 8); Full Year 2017 (p. 139)
**Net debt including hedging instruments; hedging instruments in Q3/2018: EUR 0.9 million; Q3/2017: EUR 1.7 million; FY 2017: EUR 1.4 million
The interim statement for the third quarter of 2018 is available here. More information can be found in the Investor Relations website.
Publication of the preliminary figures for fiscal year 2018 is scheduled for February 13, 2019.