NORMA Group achieves strong organic sales growth in 2018
· Based on preliminary figures, sales increase by 6.6 percent to EUR 1,084.1 million in 2018
· Strong organic growth of 7.7 percent
· Adjusted EBITA margin of 16.0 percent
· Rightsizing program launched to lay the foundation for continued profitable growth
“2018 was a challenging but successful year for NORMA Group,” said Bernd Kleinhens, CEO of NORMA Group. “Although the tense situation on the raw material markets had an impact on earnings and margins, our strong organic growth shows that our products are increasingly in demand worldwide.”
Organic sales growth at Group level was strong at 7.7 percent. Additional sales from the acquisitions of Fengfan, Kimplas and Statek contributed 1.6 percent to growth. On the other hand, negative currency effects reduced sales growth by 2.8 percent.
According to preliminary, unaudited figures, NORMA Group increased its Group sales in the fourth quarter of 2018 by 5.3 percent to EUR 267.0 million compared with the fourth quarter of 2017 (Q4 2017: EUR 253.6 million). As expected, organic growth declined at the end of 2018, to 1.7 percent. Acquisitions contributed 2.4 percent and positive currency effects 1.2 percent to Group sales growth in the fourth quarter of 2018.
Earnings and margin influenced by the volatile situation on the raw material markets
According to preliminary, unaudited figures, adjusted earnings before interest, taxes and amortization of intangible assets (adjusted EBITA) decreased by 0.8 percent year-on-year to EUR 173.2 million in 2018 (2017: EUR 174.5 million). The adjusted EBITA margin was 16.0 percent (2017: 17.2 percent).
The difficult situation on the international raw material markets was the main reason for the decline in earnings and margins. Higher alloy surcharges, force majeure in the area of important plastic components and punitive US tariffs on steel had a negative impact on the cost of materials ratio. Furthermore, the increasing shortage of materials on the raw material markets and the strong sales growth temporarily led to variable special costs in the areas of purchasing, production and logistics.
Adjusted EBITA rose by 6.3 percent to EUR 42.7 million in the fourth quarter of 2018 (Q4 2017: EUR 40.1 million). The adjusted EBITA margin was 16.0 percent (Q4 2017: 15.8 percent).
The net operating cash flow, including the effects from the acquisitions of Statek and Kimplas as well as the increased investments from the operative business, was at EUR 124.4 million in fiscal year 2018, which was EUR 8.5 million lower than in the previous year (2017: EUR 132.9 million). Against the backdrop of the volatile environment on the raw material markets, inventories and finished and unfinished products were built up.
Rightsizing program launched
NORMA Group started implementing a rightsizing program in the fourth quarter of 2018. This is intended to help optimize the production landscape, which has grown rapidly as a result of acquisitions, among other developments, and organizational structures, but also to further harmonize processes and systems worldwide. The optimization measures are to extend across all divisions and regions and support the continued profitable growth of NORMA Group. The objective is to consistently develop the business model further to meet the requirements of future strategic growth areas such as electromobility and water management. The program is expected to result in a positive earnings contribution (adjusted EBITA) of around EUR 10 million to EUR 15 million annually from 2021 on. The implementation of the measures with a planned total cost volume of around EUR 10 million to EUR 15 million is expected to take approximately two years. In fiscal year 2018, around EUR 2 million in costs were incurred as part of the rightsizing program, which are shown in adjusted form.
NORMA Group – preliminary* figures for fiscal year 2018
* The results contained in this press release are preliminary figures that have not yet been approved by the Supervisory Board or been audited by an external auditor.
**Adjustments in fiscal year 2018 for acquisition-related costs (EUR 1.2 million), integration costs (EUR 0.6 million), step-up effects from purchase price allocations (EUR 4.4 million), the costs of rightsizing measures (EUR 2.2 million); Fiscal year 2017 (p. 139); Fiscal year 2016 (p. 63)
***Net debt including hedging instruments (hedging instruments in the amount of: 2018: EUR 0.8 million; 2017: EUR 1.4 million; 2016: EUR 2.2 million)
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Publication of the final financial figures for fiscal year 2018 and the forecast for 2019 is scheduled for March 20, 2019.