Ursensollen, August 12, 2021 – GRAMMER Group’s revenue reached 972.5 million euros in the first half of 2021, equivalent to a year-on-year increase of 32.2 % (01-06 2020: 735.8 million euros). With the first six months of the previous year significantly impacted by the effects of the COVID-19 pandemic, business subsequently continued to recover in the first half of 2021. Revenue grew sharply over the previous year in all regions, with APAC posting the greatest improvement of 43.0 % to 206.5 million euros (01-06 2020: 144.4 million euros). Revenue in EMEA recovered by 28.0 % to 562.0 million euros in the first half of the year (01-06 2020: 439.2 million euros), while the AMERICAS posted a 33.2 % increase in revenue to 247.2 million euros (01-06 2020: 185.6 million euros). Worldwide, both divisions – Automotive and Commercial Vehicles – recorded a 28.9 % and 38.9 % increase in revenue, respectively.
Significant improvement in earnings
The growth in revenue, a favorable product mix and the implementation of restructuring measures as planned triggered a significant improvement in the GRAMMER Group’s earnings. Thus, operating EBIT came to 32.4 million euros in the first half of 2021 (01-06 2020: -45.7 million euros), translating into an operating EBIT margin of 3.3 % (01-06 2020: -6.2 %). This figure is adjusted for once-time expenses of 4.5 million euros arising in connection with the disposal of the subsidiary in Spain, directly attributable costs of 2.3 million euros for the corona-related protection and response measures and currency-translation gains of 2.2 million euros. Earnings before interest and taxes (EBIT) reached 27.8 million euros in the first half of 2021 (01-06 2020: -53.0 million euros).
“After our business development was dramatically impacted by the consequences of COVID-19 pandemic in the prior-year period, we achieved high revenue and earnings growth in the first half of 2021. We are particularly pleased with GRAMMER’s strong performance in APAC, as we intend to continue our successful growth in that region and especially in the important Chinese market,” Thorsten Seehars, CEO of GRAMMER AG, says, explaining the company’s performance in the first half of 2021 and adding: “Without the volatile call-offs and partial plant closures by our customers due to the supply shortages for semiconductors as well as the increased raw material prices, our results would have been significantly better. These factors continue to pose enormous challenges for us in the second half of the year.”
All regions with revenue growth
Revenue in APAC climbed by 43.0 % to 206.5 million euros in the first half of the year (01-06 2020: 144.4 million euros). This was due to heightened production call-offs in the first two quarters of 2021 as well as the comparatively very low revenue in the first quarter of 2020 due to the COVID-19-related production stoppages in Asia. The increase in revenue was underpinned by both divisions. Thus, the Automotive Division posted a 35.4 % increase to 130.7 million euros (01-06 2020: 96.5 million euros) over the previous year, while revenue in the Commercial Vehicles Division climbed by 58.2 % to 75.8 million euros (01-06 2020: 47.9 million euros). Operating EBIT also climbed considerably to 31.0 million euros (01-06 2020: 7.4 million euros), causing the operating EBIT margin to widen to 15.0 % (01-06 2020: 5.1 %).
EMEA posted revenue of 562.0 million euros in the first half of 2021 (01-06 2020: 439.2 million euros), equivalent to an increase of 28.0 %. This performance was underpinned by revenue growth in both divisions, which had been particularly impacted in the previous year by lower revenue due to the plant closures in the second quarter of 2020. Sequentially, revenue in EMEA was down around 7.3 % in the second quarter of 2021 compared with the first quarter. This was mainly due to a lower number of customer call-offs resulting from the global shortage of semiconductors in the supply chain. Revenue in the Commercial Vehicles Division grew by 31.7 % to 251.7 million euros in the first half of the year (01-06 2020: 191.1 million euros), while the Automotive Division posted a 25.1 % gain in revenue to 310.3 million euros (01-06 2020: 248.1 million euros). Operating EBIT climbed significantly to 34.7 million euros (01-06 2020: -17.1 million euros), with the operating EBIT margin widening accordingly to 6.2 % (01-06 2020: -3.9 %).
The AMERICAS reported an increase of 33.2 % in revenue to 247.2 million euros in the first half of 2021 (01-06 2020: 185.6 million euros). This particularly reflects the comparatively lower revenue in the second quarter of 2020 resulting from the COVID-19-related plant closures. Sequentially, the AMERICAS posted an 11.6 % decline in revenue in the second quarter compared with the first quarter, due in particular to plant closures and a lower number of call-offs by American OEMs as a result of the global shortage of semiconductors. Revenue in the Automotive Division grew by 32.4 % to 204.0 million euros (01-06 2020: 154.1 million euros), while the Commercial Vehicles Division posted a 37.1 % increase in revenue to 43.1 million euros (01-06 2020: 31.5 million euros). Operating EBIT reached -23.7 million euros in the first half of 2021 (01-06 2020: -34.0 million euros). Among other things, earnings in the first half of the year were impacted by higher raw material prices, production disruptions due to the absence of customer call-offs and increased personnel expenses.
Consistent implementation of measures to improve competitive position
The implementation of the restructuring measures initiated in 2020 continued as planned in the first half of 2021. Among other things, these entail the consolidation of sites in Europe and North America and a reduction of a total of around 300 jobs in indirect areas in EMEA, which was duly implemented by mid-2021. With the help of the underlying volunteer program, GRAMMER was able to achieve the full-year target of a sustained reduction in structural costs with minimum social hardship as early as in the first quarter of 2021. As part of the site consolidation strategy to improve the cost structure and to strengthen competitiveness on a sustained basis, GRAMMER sold a subsidiary in Spain in the second quarter, which resulted in a one-time charge on earnings in the second quarter.
Rating outlook reflects solid funding base and financial flexibility
GRAMMER AG’s equity rose by 9.8 % to 332.0 million euros in the first half of 2021 (December 31, 2020: 302.2 million euros). Despite the increase in net financial debt to 359.9 million euros (December 31, 2020: 287.1 million euros), this increase in equity led to a higher equity. The equity ratio increased to 23.0 % (December 31, 2020: 22.0 %).
The favorable business performance is also reflected in GRAMMER AG’s current rating. Rating agency Scope confirmed its BB+ rating for GRAMMER AG in June 2021, upgrading the outlook from “negative” to “stable” in recognition of its solid medium-term funding base and good financial flexibility. In the rating agency’s view, the rationale for the positive rating includes the stabilization of the order situation and the general economic conditions for the GRAMMER Group.
50 percent reduction in carbon emissions by 2030: GRAMMER on its way to becoming a “green company”
GRAMMER launched an extensive program in July to improve its global carbon footprint. By the end of this decade, the company aims to reduce its carbon emissions worldwide by at least 50 percent – and thus make its contribution to meeting the 1.5-degree target defined by the Paris climate agreement. One of the milestones already achieved was the adoption of renewable energies at all German sites.
Sustainability is entrenched in the GRAMMER Group’s corporate strategy and is divided into five fields of action: In addition to developing more sustainable products, these include reducing direct emissions, using energy, raw materials and materials more efficiently, increasing recycling rates and optimizing the carbon footprint along the supply chain as well as in the company’s own products.
Outlook for 2021 confirmed
GRAMMER AG expects the challenging economic conditions to persist in 2021 particularly in the markets which it addresses. The further course of the COVID-19 pandemic and, above all, the development of the global shortages in the semiconductor industry and prices on the international commodity markets will have a significant impact on the expected economic recovery. Although GRAMMER has shown flexibility and agility since the beginning of the pandemic, as things currently stand, adverse shifts in revenue and earnings effects during the rest of the year cannot be ruled out.
GRAMMER confirms the guidance published on March 31, 2021 and expects revenue to recover to around 1.8 billion euros (previous year: 1.7 billion euros), with operating EBIT improving to around 65 million euros (previous year: -11.7 million euros) in 2021. In 2020, operating EBIT was very heavily impacted by the effects of the global COVID-19 pandemic as well as the costs caused by various one-time effects.
Company profile
Located in Ursensollen, Germany, GRAMMER AG specializes in the development and production of components and systems for automotive interiors as well as suspended driver and passenger seats for onroad and offroad vehicles. In the Automotive Division, GRAMMER supplies headrests, armrests, center console systems, high-quality interior components, operating systems and innovative thermo-plastic components to automakers and automotive system suppliers. The Commercial Vehicles Division comprises seats for the truck and offroad seat segments (tractors, construction machinery, and forklifts) as well as train and bus seats. With about 14,000 employees, GRAMMER operates in 19 countries around the world. GRAMMER shares are listed in the Prime Standard and traded on the Frankfurt and Munich stock exchanges via the electronic trading system Xetra.