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STS Group AG publishes its first audited consolidated financial statements since the IPO and confirms its provisional figures / business in China grew organically in a declining market / adjusted EBITDA increased by around 67 % to 23.7 mEUR

2019| Apr| 04
Financial News
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DGAP-News: STS Group AG / Key word(s): Annual Results

04.04.2019 / 07:30
The issuer is solely responsible for the content of this announcement.


STS Group AG publishes its first audited consolidated financial statements since the IPO and confirms its provisional figures / business in China grew organically in a declining market / adjusted EBITDA increased by around 67 % to 23.7 mEUR


-Final consolidated figures confirm provisional figures of February 27, 2019.

- Revenue rose by around 29% to 401.2 mEUR (prior year: 310.0 mEUR).

- Increase in adjusted EBITDA of around 67% to 23.7 mEUR (prior year: 14.2 mEUR).

- Integration of acquired units completed in 2018.

- Positive net liquidity of around 8.3 mEUR (prior year: -8.7 mEUR). Cash and cash equivalents increased to 31.2 mEUR.

- Revenue and earnings figures for financial year 2019 consistent with press release dated February 27, 2019.


Hallbergmoos/Munich, April 4, 2019. STS Group AG (ISIN: DE000A1TNU68), the global system supplier for the automotive industry, focusing on the commercial vehicle industry and listed in the Prime Standard of the Frankfurt Stock Exchange, publishes its Annual Report and audited consolidated figures for financial year 2018 today.

"We are delighted to publish our first Annual Report as a listed company today. Looking at the past financial year, we continued to grow despite a difficult sector environment and met the guidance for 2018. The market environment in the automotive industry will continue to be challenging in 2019. Nevertheless, we are convinced that we have laid the foundations for further growth in the next few years with the acquisitions we have made and the integration thereof, as with our IPO," says Andreas Becker, CEO of the STS Group AG.

Revenue and EBITDA performance
In the reporting year, the STS Group generated consolidated revenue of 401.2 mEUR against 310.0 mEUR in the prior year. This represents an increase of 29%, which is essentially attributable to acquisitions carried out in financial year 2017 and the associated expansion of business.

Adjusted EBITDA rose by around 67% in the reporting year to 23.7 mEUR (prior year: 14.2 mEUR). Adjusted EBITDA is calculated on the basis of EBITDA and is largely adjusted for costs of 11.8 mEUR for the IPO and the integration of the acquisitions. Integration of the acquisitions was completed in 2018, meaning that no additional costs are expected here. EBITDA amounted to 11.9 mEUR in 2018. Depreciation and amortization of 13.2 mEUR mainly related to intangible assets. This resulted in earnings before interest and taxes (EBIT) of -1.3 mEUR and a consolidated loss of -4.8 mEUR.

Balance sheet
Net liquidity as of December 31, 2018 of 8.3 mEUR (prior year: -8.7 mEUR) consisted of cash and cash equivalents of 31.2 mEUR (December 31, 2017: 15.8 mEUR) less liabilities to banks and to third parties from loans totaling 22.9 mEUR (December 31, 2017: 24.5 mEUR). As a consequence of the capital increases carried out in the past financial year, equity at the end of the 2018 reporting period increased by around 36% to 82.4 mEUR (December 31, 2017: 60.7 mEUR). As of December 31, 2018, the equity ratio therefore rose to 30.1% against 22.1% as of December 31, 2017. With this balance sheet structure, the STS Group believes it is well placed for further growth.

Segment performance
Nearly all four segments contributed to the positive business figures and the generally sound statement of financial position. The Plastics and China segments achieved a gratifying performance whereas the performance of the Acoustics segment failed to meet expectations.

Acoustics
Acoustic and thermal systems are developed and produced in the Acoustics segment. This segment posted a fall in revenue of 6.2% in the reporting year to 124.4 mEUR against 132.6 mEUR in the prior year. This was caused primarily by a reduction in customer call-offs in the European car market. In the reporting year, adjusted EBITDA came to -1.2 mEUR (prior year: 2.7 mEUR), which, besides lower revenue, was largely attributable to additional ramp-up costs for the production plant in Poland. The Executive Board anticipates a positive impact from the efficiency measures instigated in Poland in financial year 2019.

Plastics
A number of body parts and interior modules for trucks, commercial vehicles and cars are produced in the Plastics segment. In the reporting year, the Plastics segment posted a significant increase in revenue of around 44% to 198.6 mEUR (prior year: 137.7 mEUR). The gratifying performance was largely generated by the acquisitions in the prior year, while revenue decreased organically due, in particular, to the scheduled expiry of a project in the first half of 2018. A significant improvement in earnings was achieved in this segment in the reporting year thanks to numerous operating improvement measures which generated efficiency enhancements. With an increase of more than 10 mEUR to 16.7 mEUR (prior year: 6.4 mEUR) the Plastics segment reported the highest adjusted EBITDA in the Group. As far as the segment's performance moving forward is concerned, the Group expects additional growth in the next few years as a result of the expansion of the American market.

China
The China segment, which combines activities in the Chinese market, was presented as a separate segment for the first time in financial year 2018. In China, the STS Group grew in the reporting year by increasing its own market share. Revenue in this segment virtually doubled to 48.6 mEUR (prior year: 25.3 mEUR) due to non-organic growth in particular. Despite the general decline in the truck market in China, the China segment achieved organic growth of 2.4% in the reporting year. With an increase of 3.1 mEUR (around 73%) to 7.2 mEUR (prior year: 4.1 mEUR), adjusted EBITDA exceeded management expectations. In the current year, the focus is concentrated on further expanding business in China. Even though the Executive Board expects a declining market in China in 2019, proximity to customers and a highly vertically integrated production process offer competitive advantages, which should allow an expansion in its own market share. The new plant in Shyian, which started production in the first quarter of 2019, will be opened officially on April 11, 2019 and offers sufficient capacity for future growth.

Materials
The Materials segment comprises the production of semi-finished products (SMC), bulk molding compounds (BMC) and advanced molding compounds (AMC). Due to acquisitions, revenue in this segment doubled in financial year 2018 to 40.0 mEUR against 20.0 mEUR in the prior year. The segment's adjusted EBITDA increased to 1.9 mEUR in the reporting period against 1.2 mEUR in the prior year. Various research activities are undertaken in the Materials segment with the aim of developing new material solutions. Here, the focus is concentrated, in particular, on reducing weight to cut emissions and innovative product solutions for electric mobility.

2019 guidance
As previously announced on publication of the provisional figures, the STS Group expects sales volume to remain stable despite continuing challenges in the market environment in 2019 at approximately 400 mEUR and adjusted EBITDA at least at the prior-year level (2018: 23.7 mEUR). No one-time items are expected in 2019, as activities in relation to the IPO have been concluded successfully and the acquisitions have been integrated. The Executive Board anticipates EBITDA will increase by at least 100% against the prior year (2018: 11.9 mEUR) and thus anticipates a significantly higher net result for financial year 2019.

Medium-term outlook to 2023
Assuming a positive market environment, the Executive Board of the STS Group aims to achieve revenue of at least 500 mEUR by 2023e. This planned growth is to be driven by doubling revenue in China, expanding the footprint in North America and sustained growth in Europe. The Executive Board also anticipates positive stimulation from the market based on new emissions targets in Europe but also in China in future. The STS Group also sees additional potential from strategic non-organic growth in coming years.

In terms of earnings, allowing for a favorable market environment, the Executive Board aims to achieve an adjusted EBITDA margin of at least 10% in the next five years (2023e). As the main driver of higher EBITDA, the STS Group anticipates positive economies of scale based on the planned growth in revenue, a product and regional mix offering higher margins and further efficiency enhancements in production. Strategically, the STS Group would like to position itself more strongly as a system provider in future, especially with the expansion of new production systems as a combination of acoustic, SMC and compression molding components.

The Annual Report 2018 of STS Group AG is available at https://ir.sts.group/websites/stsgroup/English/3100/financial-reports.html to download.

Telephone conference on April 4, 2019
Today, at 9 am on April 4, 2019, STS Group AG will hold a telephone / webcast conference in English for interested investors and representatives of the press. To register, please e-mail ir@sts.group.


About STS Group:
STS Group AG, www.sts.group(ISIN: DE000A1TNU68), is a leading system supplier for the automotive industry in the soft and hard trim sector. The Group, with its tradition and expertise dating back to 1934, has more than 2,500 employees around the world and generated revenue of over 400 mEUR in financial year 2018. At its 17 plants in total in France, Italy, Germany, Poland, Mexico, Brazil and China, the STS Group produces plastic and acoustic components, such as solid and flexible vehicle trim, noise and vibration-damping materials and entire interior and exterior trim systems. STS is considered a technology leader in the manufacture of plastic injection molding, specialty acoustic products and components from sheet molding compounds (SMC). STS has a strong footprint with plants in China, Europe, Mexico and Brazil. The customer portfolio comprises leading international commercial vehicle and automotive manufacturers.

STS Group AG
Stefan Hummel
Head of Investor Relations
Zeppelinstrasse 4
85399 Hallbergmoos, Germany
+49 811 1244 9412
ir@sts.group
www.sts.group

Contact for financial and business press
CROSS ALLIANCE communication GmbH
Susan Hoffmeister
+49 89 125 09 03-33
sh@crossalliance.de



04.04.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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Stefan Hummel
Head of Investor Relations
P+49 811 124494 12