STS Group AG publishes figures for the first quarter of 2020 - business development negatively affected by COVID-19 / China nevertheless with revenue and earnings growth

-Revenues in the first quarter of 2020 74.3 mEUR (3M/2019: 95.5 mEUR); revenue down 22.2 % due to COVID-19 pandemic and weak automotive markets in Europe

- Adjusted EBITDA in the first quarter of 2020 down year-on-year at -1.2 mEUR (3M/2019: 4.3 mEUR)

- Positive sales and earnings development in the China segment due to high customer demand in the commercial vehicle sector

- Positive net cash flow from operating activities of 0.7 mEUR (3M/2019: -1.1 mEUR); liquidity maintained at December 31, 2019 level

- COVID-19 conditional comparative forecast 2020: Revenues below prior year and declining Adjusted EBITDA-margin
 

Hallbergmoos/Munich, May 13, 2020. STS Group AG (ISIN: DE000A1TNU68), a global system supplier for the automotive and commercial vehicle industry, listed in the Prime Standard of the Frankfurt Stock Exchange, today publishes its interim statement fort he first quarter of 2020.

Andreas Becker, CEO of STS Group AG: "STS Group's business development in the first quarter was dominated by the corona pandemic and the resulting plant closures in China, Europe and America. The plant closures had a negative impact on the Group's sales and earnings, particularly in Europe, although the financial impact will be even more noticeable in the second quarter. The global automobile production declined within the first quarter of 2020 by around 25% and in the Chinese automobile market even by around 40%. Nevertheless our business in China developed positively. Buoyed by high customer demand in the commercial vehicle sector, the China segment was able to make up for the closure-related sales declines and regain the high level of capacity utilization before the temporary plant closure. In the meantime, all our plants in Europe have been reopened in order to secure the supply chains. We are also working on a number of liquidity and cost reduction measures. Among other things, the entire Management Board of STS Group AG is currently waiving 20% of its fixed salary".

Revenue Performance
STS Group generated revenues of 74.3 mEUR in the period from January 1 to March 31, 2020, compared with 95.5 mEUR (-22.2%) in the same period of the previous year. The main reason for the decline in Group revenues is the global spread of the coronavirus and the associated global economic shutdown. The effects of the COVID 19 pandemic were particularly noticeable in STS Group's market environment in Europe and America. The plants in Germany, Italy, Poland, France and Brazil were temporarily closed from mid-March to the end of April 2020. This led to a significantly negative sales development in the Acoustics, Plastics and Materials segments.
The China segment, on the other hand, performed well, achieving a 2.9% increase in sales in the first quarter of 2020 despite COVID-19-related plant closures in February and March. This was driven by high customer demand for STS products in the commercial vehicle sector in the Chinese market.

Earnings Performance
Earnings before interest, taxes, depreciation and amortization (EBITDA) fell to -1.3 mEUR in the first quarter of 2020 (3M/2019: 4.3 mEUR). In the reporting period, extraordinary expenses for reorganization measures in the amount of 0.1 mEUR were incurred. There were no extraordinary expenses in the prior-year period. At -1.2 mEUR, the adjusted operating result (Adjusted EBITDA) in the first quarter of 2020 was significantly below the previous year's period (3M/2019: 4.3 mEUR) due to the lower business volume. The earnings situation in the Acoustics and Plastics segments was significantly impacted by COVID-19-related revenue declines in the first quarter of 2020. Cost-cutting measures, in particular the introduction of nationwide short-time work and savings in operating costs, could only partially compensate for the revenue-related negative effects on earnings. Despite COVID-19-related plant closures, the China segment achieved a significant increase in earnings in the first three months of the current fiscal year, in particular due to the absence of start-up costs for the new plant in Shiyan and a more profitable product mix. The consolidated result for the period under review amounted to -8.6 mEUR (3M/2019: -1.3 mEUR).

Financial Situation
In the first quarter of 2020 STS Group generated a positive net cash flow from operating activities of 0.7 mEUR (3M/2019: -1.1 mEUR). The increase was mainly due to a significant improvement in working capital compared to the previous year.

The Group's net financial debt increased by 4.8 mEUR to 43.9 mEUR as of March 31, 2020 (December 31, 2019: 39.1 mEUR), mainly due to higher liabilities to banks and increased factoring liabilities. As of March 31, 2020, net financial debt consisted of financial liabilities to banks and third parties of 22.6 mEUR, liabilities from factoring of 14.6 mEUR and leasing liabilities of 24.0 mEUR, less cash and cash equivalents of 17.3 mEUR.

"As a consequence of the COVID-19 pandemic, our focus is now on stringent liquidity management and the implementation of short-term cost-cutting measures, in particular the widespread introduction of short-time work in Europe as well as strict cost discipline in all areas," commented Dr. Ulrich Hauck, CFO of STS Group AG.

Outlook 2020
Due to recent developments regarding the COVID-19 pandemic in Europe and America, the Management Board considers the market environment for STS Group in fiscal year 2020 to be extremely challenging. From mid-March 2020 to the end of April 2020, the STS plants in Italy, France and Germany were closed or production was significantly scaled back. The further impact of COVID-19 on the global economy and, in particular, the development of call-off figures of automobile and commercial vehicle manufacturers cannot be reliably estimated at present. In contrast, the Chinese STS plants are already well utilized again after the plant closures in February and March.

Against the background of the high level of uncertainty in connection with the development of the COVID-19 pandemic, the Management Board expects revenues for fiscal year 2020 to be below the previous year's level. The Company has already initiated extensive cost-cutting measures, but the Board of Management still expects the Adjusted EBITDA-margin to decline.

The interim report for the first quarter of 2020 of STS Group AG is available for download at ir.sts.group. The 3-month figures do not require an auditor's review and are therefore unaudited.

Virtual Annual General Meeting 2020
STS Group AG will hold its annual general meeting exclusively virtually this year. In the course of the COVID-19 pandemic, STS Group decided well in advance to postpone the annual general meeting, which was scheduled for May 15, 2020, to July 14, 2020. In order to protect the health of shareholders, employees and also service providers and in view of the ban on large scale events extended by the Federal Government until August 31, 2020, the Board of Management and Supervisory Board have decided to hold the annual general meeting on July 14, 2020 exclusively virtually. Further details on the procedure will be provided in the invitation to the virtual annual general meeting, which will be published in the electronic Federal Gazette on June 2, 2020 and will be available at the following link: sts.group/hauptversammlung.

Conference Call on May 13, 2020
STS Group AG will hold a conference call in English for interested investors and press representatives today, May 13, 2020 at 14:00 hrs. To register please send an email to ir@sts.group.

About STS Group:
STS Group AG,www.sts.group(ISIN:DE000A1TNU68), is a leading system supplier to the automotive industry with a focus on solutions in the acoustics, thermal and structural engineering sectors. It employs more than 2,500 people worldwide and generated revenues of 362.8 mEUR in the financial year 2019. The STS Group ("STS") produces and develops plastic and acoustic components such as solid and flexible vehicle and aerodynamic trim, noise and vibration-damping materials, entire interior and exterior trim systems, as well as lightweight construction and battery components for electric vehicles at its 17 plants and four development centres in France, Italy, Germany, Poland, Mexico, Brazil, China and, in the future, also in the USA. STS is considered as a technology leader in the manufacture of special acoustic products, plastic injection moulding and components made of composite materials (Sheet Molding Compound - SMC). STS has a large global footprint with plants in four continents. The customer portfolio comprises leading international manufacturer of commercial vehicles, passenger cars and electric vehicles.

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

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