DGAP-News: R. STAHL publishes audited figures for FY 2017: Declining sales weigh on earnings, Group-wide efficiency program initiated

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R. STAHL publishes audited figures for FY 2017: Declining sales weigh on earnings, Group-wide efficiency program initiated

- Sales decline 6.3 percent to EUR268.5 million, EBIT pre exceptionals* drops to EUR-6.7 million

- Net profit of EUR-21.2 million additionally burdened by around EUR11 million from adjustment of tax related balance sheet items

- Effective management of working capital drives free cash flow to EUR8.2 million

- No dividend proposal for FY 2017 due to net loss

- Group-wide efficiency program "R. STAHL 2020" initiated

- Outlook for FY 2018: EBITDA pre exceptionals to increase by mid-to-high double digit percentage

Waldenburg, 12 June 2018 - R. STAHL, leading supplier of products and systems for explosion protection, today publishes the audited results for fiscal year 2017. Compared to the preliminary figures that were published on 2 March 2018, sales remain unchanged, while earnings before interest and taxes (EBIT) pre exceptionals came in at EUR-6.7 million.

Sales trend down, Central region and Americas weak

Compared to the previous year, sales fell by 6.3 percent to EUR268.5 million (2016: EUR286.6 million). There were differences in the regional trends: in Germany and Asia, sales were largely on a par with the previous year, while sales in the Central region and the Americas fell sharply. In addition to falling volumes and pressure on prices, this trend was exacerbated by adverse exchange rate fluctuations. Sales in all quarters failed to reach the corresponding prior-year figures.

In Germany, there was a moderate year-on-year decline in sales of 0.7 percent to EUR60.9 million in 2017 (2016: EUR61.3 million). Sales in the Central region fell by 8.5 percent to EUR120.7 million (2016: EUR131.9 million), due in particular to the very strong previous year. As in 2016, sales suffered the strongest percentage decline of 19.1 percent to EUR29.0 million in the Americas region (2016: EUR35.8 million). This was once again due to weak order intake in the preceding period - above all in our project business and with companies serving the oil production industry. Further contributing factors included delays in the technical clarification of orders. In the reporting period, Asia was the only region to report slight growth. Compared to the previous year, sales were raised by 0.6 percent to EUR57.9 million (2016: EUR57.6 million).

Low sales weigh heavily on earnings

The weak sales trend in 2017 had a significant impact on earnings: at EUR-10.7 million, earnings before interest and taxes (EBIT) were around EUR20 million below the prior-year figure (2016: EUR8.8 million). In addition to the fall in sales, this was also due to exceptionals of EUR-4.0 million, compared to a positive contribution from exceptionals of EUR1.4 million in the previous year. EBIT pre exceptionals therefore came in at EUR-6.7 million (2016: EUR7.4 million), and EBITDA pre exceptionals at EUR5.8 million (2016: EUR20.7 million). The unexpectedly weak net profit of EUR-21.2 million (2016: EUR4.2 million) includes adjustments to the recoverability of deferred taxes on loss carryforwards which led to an additional burden of around EUR11 million. In sum, this resulted in earnings per share of EUR-3.28 for 2017 (2016: EUR0.64).

Strong free cash flow
Contrary to the development of earnings, cash flow from operating activities was raised by 81.4 percent to EUR19.7 million (2016: EUR10.9 million) due to a strong year-on-year improvement in working capital of EUR24.2 million to EUR18.9 million. This resulted from a reduction in receivables and increased trade payables as well as from lower inventories due to the fall in sales. In the period under review, capital expenditure was reduced by 16.6 percent to EUR-10.4 million (2016: EUR-12.5 million). In sum, free cash flow improved strongly year on year to EUR8.2 million (2016: EUR-0.3 million).

Group-wide efficiency program "R. STAHL 2020" initiated
The dramatic slump in demand from the oil and gas sector in recent years has demonstrated that R. STAHL's cost and corporate structures are insufficiently capable of securing profitability under adverse market conditions. Top priority is therefore on reducing the high level of complexity in the areas of corporate structures, product portfolio as well as processes and systems to enhance the efficiency of our organization. We aim to achieve this with the Group's global realignment program "R. STAHL 2020", which has been begun to be implemented in early 2018. Its focus is on three main areas:

- Creation of a global corporate organization with standardized Group-wide processes

- Optimization of the R. STAHL product portfolio

- Harmonization of global IT-systems

This program will enable R. STAHL to create the necessary conditions and scope to fully exploit the opportunities for sustainable and profitable growth arising in its markets. The implementation of the measures is aimed to be completed by the end of 2019.

Significant improvement in earnings expected for FY 2018
R. STAHL started in 2018 with a solid order backlog of EUR92.3 million as of 31 December 2017 (31 December 2016: EUR80.7 million). The positive outlook for the global economy and main sales markets and sectors build confidence that demand for explosion protection products will also pick up in 2018. With regard to external factors with a direct or indirect impact on R. STAHL's business, especially oil prices and exchange rates, the Executive Board expects no developments that will significantly influence earnings. For 2018, the Executive Board expects a year-on-year increase in EBITDA pre exceptionals in the mid to high double-digit percentage range.

* Exceptionals: restructuring charges, non-scheduled depreciation and amortization, charges for design and implementation of IT-projects, M&A costs as well as profit and loss from the disposal of non-current assets no longer required for business operations

Key figures of R. STAHL Group pursuant to IFRS

¹⁾ Central region: Africa and Europe without Germany
²⁾ Exceptionals: restructuring charges, non-scheduled depreciation and amortization, charges for design and implementation of IT-projects, M&A costs as well as profit and loss from the disposal of non-current assets no longer required for business operations
³⁾ Proposal to the Annual General Meeting on 30 August 2018
⁴⁾ without pension provisions
⁵⁾ without apprentices

As of June 12, 2018 the annual report for FY 2017 will be available for download on the company's website under https://r-stahl.com/en/global/corporate/investor-relations/ir-news-and-publications/financial-reports/.

Investors' and analysts' conference call of R. STAHL AG on the results of FY 2017 and Q1 2018
Today at 9:00 CET, the Chief Executive Officer of R. STAHL AG, Dr. Mathias Hallmann, will explain the results of FY 2017 and Q1 2018 and will be available for questions and discussions afterwards. The conference call will be held in English language.

Please dial the following number to join the call and provide the following PIN as well as your full name and company when prompted:

DE: +4969222229043
UK: +442030092452
USA: +18554027766

Participant PIN: 16790194#
Along with the conference call we will provide an online presentation via the internet simultaneously. Please log on as a participant on the following website (no password required):

Website: https://webcasts.eqs.com/rstahl20180612/no-audio

An audio cast will be available shortly after the conference call has ended on the company's website under the following link:

https://r-stahl.com/en/global/corporate/investor-relations/ir-news-and-publications/events-and-presentations/

Financial calendar 2018
9 August Interim statement Q2
30 August Annual General Meeting in Kuenzelsau
8 November Interim statement Q3

Über R. STAHL - www.r-stahl.com
R. STAHL is one of the world's leading suppliers of electrical and electronic products and systems for explosion protection. These products and systems prevent explosions in risk areas and contribute to the safety of people, machines and the environment. The portfolio ranges from products used in switching/ distributing, installing, operating/monitoring, lighting and signalling/alarming, up to automation. Typical customers operate in growth industries, such as the oil & gas industry, the chemical and pharmaceutical industries and the food industry. In 2017, 1,763 employees generated sales of EUR268.5 million.

The shares of R. STAHL AG are traded on the Regulated Market/Prime Standard of Deutsche Boerse (ISIN DE000A1PHBB5).

Contact:
R. STAHL AG
Am Bahnhof 30, 74638 Waldenburg (Wuertt.)

Dr. Thomas Kornek
Head of Investor Relations & Corporate Communications
Phone: +49 7942 943 1395
e-mail: investornews@stahl.de