Tognum after Q1: very good start to 2011 financial year

• Order intake increases 17.4% to €817.9 million
• Revenues up 29.8% to €661.4 million
• Adjusted EBIT margin of 10.9% (Q1 2010: 8.4%)
• Net financial debt completely eliminated
• Forecast specified for the full year 2011: revenues of around €2.9 billion and adjusted EBIT of around €300 million planned

Friedrichshafen, 9 May 2011. The specialist for propulsion and power solutions Tognum made a very good start to the 2011 financial year. Order intake and revenues saw double-digit growth in virtually all end markets. The adjusted EBIT margin at the end of the first quarter is already back to a double-digit level. On the basis of this performance and with market prospects remaining good, the company has specified its forecast for the full year 2011: Tognum now expects to achieve revenues of around €2.9 billion (full year 2010: €2.564 billion) and an adjusted EBIT of around €300 million (2010: €242.1 million).

“With a strong first quarter, we show that our growth strategy is bearing fruit and that we benefit from the economic recovery,” said Volker Heuer, CEO of Tognum AG. “Our strong market position and our sound financial base will provide the support we need to achieve our goal of outperforming the market with double-digit EBIT margins.” Tognum CFO, Joachim Coers, added: “For the first time since the IPO, we show a net cash position. The strong cash flow in the first quarter was one of the factors that enabled us to completely eliminate our net financial debt.”

Double-digit growth in order intake and revenues  

Order intake increased 17.4% in the first three months of 2011 to €817.9 million (Q1 2010: €696.5 million). Compared with the same quarter last year, revenues were up 29.8% to €661.4 million (Q1 2010: €509.4 million). All three reporting segments contributed to this growth.

Significant increase in adjusted EBIT and adjusted EBIT margin
The adjusted EBIT increased by 68.0% to €71.9 million (Q1 2010: €42.8 million). This increase was due primarily to higher revenues combined with an improved revenue mix, greater capacity utilisation, the rise in efficiency and a favourable relationship of prices to costs. The adjusted EBIT margin has already risen to 10.9% at the end of the first quarter (Q1 2010: 8.4%).

Improved adjusted gross profit margin and higher adjusted consolidated net profit

An increase in the adjusted gross profit of around 35% to €197.5 million (Q1 2010: €146.4 million) resulted in an improved adjusted gross profit margin of 29.9% (Q1 2010: 28.7%) in the reporting period. The adjusted consolidated net profit was up 127.8% to €50.8 million (Q1 2010: €22.3 million). This resulted in adjusted earnings per share of €0.39 (Q1 2010: €0.17).

Increased equity ratio, surplus of liquid funds

At the end of the first three months, free cash flow, which comprises cash flow from operating activities and investing activities, at €66.3 million is around 10% of revenues and thus remains at a high level (full year 2010: around 8% of revenues). Net financial debt was further reduced as a result of the positive cash flow. As at the balance sheet date, Tognum subsequently had a net cash position of €21.6 million (31 December 2010: €-57.2 million).

Improved results in all three reporting segments

All three reporting segments – Engines, Onsite Energy & Components (OE&C) and Distribution – reported improved results in the first three months of the year.¹  

Revenues in the Engines segment rose to €454.7 million in the reporting period and were thus 20.3% above the level of the same period last year (Q1 2010: €378.0 million²). In the Marine application area, yacht business was one of the factors leading to the increase in revenues. Within the Industrial application area, the rail and mining applications saw positive performance as a result of the continuing economic recovery. There was an above-average increase in revenues in the Oil & Gas application area, where higher prices for raw materials resulted in higher investing activities. The adjusted segment EBIT was up 36.9% in the first three months to €58.3 million (Q1 2010: €42.6 million).

Revenues in the OE&C segment saw a significant increase of 48.9% in the first quarter, rising to €210.9 million (Q1 2010: €141.6 million). In the OE Diesel Systems & Engines application area, the diesel systems business performed positively, as did the supply business to OEM customers. The growing demand for gas systems led to an increase in revenues in the OE Gas Power Systems application area. The adjusted segment EBIT increased eight-fold to €24.8 million (Q1 2010: €3.1 million).

Revenue volume in the Distribution segment rose in the first three months by 101.1% to €110.2 million (Q1 2010: €54.8 million). The adjusted segment EBIT was up 35.2% to €7.3 million (Q1 2010: €5.4 million).

Forecast specified for 2011

Since the overall performance of the global economy continues to accelerate and a very positive trend is reported in the off-highway markets, Tognum has now specified its forecast. The company expects revenues of around €2.9 billion for the 2011 financial year (2010: €2.564 billion) and an adjusted EBIT of around €300 million (2010: €242.1 million). In line with the dividend policy that was defined at the IPO, the company in 2011 is again aiming at a dividend payment of 30% to 50% of the adjusted net profit.

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The interim report valid at 31 March 2011 is available for download at www.tognum.com in the Investors section.