Press Release

Dürr on course for record order intake and sales

Business figures for the first nine months of 2018

- Project pipeline and order books amply filled: Order intake and sales could reach new full-year records in 2018

- At 6.9%, Q3 operating EBIT margin within the target corridor

- Cash flow positive in Q3

- Digital Factory developing Smart Apps for optimizing production

Bietigheim-Bissingen, November 8, 2018 – Dürr is striving for new records in order intake and sales this year. After the first nine months of 2018, order intake stood at € 2,753.2 million and could rise to around
€ 3,900 million by the end of the year for the first time. Sales should come to more than € 3,800 million for the year as a whole, after reaching € 2,734.1 million in the first nine months. Ralf W. Dieter, CEO of Dürr AG: “We look set to achieve a very good fourth quarter, to which all five divisions should be able to contribute. In automotive business, there are many capital spending projects in the pipeline. This particularly applies to China where we are increasingly supplying new producers of electric vehicles alongside the established OEMs.” Operating earnings and cash flow in the third quarter exceeded the previous two quarters. The operating EBIT margin reached 6.9% in the third quarter, thus coming within the target that had been announced in October for the entire year (6.8 to 7.2%). Operating cash flow and free cash flow were in positive territory in the third quarter.

In like-for-like terms, i.e. adjusted for the sale of Dürr Ecoclean (industrial cleaning technology) in 2017 and negative currency translation effects, sales were up 6.4% in the first nine months of 2018, rising by 2.0% in non-adjusted terms. The greatest top-line growth was reported by the Paint and Final Assembly Systems division in its business for the automotive industry. Service revenues were also up, climbing by 4.5% or, adjusted for the sale of Dürr Ecoclean, by 6.1%.

Like-for-like order intake almost reached the previous year´s figure (down 2.0%). The Clean Technology Systems division reported the greatest growth (up 24.3%) even though the US environmental technology companies MEGTEC and Universal, which were acquired at the beginning of October, are not yet included in the nine-month figures. In Europe, the Dürr Group’s order intake repeated the previous year’s high figure of just under € 1.4 billion thanks to strong expansion in Germany (up 48%). New orders in China fell slightly short of the previous year (down 6%), however, Dürr expects sharp growth in the fourth quarter.

At € 153.3 million, EBIT was down on the previous year in the first nine months primarily as a result of extraordinary effects: whereas EBIT in the previous year had included extraordinary income of
€ 11.8 million, which mainly resulted from the sale of Ecoclean, the first nine months of 2018 came under pressure from extraordinary expense of € 25.2 million, including € 13.5 million for the discontinuation of the loss-making micro gas turbine business announced in October. Operating EBIT before extraordinary effects came to € 178.5 million in the first nine months of 2018, accompanied by an operating EBIT margin of 6.5%. At € 68.0 million, operating EBIT in the third quarter fell only slightly short of the previous year
(€ 70.8 million), with all five divisions reporting the highest quarterly operating earnings in the year to date. The Group’s operating EBIT margin came to 6.9% in the third quarter, thus exceeding the previous two quarters (Q1 2018: 6.6%, Q2 2018: 6.0%).

Innovation spending was increased by a further 4.1% to € 88.6 million in the first nine months of 2018. Digitization remains the most important focus of innovation. The Dürr Digital Factory, which is responsible for digital innovations, is currently working on various apps that work in sync with each other to systematically document, analyze and optimize customers’ production processes, maintenance and painting quality. These Smart Apps evaluate big data volumes from paint shops, using the ADAMOS IIoT platform operated jointly with Software AG and other partners.

The cash flow from operating activities amounted to € -31.9 million in the first nine months of 2018, returning to positive territory in the third quarter at € 27.8 million and exceeding the previous year’s figure. At € 10.9 million, the free cash flow was also positive in the third quarter. CFO Carlo Crosetto: “We expect the positive cash flow trend to strengthen in the fourth quarter. Assuming that we are able to additionally increase incoming payments, cash flow could exceed the previous year in 2018.” Net financial status was slightly negative at € -18.3 million as of September 30, 2018. Dürr expects to be able to report a positive net financial status at the end of the year despite the outgoing payment for the acquisition of the environmental technology companies MEGTEC and Universal. This assumes that the positive cash flow development continues in the fourth quarter.

The Group head count rose by 3.3% over the end of 2017, standing at 15,461 on September 30. Of these, 53% (8,156 people) were employed in Germany. The acquisition of MEGTEC and Universal led to the addition of a further more than 800 employees at the beginning of October.

Outlook
Sales guidance for 2018 is in a range of € 3,750 to 3,950 million. The target corridor for order intake is
€ 3,650 to 3,950 million. Both forecasts include approximately € 50 million expected to be contributed by MEGTEC and Universal in the fourth quarter. The Dürr Group’s previous records were sales of € 3,767.1 million in 2015 and order intake of € 3,803.0 million in 2017. Dürr had originally reported order intake of
€ 3,888.7 million for 2017. However, orders worth € 86 million received from Iran were retroactively eliminated in the fourth quarter of 2017. Following the adjustment to its guidance announced on October 17, Dürr now projects an EBIT margin of 5.8 to 6.3% or, before extraordinary effects, 6.8 to 7.2% for 2018 (including MEGTEC and Universal in both cases).

N.B. The comparative figures for the first nine months of 2017 and the third quarter of 2017 have been adjusted following the first-time application of IFRS 15 and therefore differ from the figures originally reported.

KEY FIGURES for the Dürr Group (IFRS) 9M/Q3 2018
€ m 9M 2018 9M 2017 adjusted1 Δ Q3 2018 Q3 2017 adjusted1 Δ
Order intake 2,753.2 2,906.7 -5.3% 798.2 828.3 -3.6%
Orders on hand (Sept. 30) 2,465.4 2,618.3 -5.8% 2,465.4 2,618.3 -5.8%
Sales revenues 2,734.1 2,680.7 2.0% 984.5 927.1 6.2%
Gross profit 602.4 636.8 -5.4% 198.3 212.7 -6.7%
Research and development costs 88.6 85.1 4.1% 27.3 29.0 -5.9%
EBITDA (earnings before financial result, taxes, depreciation and amortization) 223.0 274.5 -18.8% 82.1 86.8 -5.4%
EBIT (earnings before financial result and taxes) 153.3 214.8 -28.6% 51.9 67.7 -23.4%
EBIT before extraordinary effects2 178.5 203.0 -12.1% 68.0 70.8 -4.0%
Earnings after tax 103.5 150.3 -31.1% 35.3 48.4 -27.0%
Gross margin (%) 22.0 23.8 -1.7 pp 20.1 22.9 -2.8 pp
EBIT margin (%) 5.6 8.0 -2.4 pp 5.3 7.3 -2.0 pp
EBIT margin (%) before extraordinary effects2 6.5 7.6 -1.0 pp 6.9 7.6 -0.7 pp
Cash flow from operating activities -31.9 -22.2 - 27.8 18.6 49.5%
Free cash flow -95.8 -82.9 - 10.9 2.8 288.5%
Capital spending (net of acquisitions) 51.8 49.3 5.2% 17.5 15.7 11.3%
Total assets (Sept. 30) 3,562.3 3,416.0 4.3% 3,562.3 3,416.0 4.3%
Equity (incl. non-controlling interests) (Sept. 30) 915.8 868.3 5.5% 915.8 868.3 5.5%
Equity ratio (Sept. 30) (%) 25.7 25.4 0.3 pp 25.7 25.4 0.3 pp
ROCE (return on capital employed annualized, %) 21.6 36.0 -14.3 pp 22.0 34.9 -12.9 pp
Net financial status (Sept. 30) -18.3 86.6 - -18.3 86.6 -
Net working capital (Sept. 30) 502.1 419.1 19.8% 502.1 419.1 19.8%
Employees (Sept. 30) 15,461 14,876 3.9% 15,461 14,876 3.9%
Paint and Final Assembly Systems
€ m 9M 2018 9M 2017 adjusted1 Δ Q3 2018 Q3 2017 adjusted1 Δ
Order intake 765.4 826.5 -7.4% 187.9 181.0 3.8%
Sales revenues 878.5 816.2 7.6% 311.2 284.5 9.4%
EBIT 38.9 47.0 -17.1% 14.0 16.0 -12.8%
Employees (Sept. 30) 3,447 3,463 -0.5% 3,447 3,463 -0.5%
Application Technology
€ m 9M 2018 9M 2017 adjusted1 Δ Q3 2018 Q3 2017 adjusted1 Δ
Order intake 486.4 460.1 5.7% 141.2 134.8 4.8%
Sales revenues 472.1 447.3 5.5% 174.1 160.4 8.6%
EBIT 48.0 46.6 3.0% 17.4 17.2 1.0%
Employees (Sept. 30) 2,230 2,024 10.2% 2,230 2,024 10.2%
Clean Technology Systems
€ m 9M 2018 9M 2017 adjusted1 Δ Q3 2018 Q3 2017 adjusted1 Δ
Order intake 152.8 123.0 24.3% 36.3 27.8 30.7%
Sales revenues 119.9 131.6 -8.8% 54.9 45.3 21.3%
EBIT -14.2 1.9 - -11.7 0.3 -
Employees (Sept. 30) 612 596 2.7% 612 596 2.7%
Measuring and Process Systems
€ m 9M 2018 9M 2017 adjusted1 Δ Q3 2018 Q3 2017 adjusted1 Δ
Order intake 307.7 418.1 -26.4% 93.2 139.4 -33.1%
Sales revenues 326.1 381.7 -14.6% 112.6 131.1 -14.1%
EBIT 37.9 47.6 -20.4% 14.1 17.6 -20.2%
Employees (Sept. 30) 2,325 2,280 2.0% 2,325 2,280 2.0%
Woodworking Machinery and Systems
€ m 9M 2018 9M 2017 adjusted1 Δ Q3 2018 Q3 2017 adjusted1 Δ
Order intake 1,040.9 1,078.9 -3.5% 339.6 345.4 -1.7%
Sales revenues 937.3 903.8 3.7% 331.6 305.8 8.4%
EBIT 58.7 65.8 -10.9% 21.5 22.1 -2.8%
Employees (Sept. 30) 6,605 6,316 4.6% 6,605 6,316 4.6%
Minor variances may occur in the computation of sums and percentages due to rounding.
1 The figures for the first nine months of 2017 and the third quarter of 2017 have been adjusted following the first-time application of the new accounting standard IFRS 15.
2 Extraordinary effects in the first nine months 2018: € -25.2 million (including discontinuation expense for micro gas turbine business: € -13.5 million; purchase price allocation for HOMAG Group: € -6.5 million; FOCUS 2.0 optimization program in Paint and Final Assembly Systems: € -3.5 million; transaction costs for MEGTEC/Universal: € -1.9 million), first nine months of 2017: € +11.8 million.

The Dürr Group is one of the world's leading mechanical and plant engineering firms with extensive expertise in automation and digitization/Industry 4.0. Products, systems and services offered by the Group enable highly efficient manufacturing processes in different industries. Dürr supplies sectors like the automotive industry, mechanical engineering, chemical, pharmaceutical and woodworking industries. The Group generated sales of € 3.71 billion in 2017. In October 2018, Dürr acquired the industrial environmental technology business of US-based company Babcock & Wilcox, comprising the MEGTEC and Universal brands. Since then, the company has over 16,000 employees and 108 business locations in 32 countries. The Group operates in the market with five divisions:

  • Paint and Final Assembly Systems: Paintshops and final assembly systems for the automotive industry
  • Application Technology: Robot technology for the automated application of paint, sealants and adhesives
  • Clean Technology Systems: air pollution control systems and noise abatement systems
  • Measuring and Process Systems: Balancing as well as assembly, testing and filling technology
  • Woodworking Machinery and Systems: Machinery and equipment for the woodworking industry

This publication has been prepared independently by Dürr AG/Dürr group (“Dürr”). It may contain statements which address such key issues as strategy, future financial results, events, competitive positions and product developments. Such forward-looking statements are subject to a number of risks, uncertainties and other factors, including, but not limited to those described in Dürr's disclosures, in particular in the chapter “Risks” in Dürr's annual report. Should one or more of these risks, uncertainties and other factors materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, performances or achievements of Dürr may vary materially from those described in the relevant forward-looking statements. These statements may be identified by words such as “expect,” “want,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project” or words of similar meaning. Dürr neither intends, nor assumes any obligation, to update or revise its forward-looking statements regularly in light of developments which differ from those anticipated. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies.

Our financial reports, presentations, press releases and ad-hoc releases may include alternative financial metrics. These metrics are not defined in the IFRS (International Financial Reporting Standards). Dürr's net assets, financial position and results of operations should not be assessed solely on the basis of these alternative financial metrics. Under no circumstances do they replace the performance indicators presented in the consolidated financial statements and calculated in accordance with the IFRS. The calculation of alternative financial metrics may vary from company to company despite the use of the same terminology. Further information regarding the alternative financial metrics used at Dürr can be found in our financial glossary.

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