PARAGON GMBH & CO. KGAA
DGAP-News: paragon GmbH & Co. KGaA / Key word(s): Change in Forecast/Profit Warning paragon is adjusting its forecast for 2019 due to weakness in the automotive industry and revenue delays at Voltabox - Restraint among OEM customers is depressing revenue in Sensors and Acoustics; Cockpit and Body Kinematics are above expectations - Additional costs for new products are burdening earnings at paragon movasys GmbH - The Voltabox subsidiary is reducing its revenue and earnings forecast due to revenue delays - For the year as a whole, Group revenue of EUR 200 million to EUR 210 million and a negative EBIT margin of around -1 to -2 % are planned - An extensive cost reduction program is being implemented
In the automotive sector, revenues in the Sensors and Acoustics units are below the already conservative budget figures despite a good start to the year. The reason is the further declining market share of an important OEM customer. By contrast, revenues in the Cockpit and Body Kinematics units are above budget. As extrapolated for the 2019 fiscal year as a whole, revenue of around EUR 130 million in the automotive business will tend to be more at the upper end of the previously planned range of EUR 115 million to EUR 135 million.
However, the changed product mix is leading to weaker profitability. This is primarily attributable to HS Genion GmbH, which was acquired in November 2017 and is currently part of paragon movasys GmbH. Here the launch of new products has led to significant additional costs for personnel and material. According to preliminary figures, the deviation from planned EBIT in the first half of the year was EUR 3.3 million. The consequently unprofitable paragon movasys GmbH has already taken targeted measures to reduce costs. Among other items, functions that were previously still assigned to the two sites at Landsberg am Lech and Delbrück have been consolidated. The measures should be completed by mid-2020, enabling the subsidiary to achieve an EBIT margin of 3 to 4 %.
The one-time costs for the consolidation and integration of new subsidiaries will result in an additional EUR 3.5 million burden to EBIT in the current year. These measures primarily involve the consolidation of sites for development and production that is currently being implemented. Specifically, the development location in Nuremberg and production lines in Neu-Ulm will be integrated into the Limbach site.
Overall, one-time effects of around EUR 7 million, which will depress unadjusted EBIT to about positive EUR 3.5 million (approx. 3 % EBIT margin), are anticipated in the automotive sector in 2019. EBIT adjusted for one-time effects will be at least EUR 10 million.
The publicly traded subsidiary Voltabox has reduced its revenue and earnings forecast for the year as a whole. This is mainly due to the partial postponement of a major order for the American subsidiary Voltabox of Texas, Inc., into 2020 and the conversion of an important cell supplier to the latest technology.
The initial USD 22 million order for Voltabox of Texas, Inc., from a customer in the telecommunication industry involves the redesign and equipment of 5G mobile transmission towers. Since the customer unexpectedly changed its product specifications shortly before the start of series production, deliveries will begin only toward the end of this year. For Voltabox this means entry into a new, lucrative mass market. Aside from the U.S. business, the technological conversion to a new cell generation at an important supplier requires Voltabox to correct its forecast. Contrary to original expectations, this conversion is resulting in an interruption of the supply of materials at Voltabox in the second half of 2019 and thereby to a multi-month production interruption in subareas. The temporary supply stoppage can be replaced only partially by existing modules.
For fiscal year 2019, Voltabox now anticipates Group revenue of EUR 70 million to EUR 80 million instead of the originally indicated EUR 105 million to EUR 115 million. For the EBIT margin the company is forecasting a range of -8 to -9 %. Previously, the company had expected a positive EBIT margin of 8 to 9 %. The Voltabox Management Board has introduced a program of measures to improve cost structures and to ensure a sustainable return to the profit zone in 2020.
In sum, paragon GmbH & Co. KGaA is expected to achieve Group revenue of EUR 200 million to EUR 210 million in the current fiscal year. As a result of the consolidation of the Voltabox AG subsidiary, an EBIT margin of about -1 to -2 % is being forecast at the Group level. Originally, the Group had planned on revenue of EUR 230 million to EUR 240 million along with a positive EBIT margin of around 8 %. According to preliminary figures, in the first half of the year the paragon Group achieved revenue of EUR 96 million, which represents an increase of 22 %, and a negative EBIT of EUR -5.4 million after EUR 4.8 million in the prior year. The company will publish its mid-year figures on August 22, 2019.
12.08.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. |
| Language: | English |
| Company: | paragon GmbH & Co. KGaA |
| Artegastraße 1 | |
| 33129 Delbrück | |
| Germany | |
| Phone: | +49 (0)5250 97 62 - 0 |
| Fax: | +49 (0)5250 97 62 - 60 |
| E-mail: | investor@paragon.ag |
| Internet: | www.paragon.ag |
| ISIN: | DE0005558696, DE000A2GSB86, |
| WKN: | 555869, A2GSB8, |
| Listed: | Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange |
| EQS News ID: | 856003 |
| End of News | DGAP News Service |
856003 12.08.2019
