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    RABA   HU0000073457

RÁBA JÁRMÛIPARI HOLDING NYRT.

(RABA)
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Rába Jármûipari : Report on the Results of Rába Plc. in Q1 of 2021

05/19/2021 | 01:44pm EST

Report on the Results of Rába Plc. in Q1 of 2021

Unaudited, consolidated quarterly report

according to the International Financial Reporting Standards (IFRS)

Company:

RÁBA Automotive Holding Plc.

Company address:

H-9027 Győr. Martin u. 1.

Sector:

Machine industry

Period:

Q1 of 2021

E-mail:

adam.steszli@raba.hu

Investor's contact person:

Ádám Steszli

MANAGEMENT REPORT

MAIN RESULTS OF THE COMPANY

  • The first months of 2021 were characterised by fundamentally favourable economic trends in the key segments of the heavy truck market, which had a positive impact on sales volumes. Contrary to the increase in market activities within the sector of heavy trucks, the segments of community transport vehicles and of specialoff-highway applications experienced a substantial decline in demand, whereas the market of passenger vehicles stagnated compared to the base period. As the combined result of the different and high-volatility market movements of the various product segments, Q1 of 2021 was characterised by a 4.0 per cent decline in sales at group level, to which the Axle and the Components business units contributed 8.9 and 8.7 per cent growth respectively, while the Vehicle business unit contributed a decline by 51.6 per cent. The sales figures of the Vehicle business unit were fundamentally influenced by the fact, that as a result of the crisis management measures introduced in 2020, the production of steel structures for civilian applications was transferred from the Vehicle business unit to the Axle business unit. In terms of the exchange rate environment, in the exchange rates of the USD representing a lesser portion in the company's foreign exchange turnover, there was a decline by 2.5 per cent, and in the EUR, representing a more substantial portion of FX sales, there was an increase by 6.5 per cent compared to the levels of the previous year.
  • Base material supply linked to the stable increase in demand within the heavy vehicle sector means a substantial increase in delivery lead times and continuously increasing steel prices. The relaunch of steel manufacturing capacities operated only partially for various company- specific reasons or withdrawn from production during theCOVID-19 pandemic, is done in a phased fashion only. The situation is further deteriorated by the fundamental changes in supply and demand relations on the world market and in the Chinese trading position. As a result of the above, the steel market has, since November 2020, been characterised by steadily growing prices, triggering various degrees (35%-100%, May, 2021) of base material price increase on the world market, which is reflected in metal products to varying extent, depending on their complexity. The above substantial increase in costs is passed on by the Rába Group to its trading partners as per the terms of the existing agreements and as a result of negotiations, with a quarterly delay in the case of the majority of the products and with a 6-month delay for more complete products, with orders fixed in the longer-term. These two facts, namely that until May of 2021 base material prices have shown a steady increasing tendency and that the cost increase can be passed on to the customers with a time delay only, have a negative impact on the profit positions and margins of the group of companies in Q1 and Q2 of 2021.
  • Besides the volatile sales turnover, there was substantial cost pressure exerted on the production activity: energy prices steadied at a high level, continuously increasing wages and a drastic increase in steel prices were felt. In spite of the drastic price pressure, the gross margin level in Q1 of 2021 declined by 1.0 percentage points only, reaching 19.8 per cent. Thus, the gross profit in Q1 of 2021 still exceeded HUF 2 billion, amounting to HUF 2,250 million.
  • The balance of other revenues and expenditures amounted to HUF 42 million in losses during the review period, against the loss of HUF 349 million during the same period of the previous

RÁBA Plc's consolidated report for Q1 of 2021 in accord ance with the IFRS

year. The profit of other activities during the base period included an unplanned write-off in the amount of HUF 296 million due to the unsustainability in accounting terms of the Ministry of Defence capacities.

  • The two key elements of thecrisis-management strategy introduced in 2020 are increasing flexible adaptation and reducing administrative costs through efficiency improvements. The significant environmental changes manifest in 2021 on both customer and supplier side, continue to highlight the importance of flexibility and integrity, as well as of the efficiency of administrative activities. Continuing the implementation of crisis measures, in Q1 of 2021 we managed to cut administrative and general overhead costs by HUF 427 million, which contributed to a substantial improvement in operating profit for all of our businesses in terms of both volume and effectiveness. The operating profit of the Axle business unit, the business unit with the highest production volume increased by 68.1 per cent, the operating profit of the Components business unit increased drastically, by 179.3 per cent over the base period, whereas the operation of the Vehicle business unit was 84.9 per cent more profitable. In total, the group-level operating profit amounted to HUF 399 million, upon a substantial increase in Q1 of 2021.
  • In terms of cash generating efficiency, the positive impacts of the crisis management measures are even more pronounced:EBITDA-level profitability is at the level of the industry average, in spite of drastically increasing base material prices. The cash generating efficiency of 8.9 per cent, achieved upon a considerable efficiency improvement by 5.1 per cent resulted in HUF 1,013 million of group-level EBITDA in Q1 of 2021. The considerable cash generating efficiency was manifest in the case of the two key production divisions as well: the Axle business unit achieved profits of HUF 614 million, through a 49.4 per cent increase in EBITDA, while the Components business unit grew by 63.9 per cent, generating HUF 337 million in EBITDA-level profits.
  • The financial result in Q1 of 2021 amounted to HUF 66 million, compared to the loss of HUF 635 million generated during the same period of the previous year. The financial performance was influenced by the realised exchange rate gain by HUF 87 million and the net interest burden of HUF 17 million.
  • The total aggregate income and profit for Q1 of 2021 amounted to HUF 364 million.
  • In Q1 of 2021, the liquidity position was characterised by a stable liquidity position and HUF 7.1 billion in net debts. The net borrowings declined by HUF 886 million compared to the same period of 2020, which is the result of the profitable operating activities, the working capital increase by HUF 746 million and the investment expenditures. The revaluation, due to exchange rate fluctuation, of loans, worth HUF 36 million not involving cash movements, also contributed to the decline in net borrowings.
  • The shareholder's equity decreased by 0.4 per cent compared to the same period of the previous year. The shareholder's equity per share reached HUF 1.504/share.

thousand HUF

Q1 2020

Q1 2021

Change

Sales revenue

11 856 038

11 376 736

-4.0%

Gross profit

2 466 501

2 250 311

-8.8%

Gross margin

20.8%

19.8%

-1%p

EBITDA

449 577

1 013 070

125.3%

EBITDA level

3.8%

8.9%

5.1%p

Operating profit

-119 637

398 578

433.2%

Net financial profit/loss

-635 471

66 185

110.4%

Profit after tax for the current year

-852 942

363 708

142.6%

Total comprehensive income

-852 942

363 708

142.6%

2

RÁBA Plc's consolidated report for Q1 of 2021 in accord ance with the IFRS

GOAL AND STRATEGY OF THE BUSINESS

ˮRába started out this year once again proving to be a financially stable company, which could successfully rely on its strategic partnerships, further strengthened market positions and the results of its consistent efficiency improvement measures even in the midst of a crisis. In addition to the still encouraging market outlook, our goal is to build a strategy for a 21st century company, the three main pillars of which we have identified. On the one hand, we strive to modernize manufacturing, develop technology and provide quality service to our customers. On the other hand we also focus on optimizing and streamlining our infrastructure and operational processes, and, thirdly, we will place great emphasis on business development, building new partnerships, and establishing technological cooperations." - said Béla Hetzmann, Chairman-CEO of Rába Plc.

BUSINESS ENVIRONMENT OF THE ENTERPRISE

  • During the first months of 2021, there was a substantial demand for shipping industrial raw materials and goods, as a result of the increased economic activity. This has led to the increase of vehicle purchase prices and shipping charges due to the scarce shipping capacities. Thus, further positive trends are expected in terms of the demand during the coming period on the market of heavy trucks because of the economic activity. As a result of scarce capacities in a wide range of areas, the increase in demand will be felt in the entire supply chain, in all likelihood. Thus, positive expectations regarding profitability because of the increasing purchase prices are not justified on all levels of the supply chain. In such economic situations, a high level of integrity is a key factor of profitability.
  • In Europe, the heavy truck market saw a substantial increase by 15.1 per cent compared to Q1 of 2020. The base period was fundamentally marked by general economic recession and to a lesser extent by the initial economic impacts of theCOVID-19 pandemic. Sales volume on the North American heavy truck market exceeded the levels of the previous year by 13.9 per cent. There was no tangible increase in demand for Rába's agricultural products, sales volume was slightly, by 2.8 per cent below the level of the same period in 2020. The volume increase on the Russian truck market was in line with international trends, the market increase amounted to 11.6 per cent in Q1 of 2021. However, the market of new buses declined significantly, by 26 per cent compared to the levels of the previous year. The market of European passenger vehicles was characterised by stagnation in Q1 of 2021, the registration of new vehicles only slightly, by 0.9 per cent exceeded the value of the base period a year earlier.
  • In Q1 of 2021, the considerable economic activity and the scarce capacities resulted in a drastic change in the trends of steel prices: the price of steel, continuously declining since the beginning of 2018, albeit with varying volatility, showed a considerable growth during the review period. The price increase of 15.8 per cent experienced compared to Q4 of 2020 practically equalled the continuous price drop over the past two years. Thus, the increase in average steel prices on a year/year basis was 14.6 per cent in Q1 of 2021.
  • Human resource costs increased further in Q1 of 2021. Operational efficiency improvement, used to cover the steady increase in wages, is an increasing challenge for the Company.
  • In terms of the third dominant cost element, energy costs, purchase prices stabilised at a high level: the average energy prices in Q1 of 2021 were 0.2 per cent below the base level and only 1.4 per cent below the highest average energy price level of the past decade.
  • With regard to the exchange rate environment, the exchange rate of the USD, representing a lesser proportion in the FX turnover of the company saw a decline by 2.5 per cent, the EUR, representing more substantial weight in the FX turnover saw an increase by 6.5 per cent compared to the levels of the previous year.1

1The average exchange rates were calculated based on the official FX exchange rates of the MNB. Source: http://www.mnb.hu/arfolyam-lekerdezes

3

RÁBA Plc's consolidated report for Q1 of 2021 in accord ance with the IFRS

Q1 2020

Q1 2021

Change

EURHUF - average

339.1

361.1

6.5%

EURHUF - end of period

359.1

363.7

1.3%

USDHUF - average

307.5

299.7

-2.5%

USDHUF - end of period

327.1

309.7

-5.3%

Changes in raw material prices*

107%

123%

14.6%

Changes in wage costs**

376.3

412.7

9.7%

Changes in energy prices**

211%

210%

-0.2%

* Rába indices -own calculation - base: 2007. Q1; a verage values for the period

**HCSO national average gross wage (th HUF/month) - based on average of months 01 and 02

*** Rába indices - own calculation - base: Dec. 200 4. Average values for the period

SUMMARY OF RESULTS DURING THE REVIEW PERIOD

Rába Axle Ltd.

The sales revenue of Rába Axle Ltd. in Q1 of 2021 a mounted to HUF 7.2 billion compared to HUF 6.6 billion achieved during the base period of 2020. This corresponds to an increase by 9.1 per cent.

On the American marketthe sales revenue in the reporting period was USD 1.0 million, compared to the USD 3.2 million in Q1 of 2020. This corresponds to a decrease of 68.8 per cent.

On the EU marketRába Axle Ltd's sales figures in HUF terms increase d by 33.3 per cent, amounting to HUF 5.8 billion, compared to HUF 4.3 billion during the base period.

European exportsin Q1 of 2021 exceeded the level of the same period a year earlier by 33.6 per cent, amounting to EUR 12.5 million, compared to EUR 9.4 million in Q1 of 2020. Sales figures were fundamentally influenced by the transfer of the production of the civilian applications of the Vehicle business unit from the Vehicle business unit to the activities of the Axle business unit, in consequence of the crisis measures implemented in 2020.

Domestic salesbefore consolidation amounted to HUF 1,237 million, which represents an increase by 9.5 per cent compared to the HUF 1,130 million of the base period.

On the CIS andEast-Europeanmarkets the export sales revenues achieved by Rába Axle Ltd. in Q1 of 2021 were 83.0 per cent lower than the base period in 2020, decreasing from EUR 2.4 million to EUR 0.4 million.

In the othermarkets. the sales revenue during the reporting period amounted to EUR 2.7 million, which was 107.7 per cent above the EUR 1.3 million turnover of the 2020 base period.

The operating result of the Company in Q1 of 2021 was a profit of HUF 195 million, compared to HUF 116 million in profits during the same period of the previous year.

At EBITDA level, the operating profit of the Axle business division was HUF 614 million compared to HUF 411 million registered a year earlier.

million HUF

Q1 2020

Q1 2021

Change

America

1 015

305

-70.0%

EU - export

3 195

4 531

41.8%

EU - domestic

1 130

1 237

9.5%

CIS

808

146

-81.9%

Other

444

959

116.0%

Total sales revenue

6 593

7 177

8.9%

EBITDA

411

614

49.4%

Operating profit

116

195

68.1%

.

4

RÁBA Plc's consolidated report for Q1 of 2021 in accord ance with the IFRS

Rába Automotive Components Ltd.

The sales revenue of Rába Automotive Components Ltd . amounted to HUF 4.1 billion in Q1 of 2021, which is an increase of 8.7 per cent compared to the base period.

Rába Automotive Components Ltd. generates a conside rable portion of its sales on the European market.

European exportsduring Q1 of 2021 amounted to EUR 5.1 million, which represents a decrease of 3.8 per cent compared to the EUR 5.3 million of the base period of 2020.

Domestic salesbefore consolidation amounted to HUF 2,252 million during the reporting period, which corresponds to an increase by 14.8 per cent compared to the sales revenue of HUF 1,961 million during Q1 of 2020.

The Company generated a profit of HUF 229 million at operating level during the reporting period compared to a profit of HUF 82 million in Q1 of 2020.

On the level of EBITDA, the loss of the Components business unit was HUF 337 million during the period, compared to the profit of HUF 199 million of the previous year.

million HUF

Q1 2020

Q1 2021

Change

EU - export

1 790

1 835

2.5%

EU - domestic

1 961

2 252

14.8%

Other

11

2

-81.8%

Total sales revenue

3 762

4 090

8.7%

EBITDA

199

337

69.3%

Operating profit

82

229

179.3%

Rába Vehicle Ltd.

The sales revenue of Rába Vehicle Ltd. in Q1 of 202 1 was below the figure of the base period by 51.6 per cent and decreased from HUF 1.8 billion to HUF 0.9 billion.

The sales figures of the Vehicle business unit were fundamentally influenced by the fact, that as a result of the crisis management measures introduced in 2020, the production of steel structures for civilian applications was transferred from the Vehicle business unit to the Axle business unit. A significant portion of the sales revenue of Rába Ve hicle Ltd. is generated on the domestic market.

European exportswere 100.0 per cent below than the level of the base period, thus declining from EUR 4.6 million to EUR 0.0 million.

Domestic salesbefore consolidation amounted to HUF 855 million in Q1 of 2021, representing an increase by 334.0 per cent.

The operating losses amounted to HUF 60 million during the reporting period compared to the losses of HUF 397 million during the base period last year.

On the level of EBITDA, in the reporting period, the Vehicle Business unit registered a loss of HUF 49 million compared to the loss of HUF 311 million in Q1 of 2020.

million HUF

Q1 2020

Q1 2021

Change

EU - export

1 567

0

-100.0%

EU - domestic

197

855

334.0%

Total sales revenue

1 764

854

-51.6%

EBITDA

-311

-49

84.2%

Operating profit

-397

-60

84.9%

The Rába Group

The consolidated sales revenue of the Rába Group in Q1 of 2021 amounted to HUF 11.4 billion, which is a decline by 4.0 per cent compared to the figure of HUF 11.9 billion reported for the base period Q1 of 2020.

5

Attachments

Disclaimer

RÁBA Jarmuipari Holding Nyrt. published this content on 19 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 May 2021 17:43:04 UTC.


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Sales 2020 38 754 M 119 M 119 M
Net income 2020 -1 030 M -3,16 M -3,16 M
Net Debt 2020 6 663 M 20,4 M 20,4 M
P/E ratio 2020 -19,4x
Yield 2020 -
Capitalization 18 227 M 55,8 M 55,9 M
EV / Sales 2019 0,47x
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Nbr of Employees 1 235
Free-Float 24,8%
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Managers and Directors
Bela Hetzmann Chief Executive Officer
Zoltan Varadi Chief Financial Officer
Istvan Lepsenyi Chairman-Supervisory Board
Zsolt Harmath Member-Supervisory Board
Sandor Jozsef Szabo Member-Supervisory Board