STS Group AG publishes its 2022 half-year report – Positive development in Europe overshadowed by corona-related decline in China

DGAP-News: STS Group AG / Key word(s): Half-year report

STS Group AG publishes its 2022 half-year report – Positive development in Europe overshadowed by corona-related decline in China

08.08.2022 / 07:30
The issuer is solely responsible for the content of this announcement.

STS Group AG publishes its 2022 half-year report – Positive development in Europe overshadowed by corona-related decline in China

  • Turnover down to EUR117.4m (H1/2021: EUR134.8m) in a still difficult market environment
  • The coronavirus-related revenue decline in China of around 70.6% in the first half of 2022 cannot be fully offset by revenue growth in Europe (+25.0%)
  • EBITDA drops to EUR2.9m (H1/2021: EUR13.8m)
  • Cash and cash equivalents increased to EUR30.5m (31 December 2021: EUR28.3m)
  • Forecasts for 2022 still characterized by market developments that are generally difficult to predict

Hagen, August 8, 2022 – STS Group AG (ISIN: DE000A1TNU68), a global systems provider for the automotive industry listed on the General Standard of the Frankfurt Stock Exchange, today publishes its 2022 half-year report.

Alberto Buniato, CEO of STS Group AG: “The business development of STS Group in the first half of 2022 was characterized by a corona-related demand shutdown in the core market of China. On the other hand, the Plastics and Materials activity in Europe developed positively. with an increase in turnover of approximately 25%. In addition, we were able to create synergies for our activities in Mexico with our new strategic investor, the Adler Pelzer Group. Despite the imponderables of a currently difficult to predict market environment, we remain optimistic about our long-term strategic growth trend. Despite the temporary setback, we are fundamentally positive about China and over the reporting period we have kept our structures in place for the expected ramp-up of the customer call market in the second half of the year so that we can quickly adjust the capacities. We also continue to work with great intensity on expanding the business in the North American market, which also offers our Group real potential for future growth.”

Revenue development

STS Group AG generated a turnover of 117.4 mEUR during the period from 1 January to 30 June 2022, compared to 134.8 mEUR during the same period of the previous year. The 12.9% decline is mainly due to the drastic halt in demand in China in the first half due to the ongoing zero-COVID policy and associated lockdowns. The revenue decline in the China segment amounted to 70.6% during the reporting period. However, revenue growth in the Plastics and Materials segments could not fully offset this decline. Nevertheless, the business in Europe and at the site in Mexico was able to regain new momentum in demand after the COVID-related crisis in fiscal year 2020. In addition, revenue from the European business returned for the first times at the level before the 2019 crisis.

Evolution of results

Due to the omission of the profit contribution from China, the Group’s earnings before interest, tax, depreciation and amortization (EBITDA) fell to EUR2.9m in the first half, compared to EUR13.8m in the same period of the previous year. In addition, improved margins in the Plastics and Materials segments were offset by higher material costs, which could not yet be fully compensated and therefore weighed on profitability during the reporting period. Adjusted for restructuring-related special effects, Adjusted EBITDA fell to EUR3.1m in the first half (H1/2021: EUR13.9m). STS Group AG published a consolidated result of -6.3 mEUR in the first half of 2022 (H1/2021: 3.8 mEUR).

Balance sheet

Due to the negative consolidated result, shareholders’ equity decreased to 53.7 mEUR on 30 June 2022, compared to 58.3 mEUR on the balance sheet date 2021. This corresponds to an equity ratio of 24.0% (31 December 2021: 29.2%). Cash and cash equivalents increased to EUR30.5m as of June 30, 2022 (December 31, 2021: EUR28.3m). During the six months under review, STS Group generated a positive net cash flow from operating activities of 7.4 mEUR compared to 17.1 mEUR the previous year. The decrease in the evolution of operating cash flow compared to the same period of the previous year is mainly characterized by the negative consolidated result and the variation in net working capital. The change in the net working capital requirement is due to the constitution of stocks to secure price quality and delivery times on the supply side. The Group’s net financial debt increased slightly by EUR3.0m to EUR15.2m as of June 30, 2022 (December 31, 2021: EUR12.2m). The increase in this item is mainly due to new bank loans in China. On the other hand, the increase in cash and cash equivalents as of June 30, 2022 had a positive effect.

Forecast 2022

The evolution of the STS Group’s activity in the first half of the year is largely in line with expectations regarding the 2022 objectives communicated in the annual report. Developments over the rest of the year continue to be characterized by a market environment that is generally difficult to predict. The forecast communicated in the 2021 annual report therefore remains unchanged. If there is no dramatic escalation and expansion of the war and no halt in raw material deliveries, the management board expects a slight decline in sales for the financial year 2022 by compared to the previous year. If the situation worsens, the decline may be more pronounced. Minor special charges are expected for fiscal 2022, so Adjusted EBITDA will be roughly in line with EBITDA.

The 2022 half-year report of STS Group AG is available for download at https://www.sts.group/investor-relations/publications.

Key figures for the first half of 2022

in millions of euros
S1/2022 S1/2021
Sales income 117.4 134.8
Plastics Division 89.6 71.7
China Segment 15.4 52.3
Materials Division 18.4 14.4
Company/Consolidation -6.0 -3.7
EBITDA 2.9 13.8
Adjusted EBITDA 3.1 13.9
Plastics Division 3.5 0.3
China Segment -0.2 13.4
Materials Division 0.3 -0.1
Company/Consolidation -0.7 0.1
Adjusted EBITDA 3.1 13.9
Adjusted EBITDA margin 2.6% 10.3%
30.06.2022 31.12.2021
Group equity 53.7 58.3
Group equity ratio 24.0% 29.2%
Cash and cash equivalents
(available for free)
30.5 28.3
Net financial debt 15.2 12.2

About STS Group:

STS Group AG, www.sts.group (ISIN: DE000A1TNU68), is a leading systems supplier to the automotive industry. It employs more than 1,500 people worldwide and generated sales of EUR242.0m in fiscal year 2021. STS Group (“STS”) produces and develops in its twelve factories and three centers of development in France, Germany, Mexico, China and, in the future, also in the USA plastic injection molding and components made of composite materials (Sheet Molding Compound – SMC), such as vehicle trim and strong and flexible aerodynamics, complete interior systems, as well as lightweight construction and battery components for electric vehicles. STS is considered a technology leader in the manufacture of plastic injection molding and composite material components. STS has a broad global presence with factories on three continents. The customer portfolio includes major international manufacturers of commercial vehicles, passenger cars and electric vehicles.

STS Group SA
Investor Relations
Kabeler Str.
458099 Hagen
ir@sts.group
www.sts.group

08.08.2022 Broadcast of a Corporate News, transmitted by the DGAP – a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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Mary I. Bruner