HELLA grows substantially and increases profitability
“The past fiscal year was very successful for HELLA”, says Dr Rolf Breidenbach, CEO of HELLA. “We achieved our targets: HELLA continued its growth significantly above market level and we also increased profitability.”
Growth driver Automotive
The Automotive business again benefited from strong automotive demand in financial year 2014/2015. External sales grew by 11% to € 4.4 billion (previous year: € 3.9 billion) and profits in this business rose to about € 354 million (previous year € 291 million). This continued growth was driven by market demand as well as several new product launches which included particularly headlamps with complex LED technology and electronic systems for driver assistance and energy management. The Aftermarket segment, which had been weak in the first half, increased external revenues by a total 5% to € 1.13 billion (previous year: € 1.08 billion) mainly on the back of wholesale activities in Denmark and Poland. Adjusted operating earnings decreased slightly to € 73 million (previous year: € 78 million). The Special Applications business was severely hit by weak agricultural demand in the past fiscal year particularly as a result of the Ukrainian crisis. External sales fell by 10% to about € 308 million (previous year: € 343 million), EBIT declined to € 19 million (previous year: € 28 million).
Focus on technology leadership
Research and development expenditures were again high in financial year 2014/2015 reaching € 544 million or 9.3% of sales (previous year: 9.6%). The number of employees working globally in research and development increased by 3 percent to over 6,000 over the reporting period. With its focus on research and development as a crucial element of its corporate strategy, HELLA is further strengthening its technology leadership.
“Technologically leading products are key to the HELLA strategy”, says Dr Breidenbach. “They create a competitive edge and at the same time build the foundation for our future growth.”
In the past financial year, development in the Lighting business division centred mainly on concepts that enable a comprehensive use of LED technologies across all vehicle segments. In Electronics, the main development focus was on technologies that help reduce CO2 emissions and a new generation of radar sensors for a 360 degree capture of the surroundings.
Adjusted EBIT margin increases
In the financial year, HELLA Group generated EBIT of € 430 million and a corresponding EBIT margin of 7.4% which was up 0.9 percentage points year on year. Adjusted by restructuring costs from the voluntary severance and phased retirement program which was initiated in the previous year, the adjusted EBIT increased to € 445 million and the operating margin by 0.1 percentage points to 7.6%.
Solid financial foundation
The reinvested profits and the 11% capital increase in connection with the IPO give HELLA a very solid financing structure. As at 31 May 2015, the equity ratio had grown substantially year on year to 39% (previous year: 30%). Adjusted for the high liquidity position of € 1 billion, the equity ratio is 49% (previous year: 39%).
“Sustainable growth requires long-term financing base”, says Dr Wolfgang Ollig, CFO. “Solid financing to provide an adequate scope for action therefore forms an integral part of our strategy.”
International network strategy successfully completed
Joint ventures with partners have been a key component of HELLA’s growth strategy for over 15 years and give the Company access to new markets. Overall, external sales of companies accounted at equity amounted to € 2.9 billion, the pro rata at-equity result reached € 55 million. The external sales are not included in Group sales.
On 13 August 2015, the Company concluded a purchase contract for the outstanding 50% of the shares in the wholesale activities (Inter-Team) in Poland. The acquisition is subject to approval by the antitrust authorities. This move strengthens the Aftermarket business and HELLA‘s strategic growth potential in Eastern European wholesaling.
Outlook for financial year 2015/2016
HELLA expects the positive business development to continue in the current financial year. Beyond strengthening its market position through technological leadership in key product areas and exploiting growth opportunities from global expansion, HELLA also expects to contribute to this development by improving its operating excellence.
For financial year 2015/2016, HELLA Group plans to grow sales and EBIT in the middle to high single-digit percentage range.