Affalterbach, 28 April 2017 – HWA AG generated sales of EUR 97.4 million in the 2016 financial year, representing a year-on-year increase of almost 17%. The significant increase in sales is attributable particularly to the vehicles and vehicle components business unit. The delivery of the Mercedes-AMG GT3 made a significant contribution to sales growth. This follow-up project to the Mercedes-Benz SLS AMG GT3 marks the continuing cooperation with Mercedes-AMG GmbH in customer sport. In the motor racing business unit (DTM and Formula 3 engines), a slight increase in sales was achieved in 2016. HWA AG also generated sales with new customers. Overall, the sales level represented a record figure for HWA AG that exceeded the Management Board’s expectations. The total operating performance for 2016 amounted to EUR 100.4 million.
The development of HWA AG’s earnings in the 2016 financial year was unsatisfactory. On 12 December 2016, the company indicated in an ad-hoc disclosure that the target of an EBIT margin between 4% and 6% could no longer be achieved. HWA AG generated adjusted EBIT of EUR 2.0 million in 2016. This corresponds to an adjusted EBIT margin of around 2%. The reasons for the weaker operating performance mainly related to the vehicles and vehicle components business unit. In this segment, planned projects for 2016 were not fully processed as they were postponed until 2017. The income statement was also negatively impacted by an overly high level of vertical integration.
Owing to the unsatisfactory results and uncompetitive cost structure, the Management Board of HWA AG adopted a programme to optimise and realign individual areas. The reorganisation concept included a significant reduction of internal capacity and employment options that has already been implemented with legal effect and will be fully completed by September 2017. Provisions totalling EUR 1.8 million were recognised for this purpose in 2016. Including this negative one-time effect, reported EBIT for 2016 amounted to EUR 0.2 million. In the previous year, HWA AG had generated EBIT of EUR 5.1 million. As a result of the negative one-time effect, the company closed 2016 with a net loss for the year of EUR 0.3 million as compared to a net profit for the year of EUR 3.4 million in 2015.
Based on HWA AG’s dividend policy of paying out around 50% of the annual profit to the company’s shareholders, the Management Board and the Supervisory Board of HWA AG have decided not to propose any dividend to the Annual General Meeting for 2016 and thus to suspend the dividend payment, as the result for 2016 was negative.
The top priority for HWA AG in 2017 is to return to profitability. The focus is therefore on the development of margins and the implementation of the optimisation and realignment concept, which was communicated by HWA AG on 31 January 2017. At the heart of the concept is the greater concentration of the company’s activities on its core competencies, which the Management Board has defined in development services, the deployment, testing and construction of racing vehicles, after sales and services in motor and customer sport. Due to the reduction of internal capacity implemented in line with planning, the necessary personnel requirements have already been established for the significant decrease in vertical integration that has also been resolved and for the planned increase in outsourcing.
In the motor racing (DTM) business unit, the sales volume will decrease significantly in 2017 in line with planning. The decrease is chiefly due to cost savings on the part of the manufacturers for this series. All three manufacturers are endeavouring to reduce their costs for the DTM, including by means of changes in regulations and by using standard components, and this will be clearly reflected in HWA AG’s sales volume for the first time in 2017. However, the planned decrease in sales will not be fully reflected in the earnings contribution, as the company has reacted to this development in good time. In the vehicles and vehicle components business unit, the sales volume will stabilise at a high level after very strong growth in the past two years. The successful development in the vehicles and vehicle components business unit will continue.
In line with planning, the Management Board of HWA AG anticipates a decline in its total operating performance to between EUR 80 million and EUR 85 million in 2017. With regard to the EBIT margin, the management is somewhat more cautious in its calculations and anticipates a level of at least 2.5%. The goal is to close 2017 with positive earnings and resume dividend payments.
HWA AG will publish the annual financial statements for 2016 in May 2017.
71563 Affalterbach, Germany
Tel.: + 49/ (0) 7144/ 8717- 279
Fax: + 49/ (0) 7144/ 8718- 111
HWA AG profile:
Top performance and determination to win – that is the philosophy of HWA AG. The team has been active in international motorsport for nearly five decades and is one of the most successful teams of all time. As a sought-after development partner, HWA AG bundles its expertise for more victories on the racetrack.
HWA AG has existed in its current form since 1998. Hans Werner Aufrecht founded AMG, the customisation specialist for the Mercedes-Benz brand, in 1967. At the end of 1998, Aufrecht sold the original AMG Motorenbau- und Entwicklungsgesellschaft mbH to Daimler AG. As part of this sale, the motor racing business units, today’s Mercedes-AMG DTM team and parts of the vehicles/vehicle components unit were spun off and transferred to HWA AG. At the end of 2006, the company was converted from a limited liability company to a stock corporation; HWA AG was floated on the stock market in April 2007.
Today, HWA AG’s motor racing segment is responsible for the popular DTM touring car racing series. On behalf of Mercedes-Benz Motorsport, HWA AG takes on all activities as a full-service provider, including the development and construction of Mercedes-Benz DTM racing cars and the operation of the racing team. The vehicles/vehicle components business unit includes the development and production of vehicles and components for automotive manufacturers in the premium segment. HWA AG has further expertise in the development, manufacture and servicing of Formula 3 racing engines. The GT3 racing version of the Mercedes-Benz SLS AMG was developed and produced by HWA AG in close cooperation with Mercedes-AMG. The follow-up project, the new Mercedes-AMG GT3, has been delivered to customer teams all over the world since December 2015.