HWA AG REPORTS ON BUSINESS PERFORMANCE IN THE FIRST HALF OF 2019
Oct 24, 2019
Affalterbach, October 24, 2019 – HWA AG achieved dynamic revenue growth in the first half of 2019. Revenue increased to EUR 67.9 million, compared to EUR 55.1 million in the corresponding period of the previous year.
EBIT for the first half of 2019 amounted to negative EUR 0.3 million, compared to positive EBIT of EUR 2.2 million in the prior-year period. After the first six months of the year, HWA AG is ahead of plan in terms of revenue but below its own expectations regarding earnings.
The EBIT result for the first half of 2019 was significantly affected by a one-off impairment charge of EUR 3.9 million. Excluding this non-recurring effect, EBIT would have been clearly positive.
The impairment relates to HWA AG’s investment in the joint venture Vynamic GmbH, which is not consolidated in HWA AG’s consolidated financial statements. To date, Vynamic has failed to meet the high expectations of HWA AG’s Management Board, which led to the write-down of the investment. HWA AG nevertheless remains committed to making Vynamic successful and is currently evaluating all strategic options for the joint venture.
Independent of Vynamic’s development, HWA AG’s operating business continues to perform positively.
Within the Motorsport segment, the Company generated significant revenue from Formula E activities for the first time. In the upcoming season, HWA will compete in Formula E together with Mercedes-Benz EQ.
The Company’s involvement with its own team in the FIA Formula 3 Championship and through a cooperation in the FIA Formula 2 Championship also developed positively. For the 2020 season, HWA will take over the Arden Formula 2 team and operate it independently. Preparations are also underway for participation in Extreme E.
Additional revenue was generated through development and engineering services provided to Vynamic and its DTM activities.
As in previous years, particularly strong growth was achieved in the Vehicles/Vehicle Components segment. Business performance continues to be driven by deliveries of the Mercedes-AMG GT3 and Mercedes-AMG GT4. The successful cooperation with Mercedes-AMG is being continued through another project, the Mercedes-AMG GT3 Evo.
For 2019, HWA AG had anticipated a slight increase in Group revenue. Based on current expectations, the Company will at least achieve the previous year’s high revenue level. Due to the expected non-consolidation of Vynamic, no additional revenue contribution from the joint venture will be recognized.
As planned, Group EBIT for 2019 is expected to be significantly below the previous year’s level but remain positive. On the basis of the parent company financial statements, EBIT adjusted for the Vynamic impairment charge is expected to improve slightly compared to the previous year.
In December 2018, the Management Board announced a number of capital measures. During the first half of 2019, a cash capital increase with a volume of EUR 7.1 million was successfully completed. The shares were subscribed by companies controlled by Supervisory Board members Hans Werner Aufrecht and Willibald Dörflinger at a price of EUR 13.87 per share.
In addition, the Management Board had planned a further cash capital increase of up to 20% of the share capital in 2019. The implementation of this measure is currently under final review. As an alternative, the issuance of a convertible bond or a corporate bond remains an option.
The additional funds are intended to finance further growth, particularly within the Vehicles/Vehicle Components segment and especially for projects relating to alternative powertrain technologies.
Following extensive but ultimately unsuccessful negotiations regarding future cooperation, the DTM engagement of R-Motorsport and HWA AG will end after the conclusion of the 2019 DTM season.
While the cooperation in DTM will cease, this does not affect collaboration in other areas of the automotive sector. Discussions are currently ongoing regarding future projects between AF Racing AG and HWA AG.
Contact:
Investor Relations / Press
HWA AG
Volker Glaser
Benzstraße 8
71563 Affalterbach
Germany
Phone: +49 (0) 7144 8717-279
Fax: +49 (0) 7144 8718-111
E-mail: ir@hwaag.com
Company Profile of HWA AG
HWA AG is an independent 360-degree engineering specialist in the fields of motorsport and high-performance vehicles. Founded in 1998 by Hans Werner Aufrecht, the company is headquartered in Affalterbach, Germany, and currently employs around 300 highly qualified professionals.
All products and services of HWA AG are guided by the principle ENGINEERING SPEED. The company’s mission is to develop the highest-quality and most effective solutions to help its partners and customers achieve their goals faster. The service portfolio ranges from the design and engineering of all vehicle components to the development and production of complete vehicles, complemented by logistics, aftersales and support services.