HWA AG: Significant One-Off Charges in 2019, Positive Outlook for 2020
Feb 04, 2020
In connection with the joint venture VYNAMIC GmbH and the termination of the associated DTM engagement, all related effects must be reflected in the 2019 financial statements. This has substantial consequences for earnings and is expected to result in negative EBIT of approximately EUR 9 million for 2019.
The burdens affecting 2019 include a one-off impairment charge of EUR 3.9 million, which had already been recognized in the figures for the first half of 2019. The impairment was related to HWA AG’s investment in the joint venture VYNAMIC GmbH, which was not consolidated in the Group financial statements.
VYNAMIC failed to meet the high expectations originally held by HWA AG’s Management Board, resulting in a full write-down of the investment.
In connection with the joint venture and HWA AG’s activities relating to the DTM project in 2019, the Company incurred costs that, according to the current status, will not be compensated by the DTM partners. Consequently, HWA AG is bearing the losses incurred from the DTM project on its own, amounting to a low double-digit million euro figure overall.
The Management Board of HWA AG is pursuing claims for damages against the partners involved in the DTM engagement. However, recognition of these claims as assets is currently not planned, which is why EBIT for 2019 will be significantly negative.
All effects relating to the DTM chapter will be fully reflected in the 2019 financial statements. No further negative effects are expected for 2020. A reversal of impairment remains possible at any time.
The core operating business of HWA AG continues to perform positively.
Within the Motorsport segment, the Company's involvement in the Formula E racing series is proving successful. HWA AG’s activities in the FIA Formula 2 and FIA Formula 3 Championships also developed positively.
The Company continues to achieve growth in the Vehicles/Vehicle Components segment, where business performance remains consistently strong.
For 2020, the Management Board expects revenue of approximately EUR 90 million. The decline in revenue compared to 2019 is primarily attributable to the discontinuation of the DTM business and the cooperation with VYNAMIC GmbH.
On the cost side, HWA AG expects substantial relief in 2020 due to the discontinuation of these activities. Nevertheless, in response to the losses incurred in 2019, the Management Board will implement a general cost-reduction program.
Based on the expected business development in its two operating segments, HWA AG anticipates positive EBIT of approximately EUR 5 million for 2020. This EBIT forecast does not include any potential recovery of value from the DTM-related activities.
Due to the losses incurred in 2019, the Management Board of HWA AG will not propose a dividend to this year’s Annual General Meeting.
Contact:
Investor Relations
HWA AG
Marc Schimmelpfennig
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° 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.