SOURCE: Johnson Electric

Johnson Electric

May 17, 2016 05:44 ET

Johnson Electric Results for the Year Ended 31 March 2016

HONG KONG, CHINA--(Marketwired - May 17, 2016) - Highlights of 2015/16 Results

  • For the financial year ended 31 March 2016, total sales amounted to US$2,236 million -- an increase of 5% compared to the prior financial year. Excluding the effects of acquisition and foreign currency movements, underlying sales increased by 2%

  • EBITDA totalled US$322 million -- a decline of 4%

  • Operating profits decreased by 15% to US$207 million. Excluding non-recurring acquisition transaction costs, operating profits decreased by 10% to US$220 million or 9.8% of sales

  • Net profit attributable to shareholders totalled US$173 million -- down 18%. Underlying net profit, excluding the effect of acquisitions, declined by 15% to US$180 million

  • Basic earnings per share were 20.09 US cents (FY2014/15: 24.11 US cents)

  • As of 31 March 2016, cash reserves amounted to US$193 million and the Group's total debt to capital (total equity + total debt) ratio was 18%

Johnson Electric Holdings Limited ("Johnson Electric") (HKSE: 179), a global leader in electric motors and motion subsystems, today announced its results for the year ended 31 March 2016.

Group sales for the 2015/16 financial year totalled US$2,236 million -- an increase of 5% compared to the prior financial year. Excluding the effects of acquisitions and foreign currency movements, underlying sales increased by 2%. Net profit attributable to shareholders totalled US$173 million -- down 18%. Underlying net profit, excluding the effect of acquisitions, declined by 15% to US$180 million.

Sales Performance

The sales performance of the Group during the year was rather mixed and, as in recent prior years, was negatively impacted by the strength of the US Dollar compared to a number of foreign currencies in which Johnson Electric derives a portion of its sales, notably the Euro, the RMB and -- subsequent to the acquisition of Stackpole International -- the Canadian Dollar.

Total Group sales amounted to US$2,236 million, an increase of 5% compared to the prior financial year. This figure included five months sales contribution from Stackpole International totalling US$182 million. Excluding that acquisition and the impact of foreign exchange rate movements, which negatively affected sales on translation by US$117 million, underlying total sales increased by 2%.

The Automotive Products Group ("APG"), the largest operating division, achieved sales of US$1,605 million including Stackpole International. Excluding the acquisition and currency movements, APG's sales increased by 5% -- a creditable performance in the context of a weak global economy.

APG achieved solid sales growth in constant currency terms in each of the three major geographic regions. In Europe, where passenger car sales volumes reached a six-year high in 2015, we experienced strong demand for our market leading technology in engine and transmission management applications and in headlamp and HVAC actuators. In Asia, APG continues to perform particularly well in the powertrain cooling fan module segment despite the recent slowdown in demand growth in China. And in North America, which prior to the acquisition of Stackpole International, has been APG's smallest market in terms of direct sales, our actuator systems business unit was also a standout performer.

The Industry Products Group ("IPG") reported a 7% decrease in sales (down 5% in constant currency terms) to US$631 million. This disappointing result reversed a trend of modestly improving sales seen in the prior year and reflected intense price competition in lower-end motor product applications and generally lack-lustre demand in many industrial and consumer markets. As a consequence, management and organisational changes have been implemented in IPG with the intention of reducing costs and focusing resources on market segments where Johnson Electric is advantaged through differentiated motion subsystems technology.

Resilient Profitability and Sustained Balance Sheet Strength

On the cost side, the business benefited from lower raw material expenses and significant productivity improvements. However, these were more than offset by higher wage rates and the effects of reduced sales revenue on translation into US Dollars set against relatively fixed production and administrative overheads. The ongoing investment in building out our manufacturing footprint in Mexico and Eastern Europe is also acting as a drag on near term profitability. And lastly, operating profits were reduced by higher amortisation of intangibles and US$12.4 million in non-recurring transaction expenses related to recent and pending acquisitions.

The Group's use of forward foreign currency contracts in the normal course of business along with higher Other Income & Gains helped to mitigate some of the negative impact of the above factors. As a result, operating profit was US$207 million or 9.3% of sales (9.8% of sales excluding non-recurring transaction expenses).

Johnson Electric's overall financial condition remains strong. As of 31 March 2016, cash reserves amounted to US$193 million and the total debt to capital ratio was 18%.

New Acquisitions set to Accelerate Growth

During the year, Johnson Electric undertook two significant strategic initiatives to expand the scope of the business which are set to strengthen further our competitive position and our growth prospects.

In October 2015, the Group completed the acquisition of Stackpole International, a leading manufacturer of highly-engineered automotive engine and transmission pumps and powder metal components. Improving fuel economy and reducing emissions are pivotal drivers of automotive technology today -- and Johnson Electric is a market leader in supplying key motion subsystems to support these imperatives. The addition of Stackpole's pumps technology and powder metal expertise is an excellent fit that will enable the Group to provide integrated motorised pumps to customers in a rapidly growing market for electrically controlled solutions. The acquisition also materially increases Johnson Electric's overall exposure to the North American economy with the effect that the Group's total sales base is now essentially equally divided between Asia, Europe and the Americas.

In February 2016, the Group announced that it had signed a binding offer to acquire AML Systems, a leading supplier of active modules for vehicle headlamp systems. AML's strength in headlamp levellers perfectly complements Johnson Electric's strength in headlamp actuators and the combined business is set to be a world leader in a growing market segment driven by demand for lighting solutions that improve visibility and enhance safety for drivers and other road users. Following the receipt of customary regulatory approvals, the acquisition of AML is expected to be completed in May 2016.

Dividends

The interim dividend paid in January 2016 increased by 7% compared to the prior year to 15 HK cents per share. For the final dividend, taking into account the uncertain prevailing operating environment, the Board considers it prudent to recommend maintaining the prior year's figure of 34 HK cents per share.

Chairman's Comments on Results and Outlook

Commenting on the full year results, Dr. Patrick Wang, Chairman and Chief Executive, said, "Johnson Electric's results for the financial year 2015/16 reflected a difficult macro-economic environment, unfavourable foreign exchange rate movements and non-recurring acquisition transaction expenses. Although net income, as previously projected, declined from last year's record levels, the underlying operating performance of the business remained solid and our financial condition continues to be healthy."

Concerning the outlook for business, Dr. Wang commented, "Despite the rather gloomy macro-economic picture, I do see reasonable grounds to be upbeat about Johnson Electric's own growth trajectory. In the short term, we can expect to see the Company's revenue and earnings base in the 2016/17 financial year benefit from a full year contribution from Stackpole International and approximately ten months of contribution from AML Systems -- and without the level of acquisition-specific transaction expenses incurred in the year under review."

"In the medium term, we are winning major new product program awards, especially with large automotive OEM and Tier 1 customers, which in this industry can typically take between two to five years before sales ramp up to full production volumes. In IPG, we are also moving to enter into longer term supply agreements with some customers based on our ability to offer innovative new technology and a genuinely global manufacturing capability."

"As always in business, we need to adapt and evolve in order to prosper. The product mix and price paths of much of the new business we are booking will require changes to our business model to ensure we deliver what our customers need in terms of cost competitiveness and what our shareholders expect in terms of profitability. This will require more standardisation and automation in our production processes, further investments in infrastructure to support multiple new product launches across multiple geographies, and renewed focus on right-sizing and reducing overheads. Getting these strategic imperatives right is essential to the Group's long term success -- and our Board and management team are committed to making it happen."

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About Johnson Electric Group

The Johnson Electric Group is the global leader in electric motors and motion subsystems. It serves a broad range of industries including automotive, building automation and security, business machines, food and beverage equipment, home technologies, HVAC, industrial equipment, medical devices, personal care, power equipment and power tools. The Group is headquartered in Hong Kong and the total global headcount stands at 38,000 individuals located in Asia, the Americas and Europe. Innovation and product design centres are located in Hong Kong, China, Canada, Switzerland, Germany, Italy, Israel, Japan, the UK and the USA. Johnson Electric Holdings Limited is listed on The Stock Exchange of Hong Kong Limited (HKSE: 179). For further information, please visit: www.johnsonelectric.com.

 
JOHNSON ELECTRIC HOLDINGS LIMITED
CONSOLIDATED INCOME STATEMENT
 
    For the year ended 31 March  
    2016     2015        
    US$ Million     US$ Million     % change  
                   
Sales   2,235.9     2,136.1     5 %
                   
Cost of goods sold   (1,646.4 )   (1,503.7 )      
                   
Gross profit   589.5     632.4     (7 %)
                   
Other income and gains, net   28.5     17.9        
                   
Selling and administrative expenses, excluding nonrecurring items   (398.4 )   (407.5 )      
                   
Operating profit, excluding non-                  
recurring items   219.6     242.8     (10 %)
                   
Nonrecurring items: Acquisition transaction costs   (12.4 )   -        
                   
Operating profit   207.2     242.8     (15 %)
                   
Finance (costs) / income, net   (3.2 )   5.5        
                   
Share of profit of associates   2.6     0.7        
                   
Profit before income tax   206.6     249.0     (17 %)
                   
Income tax expense   (23.9 )   (29.2 )      
                   
Profit for the year   182.7     219.8     (17 %)
                   
Non-controlling interests   (10.0 )   (8.9 )      
                   
Profit attributable to shareholders   172.7     210.9     (18 %)
                   
                   
Basic earnings per share (in US cents)   20.09     24.11     (17 %)
Diluted earnings per share (in US cents)   19.75     23.60     (16 %)
                   

Note to Editors and Securities Analysts: The full text of the 2015/16 Annual Results announcement, including additional financial information, is available through the Investor Relations section of company's website at www.johnsonelectric.com 

Contact Information

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