Beru Registers Slight Revenue Growth in H1 2007

German vehicle engine technology and TPMS producer Beru Aktiengesellschaft has reported sales revenues of 224.2 million euros in the first half of 2007, despite what it calls ‘unfavourable market conditions.’ This first half sales figure was reflected slight sales growth, being 0.5 per cent higher than the 223.0 million euros achieved in the first half of 2006. The company credits strong growth in its Electronics and Sensor Technology and Ignition Technology divisions for the latest results.

Half year operating profit (EBIT) of 24.4 million euros represents an operating margin of 10.9 per cent, lower than the H1 2006 EBIT of 30.9 million euros and EBIT margin of 13.9 per cent. Net profit for the period amounted to 18.5 million euros, slightly lower than last year (20.8 million euros). First half earnings per share amounted to 1.80 euros, down from 2.06 euros in H1 2006.

Beru reports an expanding OE auto industry during the first half of the year and sales in this segment increasing by 3.0 per cent to 154.5 million euros. Sales revenues in the high-margin aftermarket segment decreased by 4.7 per cent to 56.3 million euros, an occurrence attributed to mild winter weather in the first quarter of the year. Although sales revenues stabilised in the second quarter of 2007, they were still lower than projected.

The company’s divisions delivered mixed results. Sales revenues for Beru’s Diesel Cold-Start Technology division decreased to 82.6 million euros in the first half of this year, from 95.7 million euros during the first half of 2006, a decline brought about by the weak aftermarket business as well as ongoing price pressures and intense competition. However sales revenues are tipped to rise again as of 2009 due to the worldwide trend towards diesel engines and the launch of new products such as the pressure-sensor glow plug (PSG) and the ceramic glow plug.

Despite declining unit sales of petrol engine cars in Western Europe, the Ignition Technology division displayed growth in the first half of 2007. Its sales revenues increased by 6.9 per cent to 65.2 million euros, primarily due to the significant increase in unit sales of ignition coils.

However the Beru division showing the strongest growth continued to be its Electronics and Sensor Technology, which generated sales revenues of 76.4 million euros, an increase of 15.2 per cent compared with the prior-year period. This growth was above all due to a more than 80 per cent increase in sales revenues for the Beru TSS tyre-pressure monitoring system. Significant revenue growth is also anticipated in this area in the second half of the year.

“Despite the currently difficult market environment, we continue to assume that the Group’s sales revenues will grow at a low single-digit rate in 2007 and that we will achieve earnings before interest and taxes of 47-50 million euros in full-year 2007. However, our net profit will not equal the high level of last year”, stated CFO Marcus Knödler.

The high level of net profit in the prior-year period was partially caused by a 7.0 million euro tax gain from the capitalisation of corporate income-tax credits. Beru expects 2008 to be another year of consolidation, while the launch of new products and new orders is anticipated to lead to stronger growth from 2009 onwards.