Johnson Electric reports Business and Unaudited Financial Information for the First Quarter of Financial Year 2019/20

HONG
KONG,CHINA – Media OutReach – 10 July 2019 – This news release is made by Johnson Electric
Holdings Limited (“Johnson Electric” or the “Company”, and together with its
subsidiaries, the “Group”) for the business operations and selected unaudited
financial information of the Company for the quarter ended 30 June 2019.

 

The Board of Directors (the
“Board”) of the Company considers the publication of quarterly sales
performance updates to be consistent with international corporate disclosure
best practice. The objective of this news release is to provide transparency
and to ensure that investors and potential investors receive equal access to
the same information at the same time.

 

The Group’s sales for the
quarter ended 30 June 2019 were US$767 million compared to US$872 million for
the same quarter in 2018, a decrease of 12%. Excluding currency movements,
sales decreased by 9% to US$794 million.

 

Foreign exchange rate
movements had a negative effect of US$27 million on the Group’s sales during
the quarter. This was mainly due to the impact of the weaker Euro and Chinese
Renminbi against the US Dollar, comparing average exchange rates for the
quarter ended 30 June 2019 to the same quarter last year.

 

While it is not the
Company’s standard practice to comment on the outlook for profit in its
quarterly sales and business updates, the Board wishes to inform the
shareholders of the Company and potential investors that, based on the
information currently available to the Company concerning prevailing sales
trends and the assessment of the unaudited management financial statements of
the Group for the first quarter of the financial year, the Board anticipates
that the Group’s unaudited profit attributable to shareholders for the six
months ending 30 September 2019 will be substantially lower than the figures
for the six months ended 30 September 2018.

 

Sales of Automotive Products Group (“APG”)

 

The global automotive
industry is presently experiencing a significant decline in light vehicle
production volumes in all major regions of the world, led by China. Sales of
our Automotive Products Group in the first quarter of the financial year
decreased by US$71 million or 10% compared to the same quarter in 2018.  Excluding currency effects, APG’s sales
decreased by US$47 million or 7%, with the following sales changes by region:

 

• Asia decreased 15%
• Europe decreased 8%
• Americas increased 5%

 

In Asia and Europe, APG’s
sales decreased across most application segments due to reduced light vehicle
production as well as the shift away from diesel vehicles which for some
product applications the Company has an above average market share. This was
partly offset by increased sales in the Americas due to rising demand for
brushless powertrain cooling products, with other application segments in the
region remaining flat, despite a decline in light vehicle production in the
region.

 

Sales of Industry Products Group
(“IPG”)

 

Sales of our Industry
Products Group decreased by US$34 million or 17% compared to the same quarter
in 2018. Excluding currency effects, IPG’s sales decreased by US$31 million or
16%, with the following sales changes by region:

 

• Asia decreased 19%
• Europe decreased 11%
• Americas decreased 18%

 

IPG’s sales decreased across
all regions reflecting low business and consumer confidence in many end market
segments that is resulting in deferred investment decisions and delayed
consumer purchases. Although the proportion of Johnson Electric’s sales that
are directly subject to US tariffs remain comparatively small as a share of
total Group sales, these sales have declined compared to the prior year.

 

Chairman’s Comments on Year-to-Date
Sales Performance and Outlook

 

Concerning the first
quarter’s sales performance, the Chairman and Chief Executive, Dr. Patrick
Shui-Chung Wang, said, “Global trade and manufacturing activity in 2019
continues to be weak compared to the prior year.  Production volumes in the global automotive
sector in the first quarter of our 2019/20 financial year are significantly
below those of a year ago — with the China market remaining especially
depressed.  Demand in several other
consumer and industrial end markets are also being negatively impacted by
rising tariff barriers and geopolitical uncertainties that are holding back
investment and damaging consumer confidence”.

 

“The Group’s weak sales
performance in the first three months of the financial year directly reflect
these end market conditions and sales orders for July and August remain below
the levels of the prior year”.

 

“Given the uncertain
prospects for improved trade relations between the US and China as well as the
exceptionally sharp contraction in the domestic automotive market in China, it
remains difficult to predict how quickly demand will recover.  Notwithstanding this tough operating
environment, the business continues to make progress in executing its key
strategic initiatives and I am confident that Johnson Electric is well positioned
to resume a positive growth trajectory once markets stabilize”.

 

Cautionary
Statement

 

Shareholders and potential
investors in the Company are reminded that the information provided in this
news release, including information related to the expected outlook for the half-year
and full year, is based on the Group’s unaudited internal records and
management accounts. This information has not been reviewed or audited by the
Company’s auditors.

 

Shareholders
and potential investors should exercise caution when dealing or investing in
the shares of the Company.

About Johnson Electric Group

The Johnson Electric Group is a
global leader in electric motors, actuators, motion subsystems and related
electro-mechanical components. It serves a broad range of industries including
Automotive, Smart Metering, Medical Devices, Business Equipment, Home Automation,
Ventilation, White Goods, Power Tools, and Lawn & Garden Equipment. The
Group is headquartered in Hong Kong and employs over 38,000 individuals in 23
countries worldwide.  Johnson Electric
Holdings Limited is listed on The Stock Exchange of Hong Kong Limited (Stock
Code: 179). For further information, please visit: www.johnsonelectric.com.