News

Johnson Electric reports increase in sales and net income for the year ended 31 March 2019

Highlights of FY2018/19
Results

  • For
    the financial year ended 31 March 2019, total sales amounted to US$3,280
    million -- an increase of 1% compared to the prior financial year. Excluding the
    effects of acquisition and foreign currency movements, underlying sales
    increased by 2%
  • EBITDA
    totalled US$549 million -- an increase of 6%
  • Operating
    profits increased by 3% to US$344 million or 10.5% of sales (compared to 10.4%
    of sales in FY17/18)  
  • Net
    profit attributable to shareholders increased by 7% to US$281 million (or 31.60
    US cents per share on a fully diluted basis). Underlying net profit, which
    excludes the net impact of non-cash foreign currency-related gains/losses and a
    prior year non-cash gain on an acquisition, decreased by 10% to US$243 million
  • Capital
    expenditure totalled US$391 million -- up 28%, reflecting major investments in
    advanced automation, technology and manufacturing footprint expansion
  • As
    of 31 March 2019, cash reserves amounted to US$340 million and the Group's
    ratio of total debt to EBITDA was 1.2 times

HONG
KONG,CHINA - Media OutReach - 16th May 2019 - Johnson Electric Holdings Limited ("Johnson Electric"), a
global leader in electric motors and motion subsystems, today announced its
results for the twelve months ended 31 March 2019.

 

Group
sales for the 2018/19 financial year totalled US$ 3,280
million -- an increase of 1% compared to the prior financial year.   Excluding the effects of acquisition and
foreign currency movements, underlying sales increased by 2%
. Net
profit attributable to shareholders rose 7% to US$281 million.   Underlying net profit, which excludes the net
impact of non-cash foreign currency-related gains/losses and a prior year
non-cash gain on an acquisition, decreased by 10% to US$243 million.

 

Sales Performance

The
softening in the global economy in the second half of the financial year, along
with industry-specific factors, represented a major headwind for the Group with
the result that total sales amounted to US$3,280 million, an increase of 1%
over the prior financial year.

 

After
several years of strong growth momentum, the global automotive industry stalled
in 2018 as US car sales peaked, Europe was held back by new emissions testing
rules and China sales declined for the first time in two decades.

 

The
Automotive Products Group ("APG"), Johnson Electric's largest operating
division, achieved sales of US$2,530 million. Excluding acquisition and
currency effects, APG's sales increased by 2 %.   On a regional basis, the strongest
performance was in the Americas where APG increased sales by almost 8% in
constant currency terms against a market where light vehicle production volumes
were flat.   In Asia, sales grew by just
over 2% in constant currency terms compared to a decline in regional industry
production of almost 3%.   China's car
industry experienced a particularly sharp contraction in production volumes of
over 6% as a result of the expiration of favourable tax purchase policies, as
well as the overall slowdown in consumption and economic activity.   APG performed less well in Europe with sales
declining approximately 3% in constant currency terms compared to a decline of
2.6% in regional production volumes.  
European passenger car production was held back by the implementation of
the "worldwide light vehicles test procedure", or WLTP -- designed to offer more
realistic fuel economy results -- which caused OEM production bottlenecks and
negatively impacted car sales in the second half of the year.

 

The Industry Products Group
("IPG") reported a 1 % increase in sales to
US$750 million -- representing 23% of total Group sales.   Generally weaker macro-economic conditions
and the US-China tariff dispute put a dampener on demand across many of the
Group's end-market segments.  
Nonetheless, through a combination of market share gains and new
customer launches, IPG was able to grow sales in the Americas by over 6% in
constant currency terms.    Sales to
European customers were essentially flat compared to the prior year. In Asia,
sales were down just under 2% in constant currency terms due to the combination
to uncertainties over US-China trade relations, slower economic growth in China
and customer-specific launch delays.


Pressure
on Underlying Profit

Gross profit decreased by 5%
to US$751 million -- which as a percentage of sales represented a reduction from
24.4% to 22.9%.   This disappointing
performance was due to the combination of weaker sales volumes in a majority of
APG's business units (particularly in the second half when sales declined on
both a sequential and year-on-year basis) and the negative impact of pricing
pressure and higher raw material, labour and depreciation expenses.    

 

The Group's operating profit
benefited from a substantial increase in " Other
Income and expenses".   This was primarily
due to the impact of a mark-to-market gain on structured foreign exchange
contracts that form part of Johnson Electric's long-term operational hedging
activities and net changes in the revaluation of monetary assets and
liabilities and other foreign currency hedging contracts.   As a result of these and other non-cash
items, operating profits increased by
3 % to US$344 million
or 10.5 %
of sales.

 

A lower effective tax rate
also boosted the bottom line, with net profit attributable to shareholders
totalling US$281 million -- an increase of 7% compared to the prior year.

 

Dividends

 

In view of the decrease in
underlying operating income and significant ongoing capital investments in
strengthening the business, the Board recommends maintaining the final dividend
of 34 HK cents per share, which together with the interim dividend of 17 HK
cents per share, represents a total dividend of 51 HK cents per share.

 

Chairman's
Comments Outlook

 

Commenting
on the outlook for the business, Dr. Patrick Wang, Chairman and Chief
Executive, said, " Demand levels in several of
our major markets have remained comparatively weak in recent months -- with
China's automotive sector in particular continuing to contract.   Consequently, the prospect of the US-China
trade dispute escalating represents a significant risk as to whether trading
conditions are able to improve in the near term."

 

Dr.
Wang further commented, "Approximately 5% of
the Group's total annual sales volume is currently subject to Section 301
tariffs that have been imposed on goods imported into the USA from China.   While this exposure is not especially large
in the context of Johnson Electric's diversified global sales base, if the USA
and China fail to reach a negotiated trade agreement in the coming weeks the
effects will be disruptive to our global supply chain and could result in
higher cost for our business, our customers and consumers."

 

"Notwithstanding the
difficult and highly unpredictable current operating environment, I remain
optimistic about Johnson Electric's competitive position and growth trajectory
in the medium to longer term.   Our
product line is aligned with the market's need for mission-critical solutions
to electrification, emissions, cooling, weight reduction and energy saving
problems -- as exemplified by a strong pipeline of new business launches
scheduled for the current financial year.  
Our global manufacturing footprint provides us with the means to be both
responsive to customers and mitigate the negative impact of foreign currency volatility
and import tariffs.   Further, we benefit
significantly from a diverse, high-quality customer base balanced evenly across
the world's three major regional economies."



JOHNSON
ELECTRIC HOLDINGS LIMITED

CONSOLIDATED INCOME STATEMENT


 

For
the 12 Months Ended 31 March

 

2019

2018

%
change

 

US$M

US$M

 

 

 

 

Sales

3,280.4

3,236.6

+1%

 

 

 

 

Cost of goods sold

(2,529.0)

(2,445.4)

 

 

 

 

 

Gross profit

751.4

791.2

(5)%

 

 

 

 

Other income and (expenses)

78.9

13.9

 

 

 

 

 

Selling and administrative expenses

(486.1)

(469.9)

 

 

 

 

 

Operating profit

344.2

335.2

+3 %

 

 

 

 

Finance income and costs, net

(16.4)

(13.5)

 

 

 

 

 

Share of profits of associate

0.1

1.1

 

 

 

 

 

Profit
before income tax

327.9

322.8

+2 %

 

 

 

 

Income tax expense

(38.3)

(48.6)

 

 

 

 

 

Profit for the year

289.6

274.2

+6 %

 

 

 

 

Deduct: Non-controlling interests

(8.3)

(10.2)

 

 

 

 

 

 

 

 

 

Profit attributable to shareholders

281.3

264.0

+7%

 

 

 

 

 

 

 

 

Basic earnings per share (in US cents)

32.46

30.64

+6 %

Diluted earnings per share (in US cents)

31.60

29.65

+7 %

Note to Editors and
Securities Analysts: The full text of the FY2018/19 Preliminary Results
announcement, including additional financial information, is available through
the Investor Relations section of company's website at www.johnsonelectric.com

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
.



Forward
Looking Statements

 

This news release contains certain
forward looking statements with respect to the financial condition, results of
operations and business of Johnson Electric and certain plans and objectives of
the management of Johnson Electric.

 

Words such as "outlook", "expects",
"anticipates", "intends", "plans", "believe", "estimates", "projects",
variations of such words and similar expressions are intended to identify such
forward-looking statements.   Such forward
looking statements involve known and unknown risk, uncertainties and other
factors which may cause the actual results or performance of Johnson Electric
to be materially different from any future results or performance expressed or
implied by such forward looking statements.  
Such forward looking statements are based on numerous assumptions
regarding Johnson Electric's present and future business strategies and the
political and economic environment in which Johnson Electric will operate in
the future.

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