▪ First-quarter sales increase to 30.8 million euros year-on-year, despite difficult conditions
▪ Earnings down as expected due to inflation-related higher material and personnel costs, start-up costs for India joint venture and negative currency effects
▪ Balance sheet quality further improved; equity ratio rises to 24.3%
▪ E-mobility joint venture in India starts production as announced by the end of May 2023
▪ Outlook 2023: Group sales at 140 – 160 million euros and slight increase in profitability expected
▪ Major sales and earnings potential from 2024 thanks to strong growth in and around India and in North America
Ostbevern, May 10, 2023 – FRIWO succeeded in increasing Group sales in the first quarter of the year by 6% to 30.8 million euros (Q1-22: 29.0 million euros) despite the recessionary tendencies in important sales markets that had been announced and were also expected in this way. Due to necessary upfront costs for the e-mobility joint venture in India in the low single-digit million euro range, negative currency effects and inflation-related, substantially higher material and personnel costs, FRIWO again reported negative EBIT (earnings before interest and taxes) of -1.4 million euros in the reporting quarter (Q1-22: -1.0 million euros). As expected, a minus of 2.2 million euros was also realized after taxes (Q1-22: – 1.6 million euros). Due to the recovery in business expected above all in the second half of the year, the Executive Board remains cautiously optimistic for the full year 2023 and confirms the forecast of being able to achieve consolidated sales of 140 – 160 million euros (comparable prior-year figure ~146 million euros). For Group EBIT, FRIWO expects earnings at the prior-year level and thus an improved return on sales. This figure also includes the start-up costs for the joint venture in India. From 2024 onwards, a strong earnings recovery is expected due to the anticipated significant profit contributions from the booming e-mobility business in India.
Production for e-mobility solutions in India to start as announced at the end of May
The basis for this great confidence is the unchanged very high demand for e-mobility solutions for the dynamically growing market in India, which is to be served via the joint venture with UNO MINDA through a production facility near New Delhi. As communicated, the production plant will be operational by the end of May 2023. Complete system solutions in the field of e-drives are manufactured there in an area of around 15,000 square meters, comprising the necessary hardware and the appropriate software architecture. The joint venture, in which FRIWO holds a 49.9% stake, can already report order intake and letters of intent for more than 400 million euros from Indian two- and three-wheeler producers. Further contracts are expected to be signed in India, from neighboring countries and also with Japanese producers in the coming quarters. Promising talks are already underway for this. The joint venture aims to become a market leader in India’s booming e-mobility market for two- and three-wheeled vehicles, through which a large proportion of mobility in India takes place. Industry experts put the market volume addressed at around 4.5 million vehicles by 2027.
FRIWO is also registering pleasing demand from the e-mobility and medical technology sectors from the sales branch in the USA, which was only founded at the end of November 2022 in Ohio. “We are very proud to have launched one of the most advanced facilities for e-mobility solutions in India within one year with our joint venture partner UNO MINDA. This will enable us to exploit the huge potential of the Indian market and we expect this to generate high earnings contributions from 2024 at the latest,” comments Rolf Schwirz, CEO of FRIWO AG.
Solid order backlog, but below previous year
After the record year, as expected, there has been a certain market saturation for electric bicycles in Europe at the beginning of 2023; nevertheless, FRIWO continues to report a solid order backlog of 77.6 million euros as of March 31, 2023, but noticeably below the comparable prior-year figure (100.4 million euros). Order intake of 26.4 million euros in the reporting quarter was slightly lower than in Q1-22 (30.6 million euros). All segments showed a solid performance, indicating that the targets for the year will be achieved. Due to the temporary slowdown in growth momentum in the first half of the year, the number of employees, particularly at the four sites in Vietnam, fell to 2,207 at the end of the first quarter (December 31, 2022: 2,501).
Strengthening of balance sheet quality continues
FRIWO will continue on its path of balance sheet solidity in 2023. After the equity ratio had increased significantly from 11.9% to 23.7% in fiscal year 2022, it was again improved slightly to 24.3% in the first quarter of 2023. The balance sheet total of the FRIWO Group decreased noticeably from 105.0 million euros as of December 31, 2022 to 92.3 million euros, in particular due to the significant reduction in receivables and payables. With the successful introduction of a Group-wide SAP system in the first quarter, FRIWO reached an important milestone for greater efficiency and created a good IT foundation for the planned future growth.
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