Standard Profil reports easing headwinds in Q1, 'brightening' outlook for 2023

FRANKFURT, Germany—Automotive sealing major Standard Profil has reported a "brightening" outlook at the first quarter of this year.

The three months to end of March saw an easing of headwinds, amid diminishing supply chain issues and falling material prices, the company reported.

Sales increased by 46.5 percent to about $150 million (€137.6 million), or $133 million pro forma*, reaching a new record level for the fourth consecutive quarter, said CEO Klaus Elmer in the company's first quarter report.

Standard Profil, he said, benefited from its SPrint25 profitability improvement program, as well as from recently agreed cost-compensation-mechanisms with customers.

"Overall, we were able to significantly increase our normalized reported EBITDA to €31.4 million ($34.2 million)—pro forma: €16.1 million ($17.5 million)—in Q1/23 versus €12.8 million ($13.5 million) in Q1/2022," Elmer added.

The CEO went on to note a continuing stabilization in customers' planned production schedules (EDIs), with production volumes outstripping those of previous years.

And, with new OEM programs set to grow further in the second half, Standard Profil "remains optimistic" for 2023, especially given an order backlog of about $3.2 billion.

Elmer forecast double-digit growth in pro forma sales to more than $522 million for 2023, while expecting some—but not all—costs to stabilize throughout the year.

"While price levels for direct and indirect materials is expected to stabilize, particularly as a result of lower energy and raw material costs, labor costs will continue to rise," Elmer said.

On the other hand, Standard Profil also foresees significant gains from current production volumes announced by customers, efficiency measures and recent pricing agreements.

"We expect pro forma normalized EBITDA to be in the range of €75 million to €80 million ($81 million to $87 million) for the full year," Elmer concluded.

With a market share of around 19 percent, Standard Profil says it is Europe's third largest supplier of automotive sealing products, behind SaarGummi (31 percent) and Cooper-Standard (22 percent).

The German-based group claims a 6-percent share of the global market, in which it competes against Cooper-Standard, Toyoda Gosei, SaarGummi, Henniges and Hutchinson.

*In May 2023 Standard Profil finalized negotiations with its main customers to receive cost compensations for increases in raw material, energy and labor costs incurred in H2/2022 as well as compensation arrangements for 2023 inflationary effects.

As the negotiations were completed after the year-end cut-off date, agreed compensations related to H2/2022 are not included in the 2022 audited financial statements; however, such compensations were retrospectively attributed to 2022 in management reporting.

As such, Standard Profil reflected the impact of cost compensation agreements to FY2022 P/L and certain aspects of B/S as "pro forma" financials in Q4/2022 investor reporting and will continue reporting certain pro forma financial KPIs throughout 2023.