ElringKlinger (ZIL2) Special Call summary

Transaction overview and strategic rationale

• Agreement signed to divest subsidiaries in Buford, GA (USA) and Sevelen (CH) to Certina Group, with closing expected in Q4 2024, pending antitrust approval.

• Divested plants generated €175 million in 2023 revenue and employed around 650 people as of year-end.

• Transaction aligns with the SHAPE30 strategy, focusing on product transformation, electrification, and improving profitability, especially in the OE segment.

• Divestment is part of ongoing portfolio review to support competitiveness and fund investments in e-mobility, heat shield business, and core product transformation.

• Certina Group brings automotive supply expertise to the acquired businesses.

Financial implications and revised guidance

• Impairments in the mid- to high double-digit million euro range will be booked in Q3 2024 due to IFRS 5 reclassification; figures are provisional and unaudited.

• 2024 revenue guidance revised to slightly below prior year (€1.85 billion), down from previous slight growth expectation.

• ROCE now expected significantly below prior year's 5.6%, with previous guidance at around 6%.

• Adjusted EBIT margin for 2024 forecast at approximately 5%, with operating free cash flow slightly positive, revised from around 2% of group revenue.

• Cash inflow from the disposal expected to be in the low double-digit million euro range.

Operational and market outlook

• Divested entities represented about 10% of group sales and balance sheet, and contributed a negative €16 million to 2023 EBIT.

• 2025 expected to be a transition year, with further transformation and ramp-up of e-mobility contracts.

• Aftermarket and battery business segments show growth, while OE segment faces some weakness; global light vehicle production remains sluggish short-term but is expected to grow mid- to long-term.

• No major tax impact expected from the transaction; group tax rate should normalize as loss-making entities exit.

• CapEx requirements will shift toward e-mobility, with some reduction in maintenance and replacement CapEx from divested assets; capex to be 4–6% of revenue.