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July 27, 2017updated 09 Apr 2021 12:39pm

Auto output drop and currency hit Gentherm Q2 results

Gentherm, which specialises in thermal management technology, said second quarter adjusted EBITDA rose 11% year on year to US$35.1m.

Gentherm, which specialises in thermal management technology, said second quarter adjusted EBITDA rose 11% year on year to US$35.1m.

Revenue grew 5% to $243.4m. Operating expenses rose 8% to $53.2m.

"The second quarter saw revenues for our automotive products grow by nearly 2%. This growth came despite the automotive industry, our most important end market, experiencing significant weakness. Global automotive production volumes declined by nearly 0.30% in the second quarter and, more importantly, production in North America and Europe was down by more than 3%," said president and CEO Daniel Coker.

"This illustrates the strength in our underlying products but still does not reflect the coming benefits from some of our new products including our battery thermal management product, which will begin shipping later this year, and our electronic controlling devices which are expected in early 2019.

"Our corporate goal to add non-automotive markets to our product offerings has helped offset the uncertainty in the automotive industry. Both GPT and CSZ had impressive results for the quarter increasing revenue by 83% and 20%, respectively, helping to supplement the overall outlook." 

Gentherm said the revenue increase came almost equally from each of the automotive, GPT and CSZ product groups. Growth at the automotive unit, which was the slowest at 2%, was affected by the declining industry production rate especially in North America.  This hit revenue CCS (which supplies seat heating and cooling components) disproportionately as did a decrease associated with vehicle models switched from the higher priced active cooling product to the lower priced heated and ventilated version. Strong growth in other automotive products combined to help offset the lower CCS revenue.

The supplier also booked a Q2 foreign currency loss of $13.2m due to holding "significant amounts" of US dollar cash at subsidiaries in Europe and intercompany relationships between those subsidiaries and its US based companies.

Guidance

Gentherm said: "We expect our full year 2017 revenue growth is likely to be at the lower end of our previously stated range of between 5% and 10%.  Our guidance reflects year-to-date actual results including the extra quarter of CSZ revenue and an expected softer automotive production level for the remainder of 2017."

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