Revenue up again in 2018 – VTG Executive Board proposes increased dividend

- Group revenue up 5.7% to EUR 1,072.6 million

- EBITDA 7.9% higher excluding one-time effects

- Plans to raise dividend to EUR 0.95

- One-time effects weigh on earnings

- Railcar capacity utilization at a ten-year high – Nacco transaction contributes to positive result

- VTG announces that it will be delisted in Q2 2019


Positive development continues: VTG Aktiengesellschaft (WKN: VTG999) brought the 2018 financial year to a successful conclusion. Published today, the as yet unaudited figures report Group revenue of EUR 1,072.6 million, an increase of 5.7 percent year on year (2017: EUR 1,014.4 million). This significant gain is attributable above all to dynamic development in Railcar activities: Thanks to a further increase in demand, fleet capacity utilization in this division rose to 93.5 percent by year end – the highest level for ten years. Successful closure of the Nacco acquisition and the associated integration of the Nacco fleet, also completed in 2018, likewise had a positive impact on revenue. First-time consolidation in the fourth quarter of 2018 added an extra EUR 22.3 million to Group revenue. The operating result (EBITDA) for the Group was EUR 349.3 million, which was 1.7 percent higher than the prior year's figure of EUR 343.4 million. This result includes one-time charges of EUR 25.6 million, of which EUR 18.8 million were for the Nacco transaction. The remaining one-time expenses of EUR 6.8 million related to the voluntary public takeover bid by Warwick Holding (Morgan Stanley Infrastructure). Adjusted for these one-time effects, EBITDA would have increased year on year by 7.9 percent to EUR 374.9 million.

"The unaudited result shows that our takeover of Nacco was the right move, an important step in the long-term development of the company," says Dr. Heiko Fischer, Chairman of the Executive Board of VTG AG. "Although the cost of the transaction placed a burden on Group profit, we are already seeing confirmation that we have strengthened our position for the long-term future. We are confident that we will be able to continue this positive trend in 2019, too, and our shareholders should also reap the benefits of this development. Accordingly, we, the Executive Board, propose that the dividend be increased to EUR 0.95."

Railcar: Capacity utilization at a ten-year high – Revenue and EBITDA sharply up

The Railcar Division experienced very dynamic development in the period under review. The fact that capacity utilization reached a ten-year high was reflected in revenue of EUR 579.9 million, a year-on-year increase of 11.4 percent (2017: EUR 520.7 million). Stronger demand and the integration of the Nacco fleet are also reflected in the operating result (EBITDA), which rose to EUR 381.4 million – 11.0 percent higher as a proportion of sales (2017: EUR 343.6 million). We were thus able to surpass the forecast published at the start of 2018, which envisaged a slight increase in revenue and EBITDA at the Railcar Division.

Logistics divisions: Contribution to Group revenue unchanged year on year – Market developments weighing on EBITDA

The loss of two major orders, the rail strike in France and a shortage of engine drivers had a negative impact on business development at Rail Logistics in 2018. Revenue was thus down 3.6 percent to EUR 324.5 million (2017: EUR 336.4 million). In this context, EBITDA too declined by 22.0 percent to EUR 6.5 million (2017: EUR 8.3 million). In this case, we did not realize the slight increase in revenue and EBITDA at Rail Logistics that was forecast at the start of 2018.

Tank Container Logistics once again posted dynamic gains in its transportation volume, with revenue rising 6.9 percent to EUR 168.2 million (2017: EUR 157.3 million). A different picture emerged on the earnings side, however: Shifts in overseas transportation flows drove up costs by leaving equipment underused, raising demurrage and adding to expenses for empty vehicle positioning. At the same time, growing demand in Europe worsened existing infrastructure bottlenecks on both road and rail, all of which further added to demurrage and freight costs. This division's EBITDA therefore fell by 42.3 percent to EUR 6.5 million in 2018 (2017: EUR 11.3 million). Here again, the forecast of a slight increase in revenue and EBITDA published at the start of 2018 was not realized, at least on the EBITDA score.

Further increase in Group revenue and EBITDA expected in 2019 – Higher dividend announced

The Executive Board anticipates further positive development in revenue and EBITDA at the VTG Group in the 2019 financial year. Although the economy has lately lost some of its momentum, the economic fundamentals remain solid in all markets of relevance to VTG. In Germany, the reduction in track prices for rail freight traffic is also expected to provide positive stimulus for the industry. These factors should further boost demand for railcars and logistics solutions. Additional revenue and earnings effects are expected from the Nacco takeover, which will be consolidated for the full financial year for the first time in 2019. In contrast, transaction and integration costs relating to the takeover should be substantially lower in 2019. This being the case, the Executive Board expects revenue to increase significantly to between EUR 1.15 billion and EUR 1.25 billion in the 2019 financial year. EBITDA is expected to be between EUR 480 million and EUR 510 million. The EBITDA forecast includes a positive contribution of EUR 50 million due to first-time adoption of the new IFRS 16 accounting standard for operating leases. Notwithstanding, the Executive Board continues to target earnings per share (EPS) of EUR 2.50 for the 2019 financial year.

For the 2018 financial year, the Executive Board has announced that it will propose to the Annual General Meeting that the dividend once again be increased from EUR 0.90 to EUR 0.95 per share.

VTG AG announces that it will be delisted in the second quarter of 2019

With the consent of the Supervisory Board, the Executive Board of VTG Aktiengesellschaft resolved on February 24, 2019, to apply to have shares in VTG delisted from regulated trading on the Frankfurt Stock Exchange. Warwick Holding GmbH, which holds a roughly 71 percent stake in VTG and is therefore the majority shareholder, had earlier announced that it would be able to support a planned capital increase with subscription rights to partially refinance hybrid capital from the Nacco financing arrangements only if the company is delisted. Delisting will probably take effect in April of this year.