DGAP-News: paragon AG / Key word(s): Forecast

18.12.2014 / 08:44


paragon AG forecasts significant jump in revenue and earnings in 2015

  - Consolidated revenue to rise by around 20 per cent to approx. EUR95
    million in 2015

  - EBIT expected to double

  - Investment in new business segments is paying off

  - Sensors, Acoustics and Electromobility are driving growth 

Delbrück, December 18, 2014 - The Managing Board of paragon AG is
predicting a surge in growth in 2015. As a result it is aiming for an
unadjusted EBIT margin of about 10 per cent on consolidated revenue of
around EUR95 million. This forecast is at the top end of its current
outlook that predicts revenue growth of up to 20 per cent in 2015 compared
with 2014. The significant investment in growth over recent years is now
clearly paying off.

Klaus Dieter Frers, chairman of the Managing Board of paragon AG said: "As
predicted the past two or three years have been dominated by massive
capital investment in fast-growing segments with prospects for the future.
Now we are starting to reap the benefits. In terms of revenue we are
forecasting a two-digit amount of million euros in the Electromobility
sector but we also expect further increases in other segments. This will
cut back our cost ratios as scheduled and substantially push up our
earnings both in absolute terms and as a percentage of revenue."

A conservative growth rate of just 3 per cent for the existing business in
the Cockpit, Acoustics and Sensors sectors is factored into the forecast
although analysts believe that the revenue attributable to paragon's
automotive industry customers will rise by 5.9 per cent and the proportion
of vehicles fitted with paragon products is rising. The Body Kinematics
segment is expected to contribute approximately EUR4-5 million to revenue
while the share of total revenue attributable to Electromobility and its
Voltabox brand is predicted to be as much as EUR15 million as paragon will
be supplying the intralogistics sector for the first time. Numerous new
production start-ups will be the main features of 2015 and 2016 including
air quality sensors, the AQI air quality improver, trays for wireless
smartphone charging, CO2 sensors, and a new type of fragrancing system.

Significant growth in orders on hand 
The positive forecast is supported by a sharp rise in orders on hand. The
volume currently logged in the order book is 30 per cent above the
comparable level in 2013. On a 'lifetime' basis, the Group has orders on
hand of more than EUR510 million compared with approx. EUR380 million last

Frers commented: "If the market performs favorably, and particularly if
other projects in the pipeline involving Voltabox battery systems come to
fruition, we could top the EUR100 million mark again for the first time
since 2008. We are only at the development stage of some of the high-volume
projects in the Voltabox segment and we have not included them in the
projection for reasons of prudence. However, they could potentially result
in substantial contributions to revenue as early as 2015 so there is
definitely scope for improvement." In addition to the deployment of the
battery packs in buses, commercial vehicles, and internal logistics systems
paragon sees great potential in computer-controlled storage batteries for
stabilizing power grids. Following a test phase an initial project on a
scale of megawatt hours is scheduled to be completed in 2015 which
illustrates the significantly shorter time to market for batteries than for
automotive electronics. In 2016, paragon plans to significantly expand its
business involving storage batteries for grid stabilization which should
also provide economies of scale for established products. For the period
2015 to 2019, the Managing Board now forecasts cumulative revenues of
between EUR220 and EUR300 million in the Electromobility segment.

Earnings set to advance
Based on predicted revenue of around EUR95 million paragon is forecasting
an unadjusted EBIT margin of about 10 per cent. Given that unadjusted EBIT
of around EUR4 million is anticipated for 2014 (adjusted EBIT of around
EUR8 million) the company is planning a dramatic rise in earnings next
year. This rapid increase in revenue will also cut cost ratios
correspondingly in the coming year. Overall, paragon is expecting a ratio
of personnel expenses to revenue of 26.5 per cent and a cost of materials
ratio of close to 52 per cent. This means that the huge capital investments
in research and development of recent years will - as planned - be
progressively reflected in rising earnings figures from 2015 onward.

Frers: "When we issued tranches of a bond in 2013 and 2014 with the aim of
investing in new, fast-growing sectors we were fully aware that we would
have to accept a fall in our profit margins. In the next few years we will
be leveraging tremendous potential, largely in Electromobility, but also in
other business segments. The period from 2012 to 2014 was dominated by a
high level of upfront capital investment that is now bearing fruit. From
2015 onward we will benefit significantly from the positive effects of this
capital investment on revenue and earnings." Assuming that the market
environment remains favorable the Managing Board believes that there will
be very significant double-digit revenue growth once again in 2016.

Company profile

Listed in the regulated market (Prime Standard) of Deutsche Börse AG in
Frankfurt am Main, paragon AG develops, produces, and sells advanced
automotive electronics solutions. The portfolio of this direct supplier to
the automotive industry includes products in the following business
segments: Sensors, Acoustics, Cockpit, Electromobility, and Body
Kinematics. Headquartered in Delbrück (North Rhine-Westphalia), paragon AG
has branches in Suhl (Thuringia), Nuremberg (Bavaria), and St. Georgen
(Baden-Württemberg) as well as a sales office in Shanghai (China) and a
subsidiary in Austin (Texas, United States).


paragon AG
Schwalbenweg 29
33129 Delbrück
Tel.: +49 (0)5250 97620
Fax: +49 (0)5250 976 260
Website: www.paragon.ag
Email: info@paragon.ag

Financial press & investor relations contact
Instinctif Deutschland GmbH
Michael Müller
Tel.:  +49 (0)221 420 750
Email: michael.mueller@instinctif.com


18.12.2014 Dissemination of a Corporate News, transmitted by DGAP - a
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Language:    English                                               
Company:     paragon AG                                            
             Schwalbenweg 29                                       
             33129 Delbrück                                        
Phone:       +49 (0)5250 97 62 - 0                                 
Fax:         +49 (0)5250 97 62 - 60                                
E-mail:      investor@paragon.ag                                   
Internet:    www.paragon.ag                                        
ISIN:        DE0005558696, DE000A1TND93                            
WKN:         555869, A1TND9                                        
Listed:      Regulierter Markt in Frankfurt (Prime Standard);      
             Freiverkehr in Berlin, Düsseldorf, Hamburg, München,  
End of News    DGAP News-Service  
306707 18.12.2014