Johnson Electric reports Business and Unaudited Financial Information for the Third Quarter of Financial Year 2021/22

HONG KONG SAR – Media OutReach – 13 January 2022 – This news release is made by Johnson
Electric Holdings Limited (“Johnson Electric” or the “Company” and together
with its subsidiaries, the “Group”) for the business operations and selected
unaudited financial information of the Group for the nine months and quarter
ended 31 December 2021.

The Board
of Directors (the “Board”) of the Company considers the publication of
quarterly sales performance updates to be consistent with international
corporate disclosure best practice. The objective of this news release is to
provide transparency and to ensure that investors and potential investors
receive equal access to the same information at the same time.

The Group’s
sales for the nine months ended 31 December 2021 were US$2,521 million compared
to US$2,242 million for the same period in 2020, an increase of 12%. Excluding
currency movements and an acquisition, sales increased by 9% to US$2,448
million. Foreign exchange rate movements had a positive effect of US$61 million
on the Group’s sales during the period. This was mainly due to the stronger average
exchange rates for the Chinese Renminbi, the Canadian Dollar and the Euro
versus the US Dollar, comparing average exchange rates for the nine months
ended 31 December 2021 to the same period last year.

The Group’s
sales for the quarter ended 31 December 2021 were US$847 million compared to
US$912 million for the same quarter in 2020, a decrease of 7%. Excluding
currency effects and an acquisition, sales for the quarter ended 31 December
2021 decreased by US$71 million or 8%.

The
acquisition of E. Zimmermann GmbH (“Zimmermann”), a specialist automotive
machining business based in Germany, on 31 May 2021 added US$12 million to
sales for the nine months ended 31 December 2021 and US$5 million to sales for
the quarter ended 31 December 2021.

Sales of Automotive
Products Group (“APG”)

APG’s sales for the nine months ended 31 December 2021 were US$1,923
million, an increase of US$196 million or 11% compared to the same period in
2020. Excluding the acquisition of Zimmermann and currency effects, APG’s sales
increased by US$127 million or 7% for the nine months.

A significant part of this increase relates to the fact that in the
period from late March to May 2020, much of Johnson Electric’s and its
customers’ operations in Europe and the Americas were effectively shut down due
to the COVID-19 pandemic. Although direct comparisons with the same period in
the prior year are therefore somewhat difficult, APG’s organic sales growth of
7% represented a substantial outperformance, when compared to the decrease in
global auto industry production of approximately 3% during the nine months from
April to December 2021. The automotive sector has been severely disrupted by
several supply chain bottlenecks over the period under review. Semiconductor
and raw material shortages have caused major automotive OEMs to make frequent
changes to production schedules, suspend production of selected vehicle models
and temporarily close some of their factories entirely.

APG’s outperformance reflects the increasing demand for the
electrification of critical automotive functions to support the growing number
of battery-electric and hybrid vehicles, as well as the imperatives to reduce
vehicle weight and to improve safety, reliability and comfort. Sales increased
across most of APG’s product segments, with significant increases experienced
in:

  • Closures, including sunroof, window-lift, power lift-gate,
    door-lock and other power closure systems
  • Thermal management, including
    electric water pump, cooling fan module, HVAC components, integrated thermal
    management and other electrified components for thermal management
  • Powder metal parts, especially
    parts for fuel cell applications
  • Power steering
  • Braking

APG’s sales for the quarter ended 31 December 2021 decreased by US$78
million or 11% compared to the same quarter in 2020. Excluding the acquisition
of Zimmermann and currency effects, APG’s sales decreased by US$86 million or
12% in the quarter. In comparison, global auto industry production volumes
decreased by approximately 17% over the same period. The industry’s production
and sales activities in the quarter continued to be hampered by the supply
chain bottlenecks mentioned previously. It should also be noted that APG’s
sales in the same quarter in the prior year rebounded to remarkably high levels
following the resumption of OEM customer production in Europe and the Americas
after earlier COVID-19 related shut-downs.

When looked at on a regional basis, APG’s sales fared better than
automotive industry production volumes in all regions in the nine months as
well as the quarter ended 31 December 2021. The sales changes for APG by
region, excluding currency effects and the acquisition of Zimmermann, were as
follows:

Quarter ended
31 December 2021

Nine months ended
31 December 2021

Asia

decrease 4%

increase 3%

Europe

decrease 22%

increase 9%

Americas

decrease 12%

increase 11%

Total

decrease 12%

increase 7%

Sales of Industry Products Group (“IPG”)

IPG’s sales for the nine months ended 31 December 2021 were US$598
million, an increase of US$83 million or 16% compared to the same period in
2020. Excluding currency effects, IPG’s sales increased by US$79 million or 15%
for the nine months.

The changes to consumer behaviour that emerged during the pandemic,
including the rise in demand for “home-centric” products, remained a strong
growth driver for many of the product applications served by IPG.  The division achieved significant growth in
the lawn and garden, beverage, ventilation, heating, window automation and
white goods segments due to a combination of program launches and new business
wins, enlarged market share and increased market demand in the nine months
ended 31 December 2021. This strong performance was achieved despite the
disruptive impact of supply chain constraints, including shortages of
semiconductors, and other materials and components, as well as disruptions to
shipping schedules that held back production in some of IPG’s end-markets.

IPG also benefited from a rebound in sales to small and medium-sized
enterprises, and to distributors, especially in Europe and the Americas. In the
same period of the prior year, these customers had been severely impacted by
the pandemic. Similarly, sales of products for commercial and industrial
applications increased for the nine months ended 31 December 2021 compared to
the reduced business levels experienced in the same period of the prior year.

IPG’s sales for the quarter ended 31 December 2021 increased by US$13
million or 7% compared to the same quarter in 2020. Excluding currency effects,
IPG’s sales increased by US$14 million or 8% in the quarter.

On a regional basis, IPG experienced the strongest growth in Europe and
the Americas as sales in the same period in the prior year were constrained by
the impact of the COVID-19 pandemic. In Asia, sales growth in the nine months
ended 31 December 2021 was more muted, as China’s industrial sector had already
recovered before April 2020 and sales in the prior year’s quarter ended 31
December 2020 were especially high. The sales changes for IPG by region,
excluding currency effects, were as follows:

 

Quarter ended
31 December 2021

Nine months ended
31 December 2021

Asia

decrease 14%

increase 3%

Europe

increase 36%

increase 27%

Americas

increase 13%

increase 19%

Total

increase 8%

increase 15%

Chairman’s Comments on Sales
Performance and Outlook

Concerning the Group’s sales performance and
outlook for the current financial year, the Chairman and Chief Executive, Dr.
Patrick Shui-Chung Wang, said, “Johnson Electric has achieved a solid sales
performance over the past nine months as the global economy remains on a
recovery path from the crisis brought on by the COVID-19 pandemic.  We continue to win new business awards in
both our Automotive and Industry divisions based on our
compelling ability to serve global customers in every major geographic
market and on a portfolio of innovative motion technology solutions that
continue to generate strong customer demand.”

“However, the global supply disruptions and
inflationary forces that depressed profitability in the first half of the year
have persisted through the third quarter of the financial year and represent
significant on-going headwinds for the business.  Management is engaged in a number of
initiatives to mitigate these effects but, in the near-term, the above-mentioned
inflationary forces are exerting significant pressure on operating margins.”

Cautionary
Statement

Shareholders and potential investors in
the Company are reminded that the information provided in this news release,
including information related to the expected outlook for the full year, is
based on the Group’s unaudited internal records and management accounts. This
information has not been reviewed or audited by the Company’s auditors.

 

Shareholders
and potential investors should exercise caution when dealing or investing in the
shares of the Company.

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