Market Overview

Orion Engineered Carbons S.A. Announces Second Quarter 2018 Financial Results

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Second Quarter 2018 Year over Year Highlights

  • Volumes increased by 3.4% to 275.6 kmt compared to 266.6 kmt in the
    second quarter of 2017 with increases of 3.9% of Specialty and 3.2% in
    Rubber
  • Revenue increased by $62.0 million, or 18.8%, to $391.6 million
    compared to the second quarter of 2017
  • Profit (Net Income) of $52.7 million increased by $34.3 million
    from $18.4 million in second quarter of 2017 and accordingly Basic EPS
    increased by $0.57 to $0.88, while Adjusted EPS
    1 increased
    $0.29 to $0.69
  • Adjusted EBITDA1 increased $16.8 million
    or 26.1% to a record $81.1 million
  • Specialty Carbon Black Adjusted EBITDA increased 17.8% or $6.8
    million to $45.2 million
  • Rubber Carbon Black Adjusted EBITDA increased 38.4% or $9.9
    million to $35.9 million
  • Dividend payments of 20 cents per share, a 5.65% increase compared
    to the second quarter of 2017
  • Restructuring project to consolidate Korean production network
    successfully completed. Restructuring gain on disposal of plant site
    totaling $29.8 million

1) See below for a reconciliation of non-IFRS financial measures to the
most directly comparable IFRS measures

Orion Engineered Carbons S.A. ("Orion" or the "Company") (NYSE:OEC), a
worldwide supplier of specialty and high-performance carbon black, today
announced results for its second quarter of 2018.

"We turned in another strong quarter this year executing well on our
plans to grow with the markets while improving price in our two
segments. We are quite pleased with the performance of both business
segments during this first half of 2018. Our end markets remained strong
in all regions of the world and our industry segments all supported
profitable growth. The headwinds of rising feedstocks were successfully
offset by price increases in the Specialty segment, while healthy demand
for Rubber blacks has kept our plants operating at a high utilization
rates. This favorable supply/demand balance supported stronger spot
pricing during the year but more importantly establishes a strong
backdrop for the negotiations in this segment for next year. It was
another record quarter with our Adjusted EBITDA reaching $81 million,"
said Jack Clem, Orion's Chief Executive Officer.

"We raised base prices across all regions and segments of our
Specialties business and as a result we saw a good recovery in gross
profit per ton, growing sequentially from $781 to $856 and on a year
over year basis was up by $94 per ton aided also by a favorable foreign
exchange. Specialty sales volumes in the second quarter were the second
highest on record only after the first quarter 2018 record volumes.

We completed the full realignment of the South Korean production
footprint this quarter and sold the real estate in the suburb of Seoul
at a price in line with expectations and a completion well ahead of
schedule. The new Specialty line at our facility in Italy is on schedule
to begin production in the fourth quarter of 2019. These continuing
initiatives to improve production capability, upgrade mix and improve
prices, along with favorable demand/supply dynamics, position us well to
take full advantage of improving global economic conditions," said Mr.
Clem.

Second Quarter 2018 Overview

ORION ENGINEERED CARBONS
      Q2 2018     Q2 2017     Y-o-Y Comparison
Volume (kmt)     275.6     266.6     3.4%
Revenue ($/Millions) 391.6 329.6 18.8%
Contribution Margin ($/Millions) 155.1 129.8 19.5%
Contribution Margin per Metric Ton ($) 562.8 487.1 15.6%
Operating Result/EBIT ($/Millions) 82.5 38.2 115.7%
Adjusted EBITDA ($/Millions) 81.1 64.3 26.1%
Profit or Loss for the Period/Net Income ($/Millions) 52.7 18.4 185.9%
Basic EPS ($) (1)     0.88     0.31     0.57
Adjusted EPS ($) (2) 0.69 0.40 0.29
 
Notes:
(1)   Basic EPS calculated using profit for the period (Net Income) and
weighted number of shares outstanding.
(2) Adjusted EPS is defined as profit or loss for the period adjusted
for acquisition related expenses, restructuring income or expenses,
consulting fees related to group strategy, certain other items (such
as amortization expenses related to intangible assets acquired from
our predecessor and foreign currency revaluation impacts) and
assumed taxes, divided by the weighted number of shares outstanding
during the periods.

Total volumes increased by 3.4% or 9.1 kmt to 275.6 kmt in the second
quarter of 2018 compared to 266.6 kmt in the second quarter of 2017.
This 3.4% increase reflected stronger volumes in both segments
particularly in North America and Europe.

Revenues increased by $62.0 million, or 18.8%, to $391.6 million in the
second quarter of 2018 from $329.6 million in the second quarter of
2017, primarily due to the pass through of higher feedstock costs,
positive foreign exchange rate translation impacts, increased volumes,
increases in the base selling prices and, to a lesser extent, product
mix.

Contribution Margin increased strongly by $25.3 million, or 19.5%, to
$155.1 million in the second quarter of 2018 from $129.8 million in the
second quarter of 2017, primarily driven by positive foreign exchange
rate translation impacts and base price increases as well as volume
growth, pass through of higher feedstock cost and increased cogeneration
income, somewhat offset by negative feedstock differentials.

The operating result also increased strongly by $44.3 million, or 115.7%
to $82.5 million in the second quarter of 2018 from $38.2 million in the
second quarter of 2017, reflecting the increase in contribution margin
as well as a favorable impact from our Rubber footprint restructuring
resulting in a gain of $29.8 million associated with the sale of the
former plant site in Seoul, South Korea due to the consolidation of the
two South Korean production sites.

The strong increase in Adjusted EBITDA of $16.8 million, or 26.1%, to
$81.1 million in second quarter of 2018 compared to $64.3 million in the
second quarter of 2017 reflected the increases in Contribution Margin,
partially offset by fixed and general administrative cost increases as
well as negative foreign exchange rate translation impacts associated
with our fixed cost base. The restructuring gain on sale of our former
plant site in South Korea is not included in Adjusted EBITDA for the
current quarter.

As a result, net income for the second quarter of 2018 increased by
$34.3 million, or 185.9%, to $52.7 million as compared to $18.4 million
in the second quarter of 2017.

Quarterly Business Results

SPECIALTY CARBON BLACK
      Q2 2018     Q2 2017     Y-o-Y Comparison
Volume (kmt)     67.8     65.3     3.9%
Revenue ($/Millions) 142.7 122.3 16.6%
Gross Profit ($/Millions) 58.0 49.8 16.7%
Gross Profit/metric ton ($) 856.1 762.4 12.3%
Adjusted EBITDA ($/Millions) 45.2 38.4 17.8%
Adjusted EBITDA/metric ton ($)     667.0     588.1     13.4%
Adjusted EBITDA Margin 31.7% 31.3% 40bps
 

Volume for the Specialty Carbon Black business increased by 3.9% to 67.8
kmt in the second quarter of 2018 from 65.3 kmt in the second quarter of
2017, reflecting growth in the U.S., Korea and China.

Revenue of the Specialty business increased by $20.4 million, or 16.6%,
to $142.7 million in the second quarter of 2018 from $122.3 million in
the second quarter of 2017, primarily associated with increased product
base prices, positive foreign exchange rate translation impacts,
increased volumes and pass through of higher cost of feedstock to
customers with index-pricing agreements, partially offset by some
product mix impacts.

Gross Profit increased by $8.2 million, or 16.7%, to $58.0 million in
the second quarter of 2018 from $49.8 million in the second quarter of
2017, primarily reflecting positive foreign exchange rate translation
impacts, increased product base prices and the increase in sales volumes
offset partially by some higher fixed costs and product mix effects. As
a result Gross Profit per metric ton increased significantly by 12.3% to
$856 in the second quarter of 2018 from $762 in the second quarter of
2017. Sequentially, Gross Profit per ton was up 9.6% from the first
quarter of 2018 which reflects further price recovery offsetting higher
feedstock costs.

Adjusted EBITDA increased by $6.8 million, or 17.8%, to $45.2 million in
the second quarter of 2018 from $38.4 million in the second quarter of
2017, primarily reflecting the development of Gross Profit, somewhat
offset by increases in general administrative costs and foreign exchange
rate translation impacts associated with our cost base. Adjusted EBITDA
margin was 31.7% in the second quarter of 2018 compared to 31.3% in the
second quarter of 2017.

RUBBER CARBON BLACK
      Q2 2018     Q2 2017     Y-o-Y Comparison
Volume (kmt)     207.8     201.3     3.2%
Revenue ($/Millions) 248.9 207.3 20.1%
Gross Profit ($/Millions) 54.7 43.1 26.9%
Gross Profit/metric ton ($) 263.3 214.2 22.9%
Adjusted EBITDA ($/Millions) 35.9 26.0 38.4%
Adjusted EBITDA/metric ton ($)     172.9     128.9     34.1%
Adjusted EBITDA Margin 14.4% 12.5% 190bps
 

Industry demand for Rubber Carbon Black remained strong in the second
quarter of 2018 contributing to an increase in sales volume of 3.2% to
207.8 kmt in the second quarter of 2018 compared to 201.3 kmt in the
second quarter of 2017. This increase in volume was associated with
increased volumes in Europe and the U.S.

Revenue increased by $41.6 million, or 20.1%, to $248.9 million in the
second quarter of 2018 from $207.3 million in the second quarter of
2017, primarily due to the pass through of higher cost of feedstock to
customers with index-pricing agreements, positive foreign exchange rate
translation effects, positive impacts from our product mix, increased
sales volumes and base price improvements.

Gross Profit increased by $11.6 million, or 26.9%, to $54.7 million in
the second quarter of 2018 from $43.1 million in the second quarter of
2017. This Gross Profit increase was primarily due to increased contract
base prices, the pass through of higher cost of feedstock to customers
with index-pricing agreements, product mix, higher sales volumes and
positive foreign exchange rate translation effects, which were partially
offset by higher fixed costs. Accordingly, Gross Profit per metric ton
increased by 22.9% to $263 in the second quarter of 2018 from $214 in
the second quarter of 2017.

Adjusted EBITDA increased by $9.9 million, or 38.4% to $35.9 million in
the second quarter of 2018 from $26.0 million in the second quarter of
2017, primarily reflecting the development of Gross Profit, partially
offset by higher general administrative expenses and foreign exchange
translation impacts associated with our fixed cost base.

Adjusted EBITDA margin was 14.4% in the second quarter of 2018 as
compared to 12.5% in the second quarter of 2017.

Balance Sheet and Cash Flow

As of June 30, 2018, the Company had cash and cash equivalents of $73.5
million, a increase of $1.2 million from December 31, 2017 with
increases in working capital associated with recent increases in
feedstock prices being offset by proceeds from the sale of our former
plant site in South Korea.

The Company's reported non-current indebtedness as of June 30, 2018 was
$664.4 million, composed of the non-current portion of term loan
liabilities of $660.1 million ($660.8 million gross term loan
liabilities reduced by capitalized transaction costs of $0.7 million)
and non-current debt from financial derivatives of $4.3 million.

Our net cash at June 30, 2018 totaled $65.2 million, composed of cash
and cash equivalents of $73.5 million less the current portion of term
loan liabilities of $8.3 million. Accordingly, net indebtedness was
$595.7 million, composed of gross term loan liabilities of $660.8
million, less net cash of $65.2 million. This represents a LTM Adjusted
EBITDA multiple of 2.1 times, compared to 2.3 times at the end of last
year. Capitalized transaction costs as well as non-current debt from
financial derivatives are disregarded in computing net indebtedness
under our lending agreements.

Cash inflows from operating activities in the second quarter of 2018
amounted to $19.4 million and include cash uses of net working capital
of $26.1 million compared to a net working capital use of $0.1 million
in second quarter of 2017 and consist of a consolidated profit for the
period of $52.7 million, adjusted for depreciation and amortization of
$24.2 million and the exclusion of finance costs, net of $9.4 million
affecting net income. Net working capital totaled $288.7 million as of
June 30, 2018, compared to $224.0 million as of December 31, 2017,
reflecting the impact of higher feedstock prices as well as foreign
exchange rate translation effects.

Cash inflows from investing activities in the second quarter of 2018
amounted to $30.7 million, and comprised the proceeds from our land sale
in Korea less expenditures for improvements primarily in the
manufacturing network throughout the production system including further
investments to conclude the consolidation of our South Korean plant
network, which was completed at the end of this quarter.

Cash outflows for financing activities in the second quarter of 2018
amounted to $32.9 million consisted primarily of a $12.2 million
repayment of local bank facilities, a dividend payment totaling $11.9
million, our regular interest payments for our term loan facilities of
$5.4 million and regular debt repayment of $2.1 million.

2018 Full Year Outlook

"Our strategy of profitable growth and improved production capabilities,
along with improving demand/supply dynamics, keep us well positioned to
take full advantage of improving global economic conditions. Having
posted strong results for the first half of the year, boosted by healthy
foreign exchange tailwinds, we expect that the benefits from foreign
exchange will subside in the second half. This should moderate Specialty
gross profit per ton off an exceptionally high second quarter level.

"Taking all of this into consideration, we are raising the floor of our
Adjusted EBITDA guidance range and now expect to generate full year
Adjusted EBITDA of $285 million to $300 million, with a weighting above
the midpoint of this range assuming current exchange rates, feedstock
cost levels and customer demand levels throughout the second half of
2018," stated Mr. Clem.

Other guidance metrics for 2018 include shares outstanding of 59.7
million reflecting the vesting of part of the long term incentive
program for senior management, an underlying tax rate of 32% on pre-tax
income, and capital expenditures reflecting an operating run rate
consistent with the past of approximately $100 million before
expenditures associated with the consolidation of the Company's plants
in South Korea and EPA related capex. Depreciation is estimated to be
approximately $75 million, and amortization is estimated to be
approximately $25 million (including amortization of acquired
intangibles of about $16 million) in 2018.

Conference Call

As previously announced, Orion will hold a conference call tomorrow,
Friday, August 3, 2018, at 8:30 a.m. (EST). The dial-in details for the
live conference call are as follow:

     
U.S. Toll Free: 1-877-407-4018
International: 1-201-689-8471
U.K. Toll Free: 0 800 756 3429
Germany Toll Free: 0 800 182 0040
Luxembourg Toll Free: 800 28 522
Luxembourg Local: 352 2786 0689

A replay of the conference call may be accessed by phone at the
following numbers through August 10, 2018:

     
U.S. Toll Free: 1-844-512-2921
International: 1-412-317-6671
Conference ID: 13681898

Additionally, an archived webcast of the conference call will be
available on the Investor Relations section of the Company's website at: www.orioncarbons.com.

To learn more about Orion, visit the Company's website at www.orioncarbons.com.
Orion uses its website as a channel of distribution for material Company
information. Financial and other material information regarding Orion is
routinely posted on the Company's website and is readily accessible.

About Orion Engineered Carbons

Orion is a worldwide supplier of Carbon Black. We produce
high-performance as well as standard Gas Blacks, Furnace Blacks, Lamp
Blacks, Thermal Blacks and other Specialty Carbon Blacks that tint,
colorize and enhance the performance of polymers, plastics, paints and
coatings, inks and toners, textile fibers, adhesives and sealants,
tires, and mechanical rubber goods such as automotive belts and hoses.
Orion has 13 global production sites and four Technology Centers with
1,427 employees. For more information visit our website www.orioncarbons.com.

Forward Looking Statements

This document contains certain forward-looking statements with respect
to our financial condition, results of operations and business,
including those in the "2018 Full Year Outlook" and "Quarterly Business
Results" sections above. These statements constitute forward-looking
statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended. Forward-looking statements are statements of
future expectations that are based on management's current expectations
and assumptions and involve known and unknown risks and uncertainties
that could cause actual results, performance or events to differ
materially from those expressed or implied in these statements.
Forward-looking statements include, among others, statements concerning
the potential exposure to market risks, statements expressing
management's expectations, beliefs, estimates, forecasts, projections
and assumptions and statements that are not limited to statements of
historical or present facts or conditions. Some of these statements can
be identified by terms and phrases such as "anticipate," "believe,"
"intend," "estimate," "expect," "continue," "could," "should," "may,"
"plan," "project," "predict" and similar expressions. Factors that could
cause our actual results to differ materially from those expressed or
implied in such forward-looking statements include those factors
detailed under the captions "Note Regarding Forward-Looking Statements"
and "Risk Factors" in our Annual Report on Form 20-F for the year ended
December 31, 2017 and in Note 10 to our audited consolidated financial
statements regarding contingent liabilities, including litigation. You
should not place undue reliance on forward-looking statements. Each
forward-looking statement speaks only as of the date of the particular
statement. New risk factors and uncertainties emerge from time to time
and it is not possible for our management to predict all risk factors
and uncertainties, nor can we assess the impact of all factors on our
business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in
any forward-looking statements. We undertake no obligation to publicly
update or revise any forward-looking statement - including those in the
"2018 Full Year Outlook" and "Quarterly Business Results" sections above
- as a result of new information, future events or other information,
other than as required by applicable law.

U.S. Dollar Reporting

This quarter marks the second quarter we are reporting our results in
U.S. dollars rather than Euro. As noted previously, we also plan to
convert our financial statements from IFRS to U.S. GAAP, effective by
the end of 2018. We believe both the switch to U.S. dollar reporting and
the anticipated adoption of U.S. GAAP will benefit investors by allowing
more direct comparisons between our results and those of some of our
peers. These measures are also among the conditions for inclusion of our
stock in certain U.S. equity indices, which may lead to additional
demand for Orion's stock from index funds and index-driven investors.
Some indices have additional requirements for inclusion. We are
analyzing the feasibility of meeting such requirements and the
associated costs and issues raised thereby, including those relating to
the tax position of Orion and other members of the group. This analysis
is ongoing and we can give no assurances regarding the outcome.

Reconciliation of Non-IFRS Financial Measures

In this release we refer to Adjusted EBITDA, Contribution Margin and
Adjusted EPS, which are financial measures that have not been prepared
in accordance with International Financial Reporting Standards as issued
by the International Accounting Standards Board ("IFRS") or the
accounting standards of any other jurisdiction and may not be comparable
to other similarly titled measures of other companies. Adjusted EBITDA
is defined as operating result (EBIT) before depreciation and
amortization, adjusted for acquisition related expenses, restructuring
expenses, consulting fees related to group strategy, share of profit or
loss of joint venture and certain other items. Adjusted EBITDA is used
by our management to evaluate our operating performance and make
decisions regarding allocation of capital because it excludes the
effects of certain items that have less bearing on the performance of
our underlying core business. Our use of Adjusted EBITDA has limitations
as an analytical tool, and you should not consider it in isolation or as
a substitute for analysis of our financial results as reported under
IFRS. Some of these limitations are: (a) although Adjusted EBITDA
excludes the impact of depreciation and amortization, the assets being
depreciated and amortized may have to be replaced in the future and thus
the cost of replacing assets or acquiring new assets, which will affect
our operating results over time, is not reflected; (b) Adjusted EBITDA
does not reflect interest or certain other costs that we will continue
to incur over time and will adversely affect our profit or loss, which
is the ultimate measure of our financial performance and (c) other
companies, including companies in our industry, may calculate Adjusted
EBITDA or similarly titled measures differently. Because of these and
other limitations, you should consider Adjusted EBITDA alongside our
other IFRS-based financial performance measures, such as consolidated
profit or loss for the period.

Contribution Margin is calculated by subtracting variable costs (such as
raw materials, packaging, utilities and distribution costs) from our
revenue. We believe that Contribution Margin and Contribution Margin per
Metric Ton are useful because we see these measures as indicating the
portion of revenue that is not consumed by such variable costs and
therefore contributes to the coverage of all other costs and profits.

Adjusted EPS is defined as profit or loss for the period adjusted for
acquisition related expenses, restructuring income or expenses,
consulting fees related to group strategy, certain other items (such as
amortization expenses related to intangible assets acquired from our
predecessor and foreign currency revaluation impacts) and assumed taxes,
divided by the weighted number of shares outstanding during the periods.
Adjusted EPS provides guidance with respect to our underlying business
performance without regard to the effects of (a) foreign currency
fluctuations, (b) the amortization of intangible assets which other
companies may record as goodwill having an indefinite lifetime and thus
no amortization and (c) our start-up and initial public offering costs.
Other companies may use a similarly titled financial measure that is
calculated differently from the way we calculate Adjusted EPS.

 

Interim condensed consolidated income statements

of Orion Engineered Carbons S.A. for the three and six months
ended June 30, 2018 and 2017 - unaudited

                 

Three Months Ended
Jun 30, 2018

Three Months Ended
Jun 30, 2017
Six Months Ended
Jun 30, 2018
Six Months Ended
Jun 30, 2017
In $ k In $ k In $ k In $ k
Revenue 391,586 329,613 798,285 653,678
Cost of sales (278,813 ) (236,734 ) (573,109 ) (465,261 )
       
Gross profit 112,773 92,879 225,176 188,417
 
Selling expenses (35,732 ) (32,705 ) (73,600 ) (63,450 )
Research and development costs (4,644 ) (4,456 ) (9,705 ) (8,644 )
General and administrative expenses (18,426 ) (18,209 ) (39,469 ) (38,346 )
Other operating income 296 2,127 459 2,274
Other operating expenses (1,561 ) (1,097 ) (3,556 ) (4,290 )
 
Restructuring income 40,253 40,253
Restructuring expenses (10,502 ) (319 ) (11,768 ) (722 )
Restructuring income/(expenses), net 29,751 (319 ) 28,485 (722 )
       
Operating result (EBIT) 82,457 38,220 127,790 75,239
 
Finance income 19,123 6,245 19,978 20,083
Finance costs (28,475 ) (17,147 ) (37,420 ) (41,355 )
Share of profit or loss of joint ventures 144 133 293 262
       
Financial result (9,208 ) (10,769 ) (17,149 ) (21,010 )
       
Profit before income taxes 73,249 27,451 110,641 54,229
 
Income taxes (20,558 ) (9,023 ) (33,722 ) (18,986 )
       
Profit for the period 52,691   18,428   76,919   35,243  
 
Earnings per Share ($ per share), basic 0.88 0.31 1.29 0.59
Weighted average number of ordinary shares (in thousands) 59,590 59,320 59,456 59,320
Earnings per Share ($ per share), diluted 0.87 0.30 1.26 0.58
Weighted average number of diluted ordinary shares (in thousands) 60,743 60,460 60,866 60,462
 

Interim condensed consolidated statement of financial position

of Orion Engineered Carbons S.A. as at June 30, 2018 and
December 31, 2017 – unaudited

       
Jun 30, 2018 Dec 31, 2017
A S S E T S     In $ k In $ k
Non-current assets
Goodwill 56,555 58,180
Other intangible assets 60,650 70,722
Property, plant and equipment 429,603 462,129
Investment in joint ventures 5,711 5,585
Other financial assets 3,175 3,564
Other assets 3,499 3,883
Deferred tax assets 56,510   43,546  
615,703   647,609  
Current assets
Inventories 175,228 159,334
Trade receivables 277,621 234,273
Other financial assets 6,872 3,890
Other assets 28,725 35,038
Income tax receivables 14,983 16,377
Cash and cash equivalents 73,453   72,284  
576,882   521,196  
1,192,585   1,168,805  
 
Jun 30, 2018 Dec 31, 2017
E Q U I T Y A N D L I A B I L I T I E S     In $ k In $ k
Equity
Subscribed capital 84,254 83,770
Treasury shares (3,757 ) (3,773 )
Reserves (26,610 ) (55,403 )
Profit or loss for the period 76,919   75,262  
130,806   99,856  
Non-current liabilities
Pension provisions 64,714 65,390
Other provisions 11,576 13,344
Financial liabilities 664,441 680,699
Other liabilities 66 6
Deferred tax liabilities 33,931   25,121  
774,728   784,560  
Current liabilities
Other provisions 56,746 59,471
Trade payables 164,180 169,624
Other financial liabilities 8,872 7,013
Income tax liabilities 35,741 15,539
Other liabilities 21,512   32,742  
287,051   284,389  
1,192,585   1,168,805  
               

Interim condensed consolidated statements of cash flows of

Orion Engineered Carbons S.A. for the three and six months
ended June 30, 2018 and 2017 – unaudited

 
Three Months Ended
Jun 30, 2018
Three Months Ended
Jun 30, 2017
Six Months Ended
Jun 30, 2018
Six Months Ended
Jun 30, 2017
In $ k In $ k In $ k In $ k
Profit for the period 52,691 18,428 76,919 35,243
 
Income taxes 20,558 9,023 33,722 18,986
 
Profit before income taxes 73,249 27,451 110,641 54,229
 
Depreciation and amortization of intangible assets and property,
plant and equipment
24,239 24,035 49,029 46,277
Gain on sale of property, plant and equipment (40,253 ) (40,253 )
Other non-cash expenses/(income) 2,124 1,402 5,656 3,421
(Increase) in trade receivables (4,935 ) (4,027 ) (53,039 ) (20,499 )
(Increase) in inventories (21,763 ) (2,996 ) (21,774 ) (15,655 )
Increase in trade payables 594 6,926 12,552 11,436
Decrease in provisions 10,693 (1,663 ) (3,179 ) (21,560 )
Increase in other assets and liabilities that cannot be allocated to
investing or financing activities
(15,861 ) (4,582 ) (8,838 ) 582
Finance income (19,123 ) (11,743 ) (19,978 ) (20,083 )
Finance costs 28,475 22,645 37,420 41,355
Cash paid for income taxes (13,288 ) (8,905 ) (16,869 ) (12,388 )
Other cash paid (4,741 ) (4,741 )
       
Cash flows from operating activities 19,410 48,543 46,627 67,115
 
Cash received from disposal of property, plant and equipment 64,672 64,672
Cash paid for the acquisition of intangible assets and property,
plant and equipment
(33,940 ) (18,160 ) (59,870 ) (36,458 )
       
Cash flows from investing activities 30,732 (18,160 ) 4,802 (36,458 )
 
Repayments of short term borrowings (2,054 ) (2,028 ) (4,188 ) (24,702 )
Cash inflows related to current financial liabilities

2,387

4,651

7,460

10,786
Cash outflows related to current financial liabilities

(12,298

) (6,631 )

(12,298

) (6,631 )
Interest and similar expenses paid (13,569 ) (11,223 ) (23,597 ) (17,738 )
Interest and similar income received 4,612 2,678 8,732 4,428
Dividends paid to shareholders (11,944 ) (11,169 ) (23,808 ) (21,955 )
       
Cash flows from financing activities (32,866 ) (23,722 ) (47,699 ) (55,812 )
       
Change in cash 17,276 6,661 3,730 (25,155 )
 
Change in cash resulting from exchange rate differences (3,537 ) 234 (2,561 ) 2,650
Cash and cash equivalents at the beginning of the period 59,714 48,506 72,284 77,906
       
Cash and cash equivalents at the end of the period 73,453   55,401   73,453   55,401  
 

The following tables present a reconciliation of each of Adjusted EBITDA
and Adjusted EPS to the most directly comparable IFRS measure:

       
Reconciliation of profit or loss Three Months Ended Jun 30, Six Months Ended Jun 30,
In $ k 2018     2017 2018     2017
Profit for the period 52,691 18,428 76,919 35,243
Income taxes 20,558 9,023 33,722 18,986
Finance costs 28,475 17,147 37,420 41,355
Share of profit of joint ventures (144 ) (133 ) (293 ) (262 )
Other finance income (19,123 ) (6,245 ) (19,978 ) (20,083 )
Earnings before taxes and finance income/costs (operating result
(EBIT))
82,457 38,220 127,790 75,239
Depreciation, amortization and impairment of intangible assets and
property, plant and equipment
24,239   24,035   49,029   46,277  
EBITDA 106,696 62,255 176,819 121,516
Share of profit of joint venture 144 133 293 262
Restructuring (income)/expenses, net (1) (29,751 ) 319 (28,485 ) 722
Consulting fees related to Group strategy (2) 151 810 1,035 1,049
Long Term Incentive Plan 2,853 1,609 5,953 3,209
Other adjustments (3) 1,055   (788 ) 1,525   199  
Adjusted EBITDA 81,148   64,338   157,140   126,957  

(1) Restructuring income or expenses are related to further actions
undertaken to realign our worldwide Rubber footprint and reflects in
particular the proceeds of the land sale in South Korea exceeding the
associated cessation costs in three and six months ended June 30, 2018.

(2) Consulting fees related to external consulting fees from
establishing and executing Group strategies.

(3) Other adjustments in the three and six months ended June 30, 2018
related in particular to license fees required for certain innovative
technologies to meet the EPA requirements of $1.1 million. Other
adjustments include income in the three months ended June 30, 2017
related to a reimbursement following a successful objection against
reassessed real estate transfer taxes in Germany of $1.5 million,
primarily offset by costs in association with our EPA enforcement action
of $0.5 million. In addition to the real estate transfer tax
reimbursement of $1.5 million other adjustments in the six months ended
June 30, 2017 include costs of $1.4 million in connection with our EPA
enforcement action.

       
Reconciliation of Adjusted EPS Three Months Ended Jun 30, Six Months Ended Jun 30,
in $ k 2018     2017 2018     2017
Profit for the period 52,691 18,428 76,919 35,243
Add back consulting fees and other adjustments 1,206 22 2,560 1,248
Add back restructuring (income)/expenses, net (29,751 ) 319 (28,485 ) 722
Add back long term incentive plan (LTIP) 2,853 1,609 5,953 3,209
Add back amortization of acquired intangible assets 3,886 3,277 7,888 6,767
Add back foreign exchange rate impacts to financial result 2,268 1,972 2,667 2,835
Amortization of transaction costs 178 1,257 381 2,023
Release of transaction costs due to repayment / extinguishment 1,738 1,738 414
Tax effect on add back items at 35% estimated tax rate 6,168   (2,960 ) 2,554   (6,026 )
Adjusted profit or loss for the period 41,237 23,925 72,175 46,435
Adjusted EPS (1) 0.69 0.40 1.21 0.78
 
Total add back items (11,454 ) 5,497 (4,744 ) 11,192
 
Impact add back items per share (0.19 ) 0.09 (0.08 ) 0.19
+ Earnings per Share ($ per share), basic     0.88       0.31       1.29       0.59  
= Adjusted EPS     0.69       0.40       1.21       0.78  
Based upon weighted number of shares outstanding: 59,590 k 59,320 k 59,456 k 59,320 k

Forward-looking Adjusted EBITDA and Adjusted EPS included in this
release are not reconcilable to their respective most directly
comparable IFRS measure without unreasonable efforts, because we are not
able to predict with reasonable certainty the ultimate amount or nature
of adjustment items in the remainder of the fiscal year. These items are
uncertain, depend on many factors and could have a material impact on
our IFRS reported results for the guidance period.

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