First half of 2012 - Clear increase in profitability for composite materials and 12% EBITDA margin

Horgen, August 17, 2012 – Group net revenues amounted to CHF 378.0 million in the first half of 2012 (1H 2011: 425.0 million), which represents a decline of 11%. SSM Textile Machinery was just able to maintain revenues at the same level as the previous year, while Ismeca Semiconductor experienced a marked sector-cyclical decline compared with its high year-back result. 3A Composites posted high revenues in Architecture and Display, whereas the price war in the wind segment put pressure on revenues and margins in Core Materials. Despite this, this segment too made a clear positive contribution to profits.

The Group posted EBITDA of CHF 45.0 million (1H 2011: 46.3 million*), which corresponds to approximately 12% of net sales.  EBIT came to CHF 30.5 million (1H 2011: 31.5 million*) and net income to CHF 24.6 million (1H 2011: 20.3 million*). Cash flow from operating activity improved by over CHF 20 million against the previous year. The cash position stood at CHF 286 million (1H 2011: 249 million).

* Previous year’s figures as published, before restatement owing to the early introduction of IAS 19 revised

In a challenging sector environment, SSM Textile Machinery reported new orders amounting to CHF 35.5 million (1H 2011: 40.1 million) resulting in net revenues of CHF 38.7 million (1H 2011: 39.3 million). This corresponds to a slight decrease of 2%.

Key markets such as India and China suffered from a decline in consumer demand from Europe and the US, which was reflected in cautious investment activity on the part of customers.

The operating result (EBIT) amounted to CHF 3.1 million (1H 2011: 5.2 million*), which corresponds to a net profit ratio of 8%. The lower result in comparison with the year-back period is primarily due to the lower operating profit. By contrast, margins were maintained despite price pressure. Start-up and integration costs for the company acquired in Italy depressed the result by approximately CHF 1 million.

Ismeca Semiconductor reported new orders amounting to CHF 45.1 million (1H 2011:  50.9 million). The decline compared with the previous year’s high figure is due to the sluggish state of the sector at the beginning of the year. Net revenues were correspondingly lower at CHF 38.0 million (1H 2011: 50.8 million). Cutting-edge products with good margins delivered a positive operating result (EBIT) of CHF 1.6 million (1H 2011: 4.8 million*) despite lower revenues.

3A Composites recorded new orders amounting to CHF 309.1 million (1H 2011:  389.3 million). Just under half of the decline is attributable to a multi-year contract won the previous year by the automotive business in Altenrhein, which has since been divested. Net revenues amounted to CHF 301.0 million (1H 2011: 334.7 million), which represents a decline of 10%. This resulted in an EBITDA of CHF 40.1 million (1H 2011: 36.7 million*), corresponding to a significant improvement in the net profit ratio to more than 13% (1H 2011: 11%). EBIT came to CHF 26.6 million (1H 2011: 22.6 million*),  The gratifying result was achieved despite unfavorable conditions in the wind energy sector, where competitive and cost pressure among wind farm manufacturers, particularly in China, led to heightened price competition in the core materials segment. In the US and Europe, the market progressed at roughly the same level as the previous year. The marine market continued to show signs of recovering. 

Despite uncertainties surrounding the future direction of the economy, the cyclical Display business made further encouraging progress in both the US and Europe.

Architecture posted solid revenues and results in Europe and Asia. In Europe, business was good in Germany in particular, while demand in southern Europe contracted appreciably. In China, business in the high-end façade cladding units segment continued to make very gratifying headway.

The adjustment of a medical plan in the US improved the result by just under CHF 3 million.

In June, Display took over a leading PVC foam sheet and PET plastic manufacturer in Ireland. On the other hand, as part of the drive toward focusing on the core operationsof lightweightcomponentsfor mass transportation and industry, the automotive business was divested, which means the absence of revenues in the region of CHF 5 million per year.

The former industrial estate in Neuhausen (RhyTech site) is being re-opened under a site development scheme and is to be used for a range of purposes (workplace, housing, encounters).Over 230 apartments are to be built on an area of 26,000 m2.A study was commissioned and an architecture competition organized. A panel of expert judges selected the winning project, which is to be realized over the coming years.

Outlook

During the second half of the year, SSM Textile Machinery is expected to witness a slowdown in business owing to a reticence on the part of customers to make major investments, while Ismeca Semiconductor should fare better in the 2nd half despite low visibility.

Developments in the wind power segment going forward will be a key factor in the performance of 3A Composites’ core materials business. The second half of the year remains challenging and will be weaker owing to the muted prospects for wind power in China. The outlook for Architecture and Display remains positive thanks to a fall in the price of raw materials and a solid order intake. Overall, the Group is expecting a weaker 2nd half in terms of revenues and result.