Growth in revenues and focus on core business 3A Composites

Horgen, 18 August 2017 – In the first half of 2017 Schweiter Technologies posted good organic growth in revenues. Net revenues from continuing operations rose 5% (+6% in local currencies) to CHF 485.6 million. The Group reported EBITDA of CHF 52.6 million (H1 2016: CHF 56.2 million), equivalent to a return on sales of 10.8%. A temporary increase in raw material costs and one-off effects led to a lower operating profit in the first half of the year in comparative terms. EBIT amounted to CHF 38.9 million (H1 2016: CHF 43.4 million) and net income from continuing operations came to CHF 30.9 million (H1 2016: CHF 30.5 million). Net income increased to CHF 129.5 million (H1 2016: CHF 34.5 million). This includes income of CHF 98.6 million from discontinued operations (SSM Textile Machinery). The Group’s cash holdings amounted to CHF 232 million.

3A Composites received orders amounting to CHF 505.7 million (H1 2016: CHF 498.8 million). Net revenues rose by 5% to CHF 485.6 million (H1 2016: CHF 462.3 million). As a result, EBITDA came to CHF 53.9 million (H1 2016: CHF 57.9 million). This equates to a return on sales of 11.1%. EBIT amounted to CHF 40.1 million (H1 2016: CHF 45.1 million).

The Display and Architecture businesses in Europe and the US made particular contributions to the growth in revenues.

The European Display business once again expanded its market position. Systematic development of the extensive range of transparent and non-transparent panels, coupled with a focused approach to sales, resulted in a particularly sharp rise in revenues compared with the general economic trend. In the American Display business, a combination of product innovations, a refocusing of sales and major customer projects even led to a double-digit increase in revenues. A temporary increase in raw material costs and the delayed contribution to earnings of adjustments to selling prices resulted in comparatively lower profitability.

The Architecture business posted double-digit increases in revenues in both Europe and America. Higher-than-expected start-up costs for a new production line negatively impacted profitability in the first half of the year. Weaker demand in China, as well as project delays in the Middle East and India slowed revenue performance in the Asian Architecture business.

The Core Materials business posted sustained strong demand – level with the previous year – in both the wind and non-wind sectors. Revenue growth was constrained by a temporary shortage of balsa wood resulting from unusually heavy rainfall in Ecuador.

Business in the Transportation sector showed a very pleasing trend, recording double-digit growth in revenues thanks to high demand in the rail vehicles segment accompanied by a disproportionately strong increase in profitability.

Outlook

In the second half of the year, business is expected to continue to develop favourably, with an operating result at least on a par with the first half. Demand in the Display and Architecture business in Europe and the United States is expected to be stable. The selective adjustment of selling prices should have a positive impact on profitability in the second half of the year. Some signs of recovery are emerging in the Asian Architecture business, while the Core Materials business is expected to enjoy solid demand.

In addition, the acquisition of Athlone Extrusions in Ireland will further strengthen the Composites business and make a positive contribution to earnings.