Half-Year Report at June 30, 2017: Higher profit – good order intake sustained

Zurich, August 11, 2017 – In the first half of 2017, the Conzzeta Group generated net revenue of CHF 625.9 million, up 19.3% year on year, with order intake remaining strong. The operating result increased by 46.5% to CHF 38.3 million, with an EBIT margin of 5.8% (previous year: 4.8%). The Group result amounted to CHF 30.0 million, a rise of 44.0% on the previous year's level.

Net revenue on a comparable basis, i.e. at stable foreign exchange rates and considering changes in the scope of consolidation, was 11.1% higher than in the subdued first semester of 2016. A disproportionately high contribution came from the strong performance in the Sheet Metal Processing segment and growth by the Group as a whole in Asia of 22.4%. Including the 51% stake acquired in DNE Laser, Shenzhen (China), in July 2016, sales growth in Asia amounted to 67.7%. Net revenue in Europe grew by 10.6%, while weakening in the Americas by 1.5%.

The EBIT margin improved significantly on higher revenue, thanks in particular to a favourable change in the mix of innovative products and despite set-up costs in connection with the ongoing strategy projects and a notable rise in the price of starting materials within the Chemical Specialties segment. Group profit before minorities included a better financial result and higher tax expense.

Michael Willome, Group CEO, comments: “In light of the pleasing results achieved for the first six months of the year, particularly also in Asia, we are on course overall to meet the targets set for 2017 and beyond. Innovation and uncompromised market orientation are the basis for profitable growth and the further internationalization of our group of companies.”

Segments

The Sheet Metal Processing segment (Bystronic) generated net revenue of CHF 366.3 million (previous year: CHF 256.8 million). On a comparable basis, i.e. with stable exchange rates and not including the acquisitions of DNE Laser and FMG in the course of 2016, net revenue increased by 24.8%. The operating result was CHF 39.9 million (CHF 17.7 million), with an EBIT margin of 10.1% (6.5%). Net revenue increased in all regions, with substantial two-digit growth rates in Asia and Europe. The order intake continued to grow equally with two-digit growth rates on a broad geographical basis. The order book further increased from the above-average level at the end of 2016. The business benefitted on the one hand from the generally positive state of the market. On the other hand, demand was particularly high for Bystronic’s newly launched laser cutting systems with higher performance ratings and for integrated automation solutions as well as for the entry-level products of DNE Laser. The integration of DNE Laser and FMG was completed in the first half of 2017.

The Sporting Goods segment (Mammut) generated net revenue of CHF 95.1 million (previous year:
CHF 101.4 million).  The operating result came in at CHF -9.9 million (CHF -4.5 million), with an EBIT margin of -10.4% (-4.5%). A lower result in the seasonally anyway weaker first half of the year has been planned in context of the ongoing strategy program with the further increased cost base for the development of the mission critical competencies in the areas of internationalization, digitalization, retail and design. The continuously challenging competitive environment in the proportionally significant European core markets of Switzerland, Germany and Austria (DACH-region) equally contributed to the lower result. In addition, to sharpen the focus of Mammut’s aspiration to be a premium player in the area of alpine sports and outdoor pursuits, liquidation sales were reduced in the first half of 2017 by CHF 3.3 million. The strategy program has now been launched across the entire breadth of the business. Among the aims are improving the floor space productivity of the important wholesale customers and strengthening Mammut’s own retail know-how to respond to rapidly changing consumer behaviour and strong competitive pressure. In achieving these goals, the improvement of processes and their digitalization will be of paramount importance.

The Chemical Specialties segment (FoamPartner and Schmid Rhyner) generated net revenue
of CHF 114.5 million (previous year: CHF 111.0 million).  The operating result was CHF 9.9 million
(CHF 12.5 million), with an EBIT margin of 8.5% (11.3%). As expected, due to the continued rise in raw-material prices, it was not possible to sustain the high EBIT margin recorded in the first half of 2016. For some materials, parts of the industry experienced supply shortages with new peak prices. The response to higher costs was price adjustments, which will take full effect over time. While net revenue increased in Asia and Europe as well as in the Mobility, Specialties and Print Varnishes market segments, a sideways trend was apparent in the Americas and in the Living & Care market segment. At the beginning of 2017, following last year’s review of its business strategy, FoamPartner rolled out a new organizational structure, devolving responsibility for results to the regions with the aim of strengthening market orientation. After completion of the acquisition of Otto Bock Kunststoff, announced on July 21, the new organization will be instrumental for the integration and the significant expansion of the business in all three regions, Europe, Asia and the Americas.

The Glass Processing segment (Bystronic glass) generated net revenue of CHF 49.9 million (previous year: CHF 55.2 million). The operating result was CHF 1.8 million (CHF 2.1 million), with an EBIT margin
of 3.4% (3.6%). A stronger business trend in Europe and Asia was not sufficient to compensate for the decrease in net revenue in the Americas, which was significantly lower than the strong result recorded the previous year. The order intake overall was higher year on year and the order book was above the level recorded at the end of 2016. The result reflects the previously announced restructuring measures, currently in the process of implementation.

Trends and outlook

The 2017 business year so far has matched our assessment at the start of the year, although the state of the market in the Sheet Metal Processing segment has shown a gratifyingly robust trend beyond our expectations. The order intake for capital goods across the Group further increased at a high level thanks to market-oriented innovations and provides a good foundation for a successful second half in the Sheet Metal Processing and Glass Processing segments.

In the Sporting Goods segment, 2017 is a year of transition with a continued focus on implementing the five year strategy program started in 2016, whereby any resulting relevant revenue contribution is not anticipated before the second half of 2018.

In the Chemical Specialties segment, FoamPartner is due to complete the recently announced acquisition during the second half of 2017. The first-time consolidation of the new business will impact the annual result accordingly, with further integration and expansion activities planned from 2018 onward.

In the Glass Processing segment, there is the prospect of a better second-half contribution to revenue and income compared with the first half thanks to ongoing customer projects and to the reduced cost base.

Provided the business environment for capital goods remains robust, we expect growth for 2017 above the previous year as well as a disproportionate increase of the operating result with an improved EBIT margin of around 7.5%.

The table below summarizes the key figures for the Group and the segments. The interim report 2017 and results presentation are published (in English) at www.conzzeta.com.

 

 

Group key figures

January-June

 

 

 

 

 

2017

2016

 

 

 

 

Net revenue

CHF m

625.9

524.6

Total revenue

CHF m

661.0

544.9

Operating result

CHF m

38.3

26.2

as % of total revenue

%

5.8

4.8

Group result

CHF m

30.0

20.9

as % of total revenue

%

4.5

3.8

Minorities

CHF m

3.9

-

 

 

 

 

Operational free cash flow*

CHF m

9.9

9.5

 

 

 

 

Cash, cash equivalents and securities

CHF m

501.4

509.0

 

 

 

 

Shareholders’ equity

CHF m

944.5

955.4

Total assets

CHF m

1,276.4

1'227.3

as % of total assets

%

74.0

77.8

 

 

 

 

Net operating assets

CHF m

420.4

430.0

 

 

 

 

Employees at the end of June

Number

4,207

3,539

Average number of employees in full-time positions

Number

4,163

3,522

*Free cash flow without changes in securities and financial assets with a term of more than 90 days as well as acquisition and divestment of business activities.

 

Segment key figures

January-June

 

 

 

 

 

 

 

 

2017

2016

 

 

 

 

 

 

 

Sheet Metal Processing

Net revenue

CHF m

366.3

256.8

 

 

Total revenue

CHF m

396.3

273.1

 

 

Operating result

CHF m

39.9

17.7

 

 

as % of total revenue

%

10.1

6.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Sporting Goods

Net revenue

CHF m

95.1

101.4

 

 

Total revenue

CHF m

95.1

101.7

 

 

Operating result

CHF m

-9.9

-4.5

 

 

as % of total revenue

%

-10.4

-4.5

 

 

 

 

 

 

 

Chemical Specialties

Net revenue

CHF m

114.5

111.0

 

 

Total revenue

CHF m

116.4

111.3

 

 

Operating result

CHF m

9.9

12.5

 

 

as % of total revenue

%

8.5

11.3

 

 

 

 

 

 

 

Glass Processing

Net revenue

CHF m

49.9

55.2

 

 

Total revenue

CHF m

53.1

58.6

 

 

Operating result

CHF m

1.8

2.1

 

 

as % of total revenue

%

3.4

3.6

 

 

 

 

 

 

 

 

For further information please contact:
Michael Stäheli, Head Investor Relations & Corporate Communications
Phone +41 44 468 24 84
media@conzzeta.com

About Conzzeta
Conzzeta is a broadly diversivied Swiss group of companies. It stands for innovation, reliability and a long-term perspective. Conzzeta strives for leading positions in its target markets, above-average growth and long-term value creation. Over 4000 employees at more than 60 locations worldwide are dedicated to offering customers innovative solutions in Sheet Metal Processing, Sporting Goods, Foam Materials, Graphic Coatings and Glass Processing. Conzzeta AG is listed on the SIX Swiss Exchange (SIX:CON).


 

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