Half-Year Report at June 30, 2018: Conzzeta with strong business performance

Zurich, August 10, 2018 – With revenue of CHF 853.3 million (previous year: CHF 623.5 million), the Conzzeta Group achieved 36.8% growth in the first half of 2018. Adjusted for changes in the scope of consolidation and at constant exchange rates, revenue growth amounted to 19.7%. The operating result (EBIT) increased by 72.9% to CHF 66.3 million, corresponding to an EBIT margin of 7.6% (5.8%). 

  • Net revenue +36.8% -double-digit growth in all segments and regions
  • Operating result +72.9% -significant operating leverage
  • Order intake for capital goods at high level +14.5%

 

Group; CHF m

H1 2018

H1 20172

Order intake (capital goods)

581.5

508.0

+14.5%

Net revenue

853.3

623.5

+36.8%

     comparable1

 

 

+19.7%

Total revenue

875.8

658.6

+33.0%

Operating result (EBIT)

66.3

38.3

+72.9%

     as a % of total revenue

7.6%

5.8%

+180 bps

Group result

51.1

30.0

+70.3%

     as a % of total revenue

5.8%

4.5%

+130 bps

Minority interests

7.8

3.9

+101.5%

Operating free cash flow

39.4

9.9

+300.2%

Cash, cash equivalents and securities

364.1

501.4

-27.4%

Total assets

1,314.2

1,276.4

+3.0%

Shareholders' equity

883.2

944.5

-6.5%

     as a % of total assets

67.2%

74.0%

-680 bps

Net operating assets (NOA)

501.3

420.4

+19.2%

     Return on net operating assets (RONOA)

20.6%

13.9%

+670 bps

Number of employees at June 30

5,056

4,207

+20.2%

Earnings per class A share, in CHF

20.94

12.63

+65.8%

1At constant exchange rates and adjusted for changes in the scope of consolidation.
2Since 2018, other operating income has been shown separately and is no longer recorded under net revenue and total revenue. The figures for 2017 have been adjusted accordingly.

 

In the first half-year of 2018, the Conzzeta Group achieved revenue increases close to or clearly above 30% in Europe, the Americas and Asia respectively. Significant double-digit revenue growth was also reported in all segments, with the Chemical Specialties segment benefiting considerably from the acquisition of Otto Bock Kunststoff, which was acquired with effect as of September 2017. Overall, changes in the scope of consolidation contributed CHF 85.0 million and currency effects CHF 21.8 million to revenue. The start of the year was exceptionally strong thanks to the delivery of various large orders in the Glass Processing segment and successful product launches in the Sporting Goods segment. The strong momentum in the Sheet Metal Processing segment continued unabated in the first half of 2018 amid a favorable market environment. The order intake for capital goods in the two segments Sheet Metal Processing and the Glass Processing increased by 14.5% compared with the previous year.

The significantly higher than proportional increase in the operating profit relative to net revenue demonstrates the effectiveness of the ongoing efforts in the first half of the year to achieve a sustained improvement in profitability. Notable progress was achieved in the Sheet Metal Processing, Glass Processing and Sporting Goods segments. In contrast, the pressure on margins in the Chemical Specialties segment was accentuated compared with the previous year’s period due to continuing high costs of raw materials, although the high level of prices eased slightly towards the middle of the year. The group result for the first half of 2018 amounted to CHF 51.1 million, up 70.3% from the previous year. 

The acquisitions of ISAtec, TTM Laser and Antil in the reporting period strengthen the product portfolios of the growth segments Sheet Metal Processing and Chemical Specialties. In all business units defined operating and strategic measures are being steadily implemented. They include a dozen initiatives from the Business Excellence Program, which is now established throughout the Group. Innovative customer solutions are also being developed in all business units to further enhance the market position in the target markets. 

Michael Willome, Conzzeta Group CEO: "We owe a special thanks to our employees in all segments for our strong performance in the first half of the year. We are continuing to make good progress in implementing our priorities and initiatives. The high level of growth in all regions is the result of innovation and rigorous market orientation. The considerable improvement in our profitability puts us on track of achieving our medium-term EBIT margin target of at least 8% already in 2018."

Trends and outlook: After strong business performance in the first half of 2018 and significant improvements compared with the same period last year, both revenue and operating result are expected to grow at a slower rate in the second half of 2018 because of base effects. The order intake for investment goods at the beginning of the second half-year showed continued good business developments in Europe and particularly in the US, with a slowing momentum in China. The measures to achieve the necessary further improvements in profitability in the Chemical Specialties, Sporting Goods and Glass Processing segments will take time to be fully implemented. In the currently prevailing environment we expect revenue growth for the financial year 2018 of around 20% and an EBIT margin (excluding one-off effects) at the lower end of the target mid-term range of 8% to 10%.

 

Segments; CHF m

 

H1 2018

H1 20172

Sheet Metal Processing

Net revenue

477.3

364.9

+30.8%

 

     comparable1

 

 

+25.7%

 

Total revenue

500.1

394.9

+26.6%

 

Operating result

62.6

39.9

+57.0%

 

     as a % of total revenue

12.5%

10.1%

+240 bps

Sporting Goods

Net revenue

111.1

94.9

+17.0%

 

     comparable1

 

 

+14.2%

 

Total revenue

111.1

94.9

+17.0%

 

Operating result

-6.4

-9.9

+35.2%

 

     as a % of total revenue

-5.8%

-10.4%

+460 bps

Chemical Specialties

Net revenue

202.8

114.2

+77.6%

 

     comparable1

 

 

+3.8%

 

Total revenue

201.4

116.1

+73.5%

 

Operating result

9.2

9.9

-7.4%

 

     as a % of total revenue

4.6%

8.6%

-400 bps

Glass Processing

Net revenue

62.4

49.7

+25.5%

 

     comparable1

 

 

+22.7%

 

Total revenue

63.5

52.9

+20.2%

 

Operating result

2.9

1.8

+63.3%

 

     as a % of total revenue

4.6%

3.4%

+120 bps

1At constant exchange rates and adjusted for changes in the scope of consolidation.
2Since 2018, other operating income has been shown separately and is no longer recorded under net revenue and total revenue. The figures for 2017 have been adjusted accordingly.

 

The Sheet Metal Processing segment (Bystronic) generated net revenue of CHF 477.3 million in the first half of 2018 (previous year: CHF 364.9 million). This includes the first-time consolidation of TTM Laser, which was taken over on April 12, 2018. With significant double-digit growth rates in all regions, revenue growth and order intake were geographically broad-based for the entire first half of the year. The order book rose again at a high level. The operating result amounted to CHF 62.6 million, 57.0% higher than the previous year (CHF 39.9 million), while the EBIT margin was 12.5% (10.1%). The profitable growth was achieved thanks to innovative offerings across customer segments and increasing economies of scale. The implementation of the growth strategy requires further efforts and investments are required in order to enhance market presence and develop new solutions and products, particularly in the area of automation. The highly competitive market environment with continuing pressure on prices, requires ongoing improvements in productivity.

The Sporting Goods segment (Mammut) generated net revenue of CHF 111.1 million (previous year: 
CHF 94.9 million), reporting double-digit growth in Europe and Asia. The operating result amounted to CHF -6.4 million (CHF -9.9 million), with an EBIT margin of -5.8% (-10.4%). The operating loss expected in the seasonally weaker first half of the year was considerably reduced, despite the strategy-driven increase in the cost base by around CHF 2 million. Favorable contributions resulted, among other things, from successful product launches for the solid winter season 2017 / 2018 (new generation of the "Eiger Extreme" apparel collection and new version of the "Barryvox" avalanche transceiver) and buoyant development of the online channel. The five-year strategic plan launched in 2016 reached its halfway point in the middle of 2018. Development of the new, critical capabilities continued to progress well in the first half of 2018. The "Delta X" collection launched in Berlin at the beginning of July 2018 will be available from the beginning of 2019, and presales were strong. Like "Eiger Extreme", it distinguishes itself by combining performance, quality and functionality. The new urban collection willcomplete Mammut's range as the premium brand for mountaineering enthusiasts.  

The Chemical Specialties segment (FoamPartner and Schmid Rhyner) generated net revenue of CHF 202.8 million (previous year CHF 114.2 million). This figure reflects changes in the scope of consolidation, namely the FoamPartner business unit's takeover of Otto Bock Kunststoff on September 1, 2017, and the sale of the 51% stake in the U.S. joint venture on July 1, 2017. Net revenue increased in all regions and in all four product segments: Mobility, Specialties, Living & Care and Coatings. The operating result amounted to CHF 9.2 million (CHF 9.9 million), with an EBIT margin of 4.6% (8.6%). Significantly higher raw material as well as reorganization costs adversely impacted the operating result by around CHF 5 million. Additional measures to pass on the higher raw material prices were largely realized in the first half of the year, although some of the measures will not have an effect until the second half of the year. The integration of FoamPartner and Otto Bock Kunststoff and the implementation of an organizational model with more of a regional focus, including the merger of the various legal entities, is proceeding according to plan, but as anticipated will require a certain amount of time. Additional initiatives to realize the mid-term margin potential are in preparation.

The Glass Processing segment (Bystronic glass) generated net revenue of CHF 62.4 million (previous year: CHF 49.7 million), with a double-digit revenue increase achieved in both the architectural and automotive glass markets. All regions contributed to this growth, particularly Asia. The operating result amounted to CHF 2.9 million, up 63.3% from the previous year (CHF 1.8 million). The EBIT margin as of the middle of the year was 4.6%, also significantly higher than the previous year (3.4%), but still below the Group's target mid-term range. The measures introduced to improve processes and increase efficiency are continuing, while at the same time further investments continue to be made in innovation projects. The aim here is, among other things, to develop a more consequent platform strategy for architectural glass and to continue to develop the range of products and solutions with a view to achieving a more balanced product mix in the medium term. 

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, market orientation and a long-term perspective. Conzzeta strives for leading positions in its global target markets, above-average growth and long-term value creation. More than 5000 employees at over 60 locations worldwide aim to be "best choice" for customers, offering 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).


 

Interim information as of the end of Q3 2018: Continued double-digit growth in all segments

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