Press releases (04/30/12) Oerlikon reports profitability increase in Q1 2012

7th consecutive profitable quarter for the Oerlikon Group

- Sales growth of 6 % to CHF 961 million
- EBIT margin of 15.8 % includes one-time effect of property sale
- EBIT margin increased to 11.8 % on a like-for-like basis (Q1 2011: 11.7 %)
- Strong margin improvement of Oerlikon Textile and Drive Systems
- Consistent execution of portfolio optimization measures
- Upside potential for 2012 outlook with improved business volume and profitability

Pfäffikon SZ, Switzerland – April 30, 2012 – The Oerlikon Group achieved another increase in profitability in Q1 2012: EBIT was CHF 152 million, corres-ponding to a margin of 15.8 % including a one-time effect from the sale of property in Arbon, Switzerland, of CHF 39 million. On a like-for-like basis, EBIT reached CHF 113 million (Q1 2011: CHF 106 million), reflecting a margin of 11.8 % (Q1 2011: 11.7 %). The overall result was driven by strong margin improvement at the Textile and Drive Systems Segments and continued high profitability in both Vacuum and Coating. CEO Dr. Michael Buscher said: “This is a good start to the year for Oerlikon. Continuous efficiency improvements coming from Operational Excellence programs across the organization have contributed to a further increase in profitability. For the full year, we see upside potential for business volume and profitability.”

Order intake and backlog on normalized levels

As predicted order intake at CHF 996 million was 12 % lower than the exceptionally high first quarter of 2011 (Q1 2011: CHF 1 126 million), when customers were restocking following the financial crisis. Orders normalized by the second half of 2011 and have continued at these levels in the first quarter of 2012. Order backlog for the first quarter of 2012 was CHF 1 345 million (Q1 2011: CHF 1 693 million). 

Strong sales performance – US and Asia continued to grow

First quarter sales 2012 were 6 % higher at CHF 961 million (Q1 2011: CHF 906 million), with growth across all Segments other than Vacuum and Advanced Technologies, which were adversely affected by continued weakness in the solar market. The other Segments’ increases were driven primarily by growth in the US and China. Q1 2012 sales were impacted by the strong Swiss Franc. Adjusted for currency effects compared to Q1 2011, sales would have reached CHF 1 005 million, reflecting a growth rate of 11 %. Market penetration was strong in Asia, particularly in China, with sales up 22 % to CHF 387 million (China: sales growth of 34 % to CHF 291 million).

Further profitability improvement

First quarter EBIT increased 43 % to CHF 152 million (Q1 2011: CHF 106 million), or to a margin of 15.8 % (Q1 2011: 11.7 %). These figures include the one-time CHF 39 million effect of the property sale in Arbon, Switzerland, and do not include the Solar Segment, which is now held as discontinued operations. Excluding this one-time effect, the EBIT margin improved to 11.8 % in Q1 2012 from 11.7 % in Q1 2011. The Q1 2012 EBIT margin also shows improvement over the full year 2011 (restated) margin of 11.1 %. This solid increase in profitability was primarily driven by higher efficiency due to Operational Excellence programs, margin improvements from innovative products and volume increases. The Company`s performance resulted in a ROCE for Q1 2012 of 17.6 % compared to full year 2011 ROCE of 16.5 %.

Portfolio optimization

The first quarter also saw the consistent execution of portfolio optimization measures. In March 2012, Oerlikon announced the divestment of the Solar Segment to Tokyo Electron of Japan. The sale is a strategic move for Oerlikon to further streamline its portfolio and enable management to drive profitable growth by developing the larger, high performing businesses within the Group. The results for the Solar Segment are now reported under discontinued operations, with first quarter financials for 2012 and 2011 restated accordingly. The transaction is expected to close in the summer of 2012.

In April 2012, Oerlikon announced its exit from the optical disc equipment business, which had been in decline for some time. The Company also announced to streamline its Drive Systems’ operations in Italy by consolidating the number of sites from seven to five. Furthermore, Oerlikon has sold its minority stake in Pilatus Flugzeugwerke AG which marks another step to focus the portfolio on operational growth businesses. The proceeds of the Pilatus transaction will be booked in the second quarter.

Outlook for 2012

Oerlikon will continue to focus on efficiency and underlying performance improvements through disciplined execution of Operational Excellence measures, expansion of market share through innovation, development of the global footprint through further regional expansion and optimization of the portfolio. The Company sees upside potential for the existing full year outlook 2012 with improved business volume and profitability.

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