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Oerlikon during the first nine months of 2010

Oerlikon's recovery gains momentum

  • Order intake of CHF 3.2 billion (+39 percent above Q1-Q3 2009)
  • CHF 2.5 billion in sales (+14 percent compared to Q1-Q3 2009) 
  • Oerlikon Textile, Coating, Vacuum and Advanced Technologies are driving growth
  • Asia is the most important growth region 
  • Outlook for 2010 as a whole has improved compared to the mid-year forecast:
    - Growth in sales slightly exceeds 20 percent
    - Operating profit for the year as a whole

 

Pfäffikon SZ, October 21, 2010 - Recovery at the Oerlikon Group continued and strengthened during the third quarter of 2010. Compared to the previous year, order intake for Q1-Q3 2010 rose 39 percent to CHF 3.2 billion. At the reporting date, orders on hand amounted to CHF 1.6 billion (September 30, 2009: CHF 1.1 billion). Despite of a negative impact by currency exchange rates of CHF 131 million (-5 percent), sales rose 14 percent to CHF 2.5 billion during the first nine months of 2010 compared to the same period of the previous year. "Our efforts are beginning to have a broader impact. Results show that the majority of our segments are benefiting above average from the positive market development. The results for the first nine months of 2010 are considerably better than expected," says Oerlikon CEO Dr. Michael Buscher. "As Oerlikon's recovery has gained ground, we are able to raise our forecast for the year as a whole. At the same time we are well aware that there are still challenging operational and strategic tasks ahead. These will be dealt with consistently," says Buscher. The company now expects sales to grow slightly above 20 percent (previously: 15 percent) and to achieve an operational profit (EBIT prior to restructuring) for the year as a whole (previously: the company will reach break-even during the second half of 2010). 

Order intake during the first nine months of 2010 rose 39 percent to 3.2 billion in a year-on-year comparison. In a quarter-on-quarter comparison, orders have eased from their peak in the second quarter (down 6 percent from Q2 2010 to Q3 2010), but remain at a high level. The ratio of orders to sales (book-to-bill ratio) of 1.3 for Q1-Q3 2010 and 1.2 for Q3 2010 underpins the Oerlikon Group's ongoing growth trend.

The Group's increase in sales during the first nine months of the year was mainly driven by Oerlikon Textile, where sales rose 56 percent to CHF 1.1 billion compared to the prior-year period. The segments Oerlikon Coating (+28 percent), Vacuum (+32 percent) and Advanced Technologies (+73 percent) also contributed to this positive trend. While Oerlikon Solar increased its sales to CHF 139 million during the third quarter, sales during the first nine months of 2010 were still at a low level. As expected, Oerlikon Drive Systems saw a slight improvement during the first nine months 2010 in a year-on-year comparison (+5 percent).

Strong growth in sales is the result of the ongoing recovery in most markets in which Oerlikon is active, particularly the textile and automotive industries but also the process industry and the semiconductor market. The strongest regional impetus came from Asia, which saw a growth from 31 percent in Q1-Q3 2009 to 43 percent in Q1-Q3 2010. Another reason for this growth is that the high level of new orders during the first half of the year can now increasingly be transformed into sales. Due to longer project lead times at Oerlikon Textile and Oerlikon Drive Systems in particular, as well as the ramp up of production including deliveries in nearly every segment, it takes orders on average around six months to have an impact on sales figures.

Outlook

Oerlikon expects this positive development at the Group level to continue in the fourth quarter of 2010. As for new orders, a 2009/2010 year-on-year comparison is expected to show a substantial increase, while a comparison of Q4 2010 and Q3 2010 is likely to reveal decreasing volumes in all segments except Coating and Drive Systems. Oerlikon Textile, Solar and Advanced Technologies anticipate considerable growth in sales compared to the previous quarters, while Coating, Vacuum and Drive Systems expect a more stable trend in Q4 2010. 

Overall, the positive development seen during the first nine months and current order backlog has prompted management to raise its forecasts for 2010 as a whole. Growth in sales of slightly more than 20 percent now seems realistic for 2010 - mid-way through the year the outlook was around 15 percent. Additionally earning figures are also expected to show improvements. "Due to the predominantly positive market development and our progress so far, we now anticipate an operational profit for the year as a whole," says Oerlikon CEO Buscher. At the end of the first half of 2010, a return to operational profitability was announced for the second half of the year. The target of generating a positive net profit in 2011 has been reaffirmed.

Segment performance
Oerlikon Textile

In a year-on-year comparison, Oerlikon increased its order intake by 112 percent to CHF 1.8 billion during the first three quarters of 2010. In Q3 2010 orders were below those received in Q2 2010 but still remain at a high level compared to the previous year. On September 30, 2010, orders on hand amounted to CHF 1.1 billion (September 30, 2009: CHF 0.5 billion). Sales improved by 56 percent to CHF 1.1 billion. The book-to-bill ratio for Q1-Q3 2010 was 1.6. Key projects that Oerlikon Textile was able to bring on board, including a major order to produce synthetic fibers worth more than CHF 200 million and an order for the world's largest staple fiber plant with a daily processing capacity of 300 tons, reflect the customers' great willingness to invest. In this situation, the segment's greatest challenge will be to systematically complete the operational restructuring efforts and make all the structural adjustments required while flexibly developing the necessary production capacities and supply chains.

Growth was driven by the extremely sharp rise in demand both in the synthetic and in the natural fiber sector, particularly from China, India and Turkey. Some orders received extend well into 2012. Developments in the Oerlikon Barmag and Schlafhorst business units were therefore positive. Oerlikon Neumag was also able to pick up the pace as a result of the recovery in the markets for carpet yarn and staple fiber. As a supplier of components for the entire textile machine market, Oerlikon Textile Components benefitted from the general upturn in the textile machine industry. Within the segment, there has been no noticeable recovery at Oerlikon Saurer, specifically the areas of twisting and embroidery.

Oerlikon Textile expects the positive trend to continue in Q4 2010, specifically that order intake will normalize at a high level and that the large volume of orders on hand will have an increasing impact on sales figures.

Oerlikon Coating

Sales at Oerlikon Coating in Q1-Q3 2010 grew 28 percent over the previous year to CHF 304 million, thus continuing its strong recovery. As expected, a comparison of Q2 2010 and Q3 2010 shows that seasonal effects caused sales to drop during the summer, yet a year-on-year comparison of Q3 2010 and Q3 2009 showed a 30 percent improvement. A key driver of this development was the high demand from the automotive and tool sector, primarily in Asia. Early regional expansion, particularly to China, and the systematic build-up of new coating centers paid off as much as the ongoing introduction of groundbreaking technologies such as the new BALINIT ALCRONA PRO coating system, launched at the beginning of the year. Accordingly, the coating services business in Asia experienced the greatest growth with 53 percent, followed by 39 percent in North America and 28 percent in Europe (at fixed exchange rates). Oerlikon Coating expects sales to be stable in Q4 2010.

Oerlikon Solar

Oerlikon Solar generated new orders of CHF 92 million in Q1-Q3 2010 (previous year: CHF 503 million, -82 percent). A quarterly comparison shows that Oerlikon Solar was able to win some initial orders worth CHF 81 million in Q3 2010. Orders on hand amounted to CHF 232 million on September 30, 2010 (September 30, 2009: CHF 328 million). Sales of CHF 139 million were generated in Q1-Q3 2010 (previous year: CHF 431 million, -68 percent), CHF 65 million of which were generated in Q3 2010. From a technological perspective, the earlier scheduled market launch of the new ThinFab production line exhibited another important milestone achieved in Q3 2010, with better performance figures than planned. The new ThinFab line produces thin-film silicon modules with a stabilized efficiency level of 10 percent and 143 Watt peak (Wp) performance at a cost of EUR 0.5/Wp. This innovation positions the segment as the cost leader in the solar thin film silicon industry. Oerlikon Solar also set a world record with a new laboratory cell with an efficiency level of 11.9 percent. This clearly emphasizes the long-term potential of thin-film silicon technology. Now it is crucial to use Oerlikon Solar's regained competitive edge to partner with new, market-shaping customers. Q4 2010 will continue to focus on processing orders on hand as well as new order acquisition. That should trigger a increase in sales over the previous quarters, even if they remain at an unsatisfactory level.

Oerlikon Vacuum

In Q1-Q3 2010, Oerlikon Vacuum succeeded in stepping up order intake by 41 percent to CHF 332 million compared to the same period of the previous year. A comparison between Q3 2010 and the previous quarter shows a 7 percent decline. Orders on hand amounted to CHF 94 million on September 30, 2010 (September 30, 2009: CHF 78 million). Sales rose 32 percent to CHF 298 million. This development was driven predominantly by Asia. North America also continued its recovery, while Europe only showed moderate improvements. Process industry, coating, solar and semiconductor applications improved most noticeably in the individual areas of application. Sales of vacuum systems for R&D and Analytics remained at a low level, partly as a result of tight budgets at public research institutions. In Q4 2010, the segment expects order intake to decline while sales volume remains stable.

Oerlikon Drive Systems

The Oerlikon Drive Systems segment boosted its order intake in Q1-Q3 2010 by 40 percent over the prior-year period to CHF 578 million. Orders received in Q3 2010 saw a 12 percent drop compared to Q2 2010. In a year-on-year comparison by quarters, orders received in Q3 2010 rose 37 percent. Orders on hand amounted to CHF 121 million on September 30, 2010 (September 30, 2009: CHF 84 million). As expected, sales generated in the segment during Q1-Q3 2010 edged up to CHF 541 million, a year-on-year increase of 5 percent. Although this indicates a stabilization of Oerlikon Drive Systems' markets, there has so far been no substantial recovery. The increase in new orders was primarily a result of off-highway applications (mining and energy), with vital impetus coming from the growth markets of India, China, Brazil and Turkey. Oerlikon Drive Systems expects a stable development in Q4 2010.


Oerlikon Advanced Technologies

The Oerlikon Advanced Technologies segment continued to recover over the last quarter. Order intake for Q1-Q3 2010 rose 76 percent to CHF 102 million while remaining steady between Q2 2010 and Q3 2010. Orders on hand totaled CHF 48 million on September 30, 2010 (September 30, 2009: CHF 29 million).  Q1-Q3 2010 saw sales grow 73 percent year-on-year to CHF 83 million, with Q3 2010 considerably stronger than the preceding quarters. This puts Oerlikon Advanced Technologies in a position to make most out of the recovery in the semiconductor market and the continuing upward trend for optical storage media. For Q4 2010 the segment expects continued strong growth in sales along with declining order intake following the overall development in the semiconductor and Blu-ray disc market.

This press release contains information based on information currently available to management. The forward-looking statements contained herein could be impacted by risks and influences that are not foreseeable at present, so that actual results may vary materially from those anticipated, expected or projected. Reported values could differ as a result of rounding.

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