Business

Oerlikon Group’s Net Profit Up 11.6 Per Cent, As Orders, Sales Rise During Q2 2017

The Switzerland-headquartered Oerlikon Group has announced that its group net profit increased by 11.6 % to Swiss Franc (CHF) 48 million in the first half of 2017 even as its EBITDA margin touched 13.4% in the second quarter.

There has been an increase in orders in all areas of the group’s business, including surface solutions segment, manmade fibres segment as well as the drive systems segment, which has achieved double digit profitability.

“We successfully delivered another quarter of strong performance and growth in all Segments. We were able to master the challenges of the markets by clearly focusing on developing sales while improving our cost structure. As a result of our strategic actions, we captured many opportunities that arose from the pickup in our key end markets and increased orders and sales in all Segments,” Oerlikon Group CEO Dr Roland Fischer said.

“Our increased focus on the surface solutions business has borne fruit, and we have achieved higher year-on-year orders and sales. We strengthened our business offerings through two technology acquisitions and investments in four services and coating centres, and made important progress in our additive manufacturing business”.

“In the manmade fibres business, the significant increase in sales and orders mainly reflects the ongoing recovery in investments in filament equipment, as well as the expansion of our position in the staple fibres market. The repositioning of the drive systems business, new customer wins and development of new applications in areas such as e-mobility have opened up attractive long-term prospects for the Drive Systems Segment. The strong second quarter performance confirms that we are on the right track with our strategy. We are confident that going forward, we can further leverage our business model and competences in surface solutions, advanced materials and materials processing,” Dr Fischer said.

Oerlikon Group second quarter review

Global economic confidence has improved markedly over the past few quarters, with stronger trade, robust demand, and upturns in industrial and capital investments. The upward trend in investments was noted in practically all of Oerlikon’s key end markets, such as aerospace, automotive, general industries, tooling, filament equipment, agriculture, construction and transportation, all of which have contributed to the Group’s strong performance. In the energy and mining sector, a slight increase in investment activity, particularly in US shale oil and gas, was observed and is expected to have a positive impact in the coming months.

The Surface Solutions Segment continued its positive momentum and grew its second quarter orders and sales. Demand came from most of its end markets, with a stable up trend in automotive and aerospace and notably higher uptake in general industries and tooling. Even after accounting for the investments in the additive manufacturing business and acquisitions to strengthen its portfolio and competences, the segment succeeded in maintaining its quarterly operating profitability at over 20 % for the eleventh consecutive quarter.

The manmade fibres business recorded a substantial uptick in orders and sales, driven by the recovery of the filament equipment market in China, new wins in South America and large projects in India and Turkey, and was also supported by a healthy demand for staple fibers systems. The Drive Systems Segment increased orders and sales as the Segment’s repositioning enabled it to benefit from the recovery in the agriculture, transportation, construction and automotive markets, and it is establishing a promising position with customer wins in e-mobility.

In the second quarter, the Group’s order intake increased year-on-year by 21.9 % to CHF 724 million, while sales went up by 19.4 % to CHF 689 million. At constant exchange rates, sales stood at CHF 693 million. EBITDA for the second quarter increased to CHF 92 million, corresponding to a margin of 13.4 %. EBIT for Q2 2017 was at CHF 44 million, or 6.4 % of sales. The second quarter performance resulted in the rolling 12-month Oerlikon Group return on capital employed (ROCE) of 6.2 % versus 6.9 % (normalised for restructuring and impairment effects) in the same period in 2016.

Oerlikon Group half-year overview

In the first half of 2017, the Group’s order intake increased year-on-year by 21.6 % to CHF 1 436 million, while sales came in at 10.9 % higher than the prior year, reaching CHF 1 297 million. With the top line increase, the EBITDA for the half year amounted to CHF 178 million, corresponding to a margin of 13.7 %. EBIT stood at CHF 84 million, or 6.5 % of sales. Result from continuing operations increased by 54.8 % to CHF 48 million, and the net result for the first half of the year increased by 11.6 % year-on-year to CHF 48 million as well.

In the first six months of 2017, Oerlikon’s service business contributed to 35.7 % of total Group sales.

2017 outlook confirmed

The positive momentum in the global economy in the first half of 2017 is expected to persist in the second half of the year. Growth for the full year is projected for the advanced economies in Europe and the USA, as well as in Asian markets, particularly China and India. Given today’s integrated global economy, certain political and economic risks and challenges will remain. However, based on the strong performance in the first half of 2017, Oerlikon confirms its outlook and is confident to deliver order intake and sales of around CHF 2.6 billion each and for the EBITDA margin to approach 14 % after absorbing the unchanged planned financial outlay for investments in additive manufacturing, the release stated.