Chairman's report
The year under review was a year of the turn- around for HUBER+SUHNER. After two extremely difficult years, a sluggish global economy coupled with weak markets, particularly in telecommunications, meant that expectations for 2003 were modest from the outset. It is all the more pleasing, therefore, that, despite the difficult environment and a decline in sales, rigorous cost management has allowed us to post a positive result and strengthen our balance sheet even further. With regard to its operations, the company reinforced the realignment of its activities and continued to focus on its core business.
We are confident that we have set the course for a successful future. With satisfaction we can say that our new management team has put us firmly back on track.
Balanced diversification
In 2003, HUBER+SUHNER expanded its client base in many markets and today has a balanced product portfolio. This gives our company a broader basis and makes us less vulnerable to fluctuation in demand in individual industries.
Strong equity base
A decisive factor for successfully overcoming the crisis in the telecom sector and for succeeding in realigning our business was our healthy balance sheet with its high level of equity capital. Liquidity was again increased in the year under review and debt reduced to such an extent that our balance sheet even showed a positive net liquidity position as at the balance sheet date. This gives us a solid platform on which to build growth. Consequently, an important goal for the Board of Directors will continue to be to secure a strong equity base and leverage this base to provide the necessary room for manoeuvre in our business.
Production in low-cost locations
As part of our focus on a few strategic locations, the number of production facilities outside Switzerland was reduced by 50%. This contrasted with the continued expansion of capacities in the low-cost growth markets China, Brazil and Poland. This new concept will allow HUBER+SUHNER to ensure competitive production worldwide and to enhance services further for its clients.
Portfolio restructured via divestments
In the 2003 business year, HUBER+SUHNER sold the cable company Champlain Cable Corporation in Vermont, USA, to a group of local investors. HUBER+SUHNER will continue to hold a minority interest in Champlain Cable Corporation, but will have no say in the operational management of the company. It also sold its industrial rolling and polyurethane unit in Pfäffikon, Switzerland, to a Belgian company. Almost all employees in the Pfäffikon unit were taken over by the new owner. These divestments allowed us to move forward with our concentration on core business.
Capital market confirms restructuring
The successful restructuring and realignment have positively impacted our share price. Our market capitalization doubled in the 2003 business year, in an initial positive correction, and we can view this as a sign of strengthened trust in our company.
Proposal for payment of a dividend
Although net income is not yet in line with future expectations, the 2003 business year has marked a return to profit. Consequently, the Board of Directors has decided to reinstate dividend payments and will propose to the General Meeting that CHF 0.50 be paid out per registered share.
Changes in the Board of Directors
Following his election to the Swiss Federal Council, Hans-Rudolf Merz, a member of our Board of Directors for many years, had to step down at the end of 2003. We would like to thank him for his dedication and his valuable services to our company, and we wish him success and fulfilment in his new cabinet post. The Board of Directors will submit a proposal to the General Meeting of Shareholders that he will be replaced by Erich Walser. Erich Walser has many years of experience in the banking and insurance sectors and he knows the industrial environment thanks to the positions he has held on various boards of directors. He is currently Chair-man and CEO of the Helvetia Patria Group.
Klaus Jenny made himself available for a term on HUBER+SUHNER’s Board of Directors during the crisis in telecoms. Now that the desired turnaround has been achieved, he will be stepping down from our Board. The Board of Directors will submit a proposal to the General Meeting of Shareholders that David Syz will be elected. David Syz has had a long career at the head of various renowned industrial companies. He was a member of the Board of Directors of HUBER+SUHNER between 1987 and 1999, serving as Vice Chairman in the years from 1994 to 1999, until he was forced to step down after being appointed State Secretary and Head of the State Secretariat for Economic Affairs (SECO). David Syz will retire from government service with effect from March 31, 2004 and has consented to make himself available once again for election to our Board of Directors.
A word of thanks
The 2003 business year brought the turnaround our company was looking for. Our employees worked hard to achieve this goal, showing extraordinary commitment, perseverance and loyalty. On behalf of the Board of Directors, I would like to thank them all for their efforts. Our thanks go, too, to our clients, our suppliers and all our other business partners and shareholders, who again showed their trust in our company over the past year.
Marc
C. Cappis
Chairman of the Board of Directors
