Higher earnings and financial power

Better capacity utilisation, a streamlined portfolio and lower depreciations of inventories and fixed assets improved the gross margin to 36.9 percent (previous year 33.1). This wider margin, higher turnover and continuing tight cost control produced the outstanding operating result (EBIT) of CHF 22.7 million (previous year 3.8) with an EBIT margin of 7.7 percent (previous year 1.4). The lower cost of interest resulting from the reduced financial liabilities produced a slightly positive financial result. One-time special factors such as property related profits and the reversal of provisions no longer needed on the income side plus a donation to the employer contribution reserves of a social foundation on the expense side were roughly balanced in the first half-year. The consolidated profits of CHF 19.9 million (previous year 1.6) with a return on sales of 6.8 percent (previous year 0.6) document the Group’s restored earnings power.

Despite the marked growth in turnover and the associated investments in net working capital plus the resumption of dividend payments, a positive free cash flow of CHF 17.6 million (previous year 13.6) resulted. Total bank liabilities were reduced from CHF 48.7 million on 31 December 2003 to CHF 32.1 million on 30 June 2004. Within the same period, the net liquid assets (liquid assets minus bank debt) improved to CHF 20.3 million (end of last year 2.9).

Higher profitability, a good debt and liquidity situation and high equity capitalisation allow HUBER+SUHNER to tackle the challenges of the future from a position of financial strength.