Half Year Report 2009HUBER+SUHNER holds its own in a difficult environment
Diversification has a stabilising effect – Cost basis adjusted – Lower but acceptable earnings level – Positive free cash flow – Overall flat development expected in the second half of 2009
After a period of particularly vigorous growth between 2006 and 2008, HUBER+SUHNER was also hit by the downturn in the global economy in the first half of 2009. Compared to last year, the Group’s order intake worldwide fell by 23% to CHF 312.2 million and net sales fell by 19% to CHF 313 .6 million. The impact of the copper price (approx. 4%) and currency effects (approx. 2%) drove down the Group’s net sales by around 6%. Discounting these effects, sales decreased by 13% compared to last year.
Despite these developments, HUBER+SUHNER is performing satisfactorily. This is because the company has focussed on diversification in the last few years, as well as achieving remarkable successes in market segments such as railway, solar and fiber optics applications in this reporting period. The development of the various divisions paints a rather varied picture. While Fiber Optics bore up well and Low Frequency technology delivered a pleasing performance, the Radio Frequency Division, which suffered a slump in order intake of 38%, was most severely hit by the downturn. As a result, various measures such as reduction of overtime and holiday accounts, early retirements were introduced to adapt the capacities in Radio Frequency technology to the new market conditions. However, short-time working and a moderate redundandencies couldn’t be avoided. The total number of permanent employed staff worldwide fell by 7% from 3718 to 3456 compared to the same period last year.
The lower business volume and the effects mentioned above, drove the gross margin down from 37.9% last year to 35.6%. In the reporting period, the EBIT was CHF 22.2 million (previous year: CHF 53.5 million) and the EBIT margin was 7.1%. The company was successful in maintaining a respectable earnings level, despite restructuring costs of CHF 5.7 million, the negative effect of the fall in the price of copper (CHF 2 .3 million on EBIT level) and lower non-recurring income (down CHF 5.5 million compared to last year). Unlike last year, net income was impacted by positive currency effects and amounted, after tax, to CHF 20.0 million (previous year: CHF 35.6 million).
It is encouraging that, even after the payment of dividends of CHF 19.3 million, HUBER+SUHNER generated a positive free cash flow of CHF 14.6 million in the first half of 2009. The availability of shareholders’ equity of CHF 465.4 million once again accounts for an impressive 76% of the balance sheet total of CHF 612.4 million.
As for the second half of 2009, HUBER+SUHNER expects sales to remain at the current level. If the business situation stabilises, an even slightly higher EBIT margin than in the first half of 2009 is possible due to the reduced cost base.
