Facing adverse market trends, the Oerlikon Group’s order intake slightly decreased year-on-year by 0.7% to CHF 672 million. However, the Group succeeded in increasing sales by 5.3% to CHF 700 million.
“In the increasingly challenging market environment, we delivered a good performance for the second quarter and for the first half of 2019, driven by strong results of our manmade fibers business,” said Dr. Roland Fischer, CEO Oerlikon Group. “We increased Group sales and sustained operating profitability. Group orders came in slightly lower in the second quarter due to weak markets. The results underscore the resilience of our business while facing tough markets and confirm that we have a sound strategy and business model.”
“Economic growth around the world is stalling, resulting in lower investments in equipment and industrial production. These developments have impacted most of our end markets, from automotive to tooling and general industries, encompassing sectors such as semiconductors and electronics. Amid mounting geopolitical and market uncertainties, and given that the anticipated market recovery for our surface solutions business in the second half of the year is no longer visible, we are adjusting our guidance for 2019,” added Dr. Fischer. “Based on our reassessment, we expect to deliver around the same level of performance as for the full-year 2018.”
Oerlikon Group second quarter review
In the second quarter of 2019, the global economy further slowed down, exacerbated by drawn-out trade disputes. Significantly weaker-than-expected industrial production translated to lower volumes, and consequently reining in of investments for equipment and declining demand for services. These developments were registered across multiple markets, including automotive, tooling and general industries, and partly in aerospace.
Facing adverse market trends, the Oerlikon Group’s order intake slightly decreased year-on-year by 0.7% to CHF 672 million. However, the Group succeeded in increasing sales by 5.3% to CHF 700 million, underlining Oerlikon’s structural growth and resilient business model built on technology leadership in long-term attractive markets. At constant exchange rates, sales stood at CHF 720 million. EBITDA for the second quarter increased to CHF 121 million, corresponding to a margin of 17.3%. EBIT for Q2 2019 was at CHF 70 million, or 10.1% of sales. The second-quarter performance resulted in a rolling 12?month Oerlikon Group return on capital employed (ROCE) of 9.5%.
Oerlikon Group half-year overview
In the first half of 2019, the Group’s order intake declined year-on-year by 5.7% to CHF 1 352 million, primarily due to the record level of orders in the manmade fibers business in the first half of 2018. Sales came in 4.3% higher than the prior year, reaching CHF 1 324 million. With the increase in sales, the EBITDA for the half year amounted to CHF 214 million, corresponding to a margin of 16.2%. The results from continuing operations for the half year came in at CHF 80 million – a 12% decrease year-over-year, primarily due to an increase in the cost of sales.
As of June 30, 2019, Oerlikon had equity (attributable to shareholders of the parent) of CHF 1 798 million, representing an equity ratio of 48% (year end 2018: 44%). Net cash on June 30, 2019 amounted to CHF 380 million (year end 2018: CHF 398 million) after dividend payouts of CHF 1 per share and the repayment of a CHF 300 million Swiss bond. Cash flow from operating activities for the first half of 2019 decreased to CHF -11 million, compared to CHF 194 million in 2018, due to an increase in receivables and inventories, as well as a decrease in payables and contract liabilities.
2019 outlook adjusted
Global economic slowdown is expected to prevail in the second half of 2019, with looming threats from geopolitical instabilities and concerns that trade disputes could intensify. As a result, Oerlikon is adjusting its guidance. Despite the aforementioned environment, Group orders, sales and the EBITDA margin are projected to be sustained at around the same level as in 2018. Specifically, order intake is anticipated to reach up to CHF 2.7 billion, sales are to exceed CHF 2.6 billion and the EBITDA margin is to be around 15.5%.
Manmade Fibers Segment
The Manmade Fibers Segment succeeded in sustaining its high level of performance – increasing order intake by 5.7% and sales by 18.5% in the second quarter. Sales in the second quarter represented the highest level of sales achieved by the segment since 2013. Sales growth was recorded primarily in textile applications such as filament equipment and texturing, and was substantiated by a healthy demand for systems used in industrial yarn spinning (special filament) and nonwovens (plant engineering).
Sales increased significantly in Europe (>140%), albeit from a low base, while China saw a healthy 26% growth. A decline in sales was registered in North America (-15%) and in India (-85%) compared to the second quarter of 2018.