Adval Tech Holding AG

Earnings Release • Mar 21, 2012

News Details

Ad-hoc | 21 March 2012 07:00

Adval Tech Group failed to achieve improvement in earnings

Adval Tech Group failed to achieve improvement in earnings

Niederwangen, March 21, 2012, 7.00 a.m. – In 2011, the Adval Tech Group failed to achieve the targeted improvement in earnings. After generating an operating profit (EBIT) of CHF 1.6 million in 2010, Adval Tech is forced to post an operating loss of CHF 5.0 million for the 2011 financial year. The group was particularly hard hit by the Swiss franc’s soaring strength against the currencies of its main sales markets (euro and US dollar). The result is a significant net loss of CHF 16.3 million (2010: net loss of CHF 10.9 million). All the operating improvements were offset by unfavorable exchange rate movements.

The total income reported by the Group was CHF 31.8 million or 10% down on the prior-year figure (CHF 316.7 million) at CHF 284.9 million in 2011. It is important to bear in mind here that total income of CHF 25.9 million ceased to be recognized in Switzerland due to the sale of the contract manufacturing operations for CD and DVD packaging in Muri, the closure of the Merenschwand site and the sale of the Bodenweid plant in Bern-Bümpliz. If prior-year total income is also adjusted for the CHF 32.9 million of currency effects, continuing operations grew by around 10%. From this perspective, the Adval Tech Group lifted income by CHF 27.0 million.

Operating earnings before interest, tax, depreciation and amortization (EBITDA) were a clearly positive CHF 14.3 million, but CHF 9.9 million down on the prior-year figure (CHF 24.2 million). As a result, the EBITDA margin shrank from 7.7% to 5.0%. After adjustment for currency fluctuations and the discontinued operations in Muri, Merenschwand and Bern, the margin improved by CHF 1.2 million year on year. The currency effects on EBITDA amounted to around CHF 10.1 million, of which CHF 3.1 million stem from translation differences (translation of the financial statements of foreign subsidiaries into the Group’s reporting currency) and CHF 7.0 million from transaction differences (translation of transactions in foreign currency into the functional currency of the subsidiary in question).

Strategy implementation and personnel changes

Thanks to acquisitions and collaborations, the Adval Tech Group now has a worldwide presence. The large cross-divisional orders the Group has won in recent years are important milestones on the journey to becoming a high-performance Group. In the current economic environment, however, implementing the global strategy systematically is becoming increasingly difficult, taking longer than planned and, during the phase when we are establishing a presence, depressing the Group’s earnings to a greater extent than expected. This has prompted the Board of Directors to pause and examine the course it has chosen to steer so far. It is currently evaluating alternatives and making initial changes to the existing strategy. On December 1, 2011, the Board of Directors appointed a new, interim CEO of the Adval Tech Group, Dr. Stephan Mayer, who is to manage this process. At the same time, the long-serving former CEO, Jean-Claude Philipona, stepped down from the Executive Management.

Neo Age Seng, Head of the Consumer Goods Division, also left the Adval Tech Group in the course of the reporting period. He joined Adval Tech as a member of the Executive Management at the beginning of 2008 when the Omni Group was acquired. His successor, Jinsheng Lu, took over the role at the beginning of November 2011 and works out of Suzhou, China. Jinsheng Lu has many years’ experience of management and sales in both the consumer goods and the automotive supply industry.

At the Annual General Meeting for financial year 2011, Chairman of the Board of Directors Dr. Walter Grüebler’s term will expire. He will not run for re-election. The Board of Directors is not proposing a new member for co-option.

Segment results

In the Automotive Segment, total income was 10% or CHF 16.3 million down on the prior-year figure of CHF 157.0 million at CHF 140.7 million in 2011. These figures should not detract from the progress made in the course of the reporting period, however. After adjustment of the prior-year figures for the segment’s discontinued operations in Merenschwand and Bern (CHF -24.7 million) and currency effects (CHF -13.3 million), total income did not decline as mentioned, but actually increased by CHF 21.7 million or 18%. Operating earnings before interest, tax, depreciation and amortization (EBITDA) were a positive CHF 6.6 million, but around CHF 5.3 million lower than in the previous year (CHF 11.9 million). Adjusted for currency effects and discontinued operations, EBITDA improved by CHF 1.2 million.

In the Medical & Consumer Goods Segment, total income fell below the prior-year figure of CHF 161.3 million to CHF 150.9 million. After adjustment of the prior-year figures for the segment’s discontinued operations (CHF -1.2 million) and currency effects (CHF -19.8 million), total income did not decline by CHF 10.4 million, but actually increased by CHF 10.6 million or 8%. At CHF 6.4 million, operating earnings before interest, tax, depreciation and amortization (EBITDA) in the Medical & Consumer Goods segment were down significantly on the prior-year figure of CHF 11.1 million. After adjustment of the results for currency effects and discontinued operations, EBITDA increased by CHF 0.5 million. In its Molding Technology Division Adval Tech improved earnings significantly in local currency terms. In the business with medical components, on the other hand, upfront expenditures incurred to set up the sites in Mexico and China weighed on earnings. In the Consumer Goods Division, earnings also deteriorated at the sites in China.

Dividend

In light of the unsatisfactory results, the Board of Directors will propose to the Annual General Meeting that no dividend should be paid.

Adval Tech will provide detailed information on the annual financial statements and an initial review of the group’s development in the current year at its press conference in Zurich on Wednesday, April 18, 2012. The Annual General Meeting of Adval Tech Holding Ltd will be held on May 10, 2012.

Key figures	2011	2010	Change	(in %)
Total income (CHF millions)	284.9	316.7	-31.8	-10%
Net turnover (CHF millions)	264.0	300.4	-36.4	-12%
Operating earnings (EBITDA) (CHF millions)	14.3	24.2	-9.9	-41%
Operating earnings (EBIT) (CHF millions)	-5.0	1.6	-6.6	n.a.
Net profit (CHF millions)	-16.3	-10.9	-5.4	n.a.
Free cash flow from operations (CHF millions)	-4.7	-1.6	-3.1	n.a.
Number of employees on December 31	2,491	2,470	21	+1%

Background information on the Adval Tech Group

Adding value through innovation – that’s what the name Adval Tech stands for. As a global technology and process partner, Adval Tech focuses on the complementary technologies of metal stamping and forming and plastic injection molding. In selected markets in the automotive, medical technology and consumer goods sectors, Adval Tech is a leading global supplier of volume components, subassemblies, systems, tools and special machinery. As a value-adding partner, Adval Tech covers the entire value chain: from product design and the development of volume components through design and production of the necessary molds and dies to complete manufacturing systems and the resulting production of components. Adval Tech trades on the markets under the names of AWM, FOBOHA, Omni, QSCH, Styner+Bienz and Teuscher.

Contact

Markus Reber, CFO:Phone +41 31 980 82 70; markus.reber@advaltech.com

Diary

April 18, 2012: Media release on publication of the annual report 2011

April 18, 2012: Conference for financial analysts 2012, ConventionPoint, SIX, Zurich

April 18, 2012: Press conference 2012, ConventionPoint, SIX, Zurich

May 10, 2012: General meeting of shareholders in Bern

August 2012: Announcement of the results for the first half of 2012

Except for the historical information contained herein, the statements in this media release are forward-looking statements that involve risks and uncertainties.