Content - Corrective measures having an effect. Significantly improved result. Good order intake confirms customer confidence.
- July 22, 2010
Corrective measures having an effect. Significantly improved result. Good order intake confirms customer confidence.
Results of the Mikron Group for the first half of 2010
Biel, July 22, 2010, 7:00 a.m. Mikron posted an order intake of CHF 110.2 million in the first half of 2010 (+82.2% compared to the same period last year) and recorded net sales of CHF 81.0 million (+5.7%). Orders were significantly ahead of expectations. Sales are improving with a time lag due to the several-month processing time for orders. The outcome at Group level is an EBIT of CHF -0.9 million (previous year CHF -18.3 million) and net earnings of CHF -2.5 million (previous year CHF -18.3 million). The significant improvement in Mikron's results is confirmation that the planned corrective measures have been implemented effectively in the recent difficult months. The pleasing order intake in the first half will result in a further increase in sales in the second half, and as such is essentially cause for optimism. By contrast, the weakness of the Euro against the Swiss Franc and the continuing uncertain outlook for economic development in the Euro zone are grounds for caution. Overall, however, the Mikron Group expects a significant year-on-year improvement in the second half as well. Looking ahead to the 2010 financial year as a whole, Mikron is confident of achieving an EBIT result around break-even point. Mikron has come through the crisis with a sufficient level of liquidity and a very solid balance sheet. This, combined with its leaner structures, put the Group in a very strong position to profit sustainably from an upturn.
Mikron Machining manufactures machines and cutting tools for the maximum-precision machining of very large quantities of small to hand-sized metal parts. The automotive supply industry and writing instruments industry account for a significant part of its business volume. So far, Europe, led by Germany, is the most important market for the division. The Asian market is becoming increasingly significant. The division comprises three production companies, Mikron SA Agno (Switzerland, headquarters), Mikron Tool SA Agno (Switzerland) and Mikron GmbH Rottweil (Germany), as well as two sales and service companies, Mikron Corp. Monroe (USA) and Mikron Ltd. Tokyo (Japan).
The business environment in the first half of 2010 was better than in the same period a year ago. Mikron Machining is benefiting from the partial market recovery that set in at the end of 2009 after two very difficult years during which it underwent large-scale staffing and organizational changes. In addition to price, customers are now attaching much greater importance to speed of delivery and flexibility. Customers are still being very restrained about major investment projects. Many existing customers have sufficient production capacity and are expanding it only very hesitantly. However, the environment for new machine business improved also in Europe in the second quarter.
Mikron Machining exceeded expectations by booking new orders worth CHF 58.0 million (+137.3%) in the first half of 2010. This is primarily due to brisk demand from the Asian writing instruments industry and the robust order backlog in the tools and service business. Although the basis for comparison – the year-back figure – is very low, order volumes are nevertheless pleasing, particularly because a considerable part of the machine business is attributable to new customers. This is not only an indication that the markets are improving, but that Mikron Machining enjoys customers' confidence and was able to further strengthen it during the crisis.
The stock of orders improved to CHF 31.4 million (+39.1%) and can now be regarded as satisfactory.
At CHF 47.0 million (+43.1%) sales advanced significantly on the previous year and were also slightly ahead of expectations. Here again, the previous year figure on which the comparison is based is low. Capacity utilization returned to a satisfactory level sooner than expected. As a result no further short-time working was necessary in the second quarter apart from a very small number of exceptional cases.
Mikron Machining posted a result at EBIT level of CHF 0.8 million for the first six months of 2010. This small profit is in line with expectations and also a notable improvement on the previous year's loss of CHF -14.1 million. This positive development is primarily due to the far-reaching corrective action that has been implemented, including the large-scale headcount reduction at the site in Agno (Switzerland). Furthermore, the profitable tools and service business as well as machine orders with short delivery times – which quickly have an impact on sales figures – made a positive contribution to the result.
The economic environment looks set to remain very challenging over the months ahead. However, various signs of recovery are still in evidence in Germany. Visibility and planning horizons remain very short and will require extensive adaptability and speed of reaction. The unclear economic signals and uncertain overall environment are making it difficult for European customers in particular to plan major and long-term investments. All in all, Mikron Machining is cautiously anticipating a slightly lower order volume for the second six months of 2010, based on the assumption that fewer machines will be sold to the writing instruments industry during this period. Second-half sales are expected to improve again as a result of the intake of new orders in the first half. Asia, and particularly China, continue to offer interesting opportunities, which Mikron Machining is addressing as a key priority.
Mikron Automation manufactures systems for assembling large quantities of small to hand-sized products and develops automation solutions for production subprocesses. Customers in the pharmaceutical and medtech industries account for the largest share of business volume. Geographically, its main markets are currently in Western Europe and the United States. The Asian market is also rapidly gaining in importance following the development of a new, lower-cost, locally produced product platform for the various market needs. Mikron Automation comprises four production companies, Mikron SA, Boudry (Switzerland, headquarters), Mikron Corp., Denver (USA), Mikron Singapore Pte Ltd and Mikron Shanghai Ltd (P. R. China).
The business environment in the first half of 2010 was significantly better than in the same period a year ago. A pick-up in the number of quotes being issued was noted. Moreover, customers in Europe reactivated several projects that had been put on hold last year. In the pharmaceutical/medical/personal care segment, the strongest market segment in sales terms, customers' willingness to invest remains intact. In the United States in particular, there are a large number of new medical devices that are due to go into production. This is Mikron Automation's most important market segment, and it expects to see a future rise in investments in assembly automation in Asia too. Customers in all the remaining market segments continue to exhibit substantial caution and restraint.
Mikron Automation booked new orders worth CHF 52.8 million (+46.5%) in the first half of 2010. This is substantially in excess of the low year-back period and meets expectations. As well as orders from the pharmaceuticals/medical/personal care segment, the first significant orders for some time were received from the electrical and consumer goods segments. Orders from new customers in the medical segment were received in the United States and China. The recently launched, locally produced EcoLine™ product platform made a key contribution to this sales success in Asia.
The stock of orders improved to CHF 46.9 million (+37.3%) and can now be regarded as good.
At CHF 34.5 million (-21.1%) sales were below the previous year, as was largely expected. This is primarily due to the low level of orders in hand at the beginning of the year and the relatively late arrival of orders in the second quarter. Furthermore, customers made substantial design changes to their end products in three major projects at the Denver and Boudry sites, resulting in unexpected delays to the completion of the assembly line.
Mikron Automation posted a result at EBIT level of CHF -0.4 million for the first six months of 2010. This is somewhat beneath expectations and is attributable to the lower sales volume. In addition, the initial effects of the devaluation of Euro against the Swiss Franc made themselves clearly felt in the first half of the year. However, both effects were largely offset by the staff and material cost reduction measures that had been implemented and overall the result was improved compared to the previous year.
Mikron Automation is remaining cautious in its predictions for the 2010 financial year. The number of quotes being issued remains healthy, giving rise to a basic mood of confidence as regards order intake. In Europe, Mikron Automation expects to receive its first orders from the automotive supply industry after a lengthy break. Further orders with potential for repeat business are expected from the medical segment in the United States. However, only a part of all these orders will be reflected in the net sales figures and result for 2010. The weakness of the Euro against the Swiss Franc is causing major uncertainty and resulting in high pressure on margins at the main site in Boudry. The newly launched EcoLine™ product platform is being positively received not only in Asia, but also in various countries and markets where production volumes are lower. Simultaneously, the revamping of the G05™ high performance assembly system, which is now available in a special version for the pharmaceutical industry, represents an important pointer.
Key figures of the Mikron Group for the first half of 2010
|Stock of orders||78.1||56.6||38.0%|
|Operating result (EBIT)||-0.9||-18.3||95.0%|
|-From operating activities||-1.5||-16.2||90.9%|
|-Free cash flow||-1.2||-14.5||91.5%|
|Number of employees||866||1'013||-14.5%|
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Except for the historical information contained herein, the statements in this media release are forward-looking statements that involve risks and uncertainties.
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