The Oerlikon Group achieved another increase in profitability in Q1 2012: EBIT was CHF 152 million, corresponding to a margin of 15.8 % including a one-time effect from the sale of property in Arbon, Switzerland, of CHF 39 million. On a like-for-like basis, EBIT reached CHF 113 million (Q1 2011: CHF 106 million), reflecting a margin of 11.8 % (Q1 2011: 11.7 %). The overall result was driven by strong margin improvement at the Textile and Drive Systems Segments and continued high profitability in both Vacuum and Coating. CEO Dr. Michael Buscher said: "This is a good start to the year for Oerlikon. Continuous efficiency improvements coming from Operational Excellence programs across the organization have contributed to a further increase in profitability. For the full year, we see upside potential for business volume and profitability."
Order intake and backlog on normalized levels
As predicted order intake at CHF 996 million was 12 % lower than the exceptionally high first quarter of 2011 (Q1 2011: CHF 1 126 million), when customers were restocking following the financial crisis. Orders normalized by the second half of 2011 and have continued at these levels in the first quarter of 2012. Order backlog for the first quarter of 2012 was CHF 1 345 million (Q1 2011: CHF 1 693 million).
Strong sales performance - US and Asia continued to grow
First quarter sales 2012 were 6 % higher at CHF 961 million (Q1 2011: CHF 906 million), with growth across all Segments other than Vacuum and Advanced Technologies, which were adversely affected by continued weakness in the solar market. The other Segments' increases were driven primarily by growth in the US and China. Q1 2012 sales were impacted by the strong Swiss Franc. Adjusted for currency effects compared to Q1 2011, sales would have reached CHF 1 005 million, reflecting a growth rate of 11 %. Market penetration was strong in Asia, particularly in China, with sales up 22 % to CHF 387 million (China: sales growth of 34 % to CHF 291 million).
Further profitability improvement
First quarter EBIT increased 43 % to CHF 152 million (Q1 2011: CHF 106 million), or to a margin of 15.8 % (Q1 2011: 11.7 %). These figures include the one-time CHF 39 million effect of the property sale in Arbon, Switzerland, and do not include the Solar Segment, which is now held as discontinued operations. Excluding this one-time effect, the EBIT margin improved to 11.8 % in Q1 2012 from 11.7 % in Q1 2011. The Q1 2012 EBIT margin also shows improvement over the full year 2011 (restated) margin of 11.1 %. This solid increase in profitability was primarily driven by higher efficiency due to Operational Excellence programs, margin improvements from innovative products and volume increases. The Companys performance resulted in a ROCE for Q1 2012 of 17.6 % compared to full year 2011 ROCE of 16.5 %.
The first quarter also saw the consistent execution of portfolio optimization measures. In March 2012, Oerlikon announced the divestment of the Solar Segment to Tokyo Electron of Japan. The sale is a strategic move for Oerlikon to further streamline its portfolio and enable management to drive profitable growth by developing the larger, high performing businesses within the Group. The results for the Solar Segment are now reported under discontinued operations, with first quarter financials for 2012 and 2011 restated accordingly. The transaction is expected to close in the summer of 2012.
In April 2012, Oerlikon announced its exit from the optical disc equipment business, which had been in decline for some time. The Company also announced to streamline its Drive Systems' operations in Italy by consolidating the number of sites from seven to five. Furthermore, Oerlikon has sold its minority stake in Pilatus Flugzeugwerke AG which marks another step to focus the portfolio on operational growth businesses. The proceeds of the Pilatus transaction will be booked in the second quarter.
Outlook for 2012
Oerlikon will continue to focus on efficiency and underlying performance improvements through disciplined execution of Operational Excellence measures, expansion of market share through innovation, development of the global footprint through further regional expansion and optimization of the portfolio. The Company sees upside potential for the existing full year outlook 2012 with improved business volume and profitability.
Key figures Oerlikon Textile as per March 31, 2012 (in CHF million)
Sales (to third parties)
EBIT (excl. one-time effect)1
EBIT margin (excl. one-time effect)1
1Sale of Arbon property
The Textile Segment reported significant increases in profitability for the first quarter of 2012, despite some weakness in the natural fiber market which is already showing first signs of recovery, as reflected in Q1 2012 order intake. EBIT, excluding the positive CHF 39 million one-time effect of the sale of the Segment's property in Arbon, Switzerland, grew strongly by 34 % to CHF 51 million, fueled by demand for Oerlikon's innovative product mix and the implementation of Operational Excellence measures. Like-for-like EBIT margin increased to 10.3 % compared to 8.3 % a year ago, a 24 % increase.
Order intake and order backlog for the quarter have normalized and were lower than in Q1 2011, a time in which there was exceptional demand as businesses recovered from the economic crises of 2008 - 2009. Sales in Q1 2012 increased by 8 % to CHF 496 million as demand for manmade fibers equipment offset the light weaknesses in the market for the natural fibers equipment. The service and component business remained good.
Oerlikon Textile continued to penetrate the market with latest new innovations and showcased these at the trade fair ITM 2012 in Turkey. The Autocoro 8 rotor spinning machine has been well received by the markets worldwide, and more than 150 units have been sold since its launch.
Oerlikon Drive Systems
Key figures Oerlikon Drive Systems as per March 31, 2012 (in CHF million)
Sales (to third parties)
Oerlikon Drive Systems showed solid improvement in the first quarter, with sustained strong order intake and order backlog up 35 %. Sales were 9 % higher, due to increased demand in the construction industry and stable demand in the mining, energy and agricultural sectors. Profitability continued to improve, with an EBIT margin of 8.5 %, up from 5.4 % in the first quarter of 2011, a 57 % increase. Production at the new Suzhou site in China is ramping up. In April the Segment also announced to streamline its manufacturing footprint in Italy, moving production away from its Garessio and Poretta Terme plants. Garessio will be closed, and a Letter of Intent has been signed with a private Italian company for the sale of Poretta Terme. This will reduce costs for the Segment and better optimize manufacturing capability in Italy.
In January 2012, the Segment presented the first prototypes of its revolutionary clutch-less multi-speed transmission for electric vehicles. This innovative transmission uses the principles of dual clutch transmissions to provide a four-speed system with seamless shifting and up to 15 % improvement in efficiency - meaning less power consumption and a higher range. The concept is scalable from city cars to light commercial vehicles.
Key figures Oerlikon Vacuum as per March 31, 2012 (in CHF million)
Sales (to third parties)
Oerlikon Vacuum reported lower order intake and order backlog in Q1 2012 than in the first quarter of 2011, which was exceptionally high following the recovery from the financial crisis. Compared to the previous quarter, the Segment has delivered improvements in both order intake and order backlog. Sales were 4 % lower than in the first quarter of 2011, as demand from the solar market continued to be weak. Improvement came late in the quarter from stabilization in pump sales to the worldwide coating industry. Profitability was at a high level of 14.1 %, although lower than the 16.3 % achieved in the first quarter of 2011 which was mainly influenced by a differing product mix necessary for project business. The Segment continues to focus on Operational Excellence.
In Q1, Oerlikon Vacuum extended the range of the DRYVAC, RUVAC and MAGiNTEGRA product lines for use in various industrial applications.
Key figures Oerlikon Coating as per March 31, 2012 (in CHF million)
Sales (to third parties)