#Business
Uster with record sales and profit levels
+ 44.9% sales growth with strong EBITA margin of 29.4%.
+ Excellent net result of CHF 36.2 million with further reduction of net debt to CHF 40.7 million,
+ Significant sales growth in all product groups, including record sales of the new USTER ® QUANTUM 3 yarn clearer and substantial increases in laboratory fiber and yarn testing instruments.
+ Increased investments in R&D to secure sustainable long-term growth.
+ Rapid ramp-up of new automated production facilities, enhancing USTER’s flexible business model and allowing fast market penetration of new products, with high levels of quality and reliability.
+ Demonstrated market leadership at Shanghaitex in China and ITMA 2011 in Barcelona, Spain.
+ Introduction of the USTER Total Testing approach enabling textile producers to improve the sustainability of their business performance.
The Group’s gross sales grew to CHF 192.5 million, an increase of 44.9% compared to the prior year level of CHF 132.8 million. EBITA increased by 63.7% to CHF 56.6 million (2010: CHF 34.6 million), resulting in an EBITA margin of 29.4% (2010: 26.0%). The net result amounted to CHF 36.2 million, 74.5% above the CHF 20.8 million achieved in 2010.
New record sales came from the combined excellent performance of the new third generation of USTER ® yarn clearers and substantial increases in demand for laboratory yarn and fiber testing instruments. Bottom line growth was mainly driven by continued improved operational leverage based on the Group’s lean organization.
The cash flow from operational activities was primarily used to reduce net debt to CHF 40.7 million, underlining the Group’s strong cash generation ability. The cash position was improved to CHF 28.8 million with an EBITA / operating cash flow conversion of 95.4%. The cash flow from operating activities amounted to CHF 54.0 million (2010: CHF 42.7 million), used mainly to invest in new production equipment and to reduce debt. The Group’s strong market position allows Uster Technologies Ltd to invoice in Swiss Francs for the majority of its business reducing exchange rate impacts to a minimum level. At the General Meeting in April, the Board of Directors will propose a dividend of CHF 2.50 per share. This will be disbursed out of paid-in capital reserves. As the majority shareholder of Uster, Toyota Industries Corporation will vote in favour of this dividend payment of CHF 2.50 per Uster share.
Dr Geoffrey Scott, CEO of Uster Technologies Ltd, comments: “The exceptional performance levels achieved in 2011 are a result of the Company’s leading position in a high-tech niche market, steadfast customer orientation and high innovation power. The success of the newest yarn clearer generation USTER ® QUANTUM 3 demonstrates the effectiveness of these fundamental drivers. In addition the combination of the Company’s flexible business model, the USTER teams’ firm dedication and overall operational excellence allowed us to deliver exemplary bottom-line performance.”
Ongoing Focus on Quality Improvements and Process Automation
In 2011 all major markets responded positively to the improving economic environment, even though the outlook was blurred by the intensifying debt crisis in Europe affecting major economies in the second half of the reporting period. However, textile markets worldwide were not yet affected by these trends and continued to grow. In parallel, rising labor costs continued the trend for producers to switch from manual systems to highly automated and integrated production processes. The result was increased demand for automated production machinery, including automatic winding machines, further boosting the demand for the associated quality measuring and control instruments, in particular USTER ® QUANTUM 3. China and India performed strongly and set the course within the industry. Furthermore, local markets in China and in other Asian countries such as Vietnam, Cambodia and Indonesia grew well above the average industry rates.
All Product Groups Above Previous Year Results
New record sales came from the combined excellent performance of the new third generation of USTER ® yarn clearers and substantial increases in demand for laboratory yarn and fiber testing instruments. USTER further developed its strong relationships in the classing business in the important US and Chinese markets and secured additional business in further cotton growing markets such as India, Africa and Central Asia. The demand for testing systems was strong, both in textile laboratories and in the manufacturing process, as a result of variable raw material prices, which focused producers on the value of closely controlling the quality of their cotton intake. Sales to textile machinery manufacturers and producers of automated winding machines increased thanks to the launch of the new third generation of USTER ® QUANTUM 3 clearer. In the customer service business, the Uster Group maintained its strong relationships with its wide textile retailer base.
Demonstrated Leadership
Uster Technologies Ltd continued to offer extensive promotional and educational programs specifically designed how to manage quality, productivity and profitability with the help of USTER ® instruments. The Company also intensified its relationships with major textile Universities in China, along with publishing a textbook entitled “Textile Measuring Technology and Quality Control” written by the former Executive Board member Richard Furter. Finally, the Group demonstrated its market leadership at both important trade fairs in 2011, the industry fair Shanghaitex in China and the important ITMA 2011 in Barcelona, Spain. At ITMA 2011, the central theme of the Group’s presence was dedicated to the introduction of the new USTER Total Testing approach that provides textile companies with unique possibilities to transform their operations and give the opportunity to assure the sustainability of their business.
2012: Slight Decline in Sales at Maintained High Profitability The management of Uster expects that the textile industry will see a downturn in the industry cycle in 2012, in line with consensus among the suppliers to the industry. This will be more of a soft landing compared to the crisis seen in 2009. As a result, management expects to see a decline in sales in 2012, but strong profitability in terms of EBITA margin will be maintained.
Confirmed Takeover Offer by Toyota
In November 2011, Toyota Industries Corporation announced an agreement to buy the remaining shares of the private equity fund Alpha, thereby reaching a controlling 50.34% stake in Uster Technologies Ltd’s share capital. As stipulated by Swiss law and the Company’s articles of association, Toyota Industries Corporation shall make a mandatory takeover offer at an offer price of CHF 44.00 per share for all publicly held registered shares of Uster Technologies Ltd. In addition, as a majority shareholder of Uster, Toyota Industries Corporation will vote in favour of a dividend payment of CHF 2.50 per Uster share and such dividend will not be deducted from the offer price. Thus the total consideration offered to the shareholder of Uster in the amount of CHF 46.50 per share implies a total equity value for Uster of CHF 393 million. The Board of Uster Technologies Ltd believes that the offered total consideration of CHF 46.50 per share for all publicly held registered shares of Uster Technologies Ltd, CHF 8.50 above the price initially indicated in November, is fair and in the interests of both companies and their respective shareholders. Therefore, the Board of Directors recommends that shareholders of Uster Technologies Ltd accept the offer of Toyota Industries Corporation. The combination of the two companies’ unique portfolios in terms of technology and market expertise offers great potential for joint business development opportunities, from which all stakeholders, including existing and new customers, business partners and the highly skilled staff of USTER, are likely to benefit.
