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2018-08-09

Oerlikon Manmade Fibers Segment records strong growth in Q2 orders, sales and EBITDA margin

“We achieved another quarter of excellent performance, recording strong growth in orders, sales and operating profitability,” said Dr. Roland Fischer, CEO Oerlikon Group. “ Our Manmade Fibers Segment recorded another quarter of strong results, substantially increasing both orders and sales and significantly improving EBITDA margin."

"With the signing of the definite agreement to divest the Drive Systems Segment, we have achieved another strategic milestone. We can now focus on growing our surface solutions and advanced materials businesses, while strengthening our Manmade Fibers Segment in its end markets. As a result of our exceptional first half-year performance, we have raised our outlook for the full year 2018.”

Key figures of the Oerlikon Group as of June 30, 2018 (in CHF million) 1 Continuing operations. 2 Restated according to new IFRS 15 (revenue recognition) accounting standard and for announced divestment of the Drive Systems Segment. 3 Including a one-time positive impact from announced divestment of Drive Systems Segment. 4 Not adjusted for divestment of Drive Systems Segment. 5 Reported annually and semi-annually only (c) 2018 Oerlikon
Key figures of the Oerlikon Group as of June 30, 2018 (in CHF million) 1 Continuing operations. 2 Restated according to new IFRS 15 (revenue recognition) accounting standard and for announced divestment of the Drive Systems Segment. 3 Including a one-time positive impact from announced divestment of Drive Systems Segment. 4 Not adjusted for divestment of Drive Systems Segment. 5 Reported annually and semi-annually only (c) 2018 Oerlikon


Oerlikon Group second quarter review

The global economy continued to expand in the second quarter of 2018, driving positive purchasing and investment trends in all of Oerlikon’s end markets. Exploiting the opportunities presented by the positive market developments, Oerlikon succeeded in increasing orders and sales in almost all end markets, and improved operating profitability.

The Surface Solutions Segment carried its growth momentum forward into the second quarter, increasing orders and sales. A high level of demand was registered in the tooling and automotive markets, while strong uptake was seen in the aviation industry. The upward demand trend noted in the first quarter in general industries continued in the second quarter. After accounting for increased operating expenses related to higher investments, particularly in the additive manufacturing (AM) business, the Segment achieved an EBITDA margin of over 20 %. The Manmade Fibers Segment once again significantly boosted orders and sales in the second quarter. The large uptick was attributed mainly to heightened investments for filament equipment and substantiated with very strong demand for texturing, carpet yarn and polymer processing equipment and systems.

In the second quarter, the Group’s order intake increased year-on-year by 26.8 % to CHF 677 million, while sales went up by 36.6 % to CHF 665 million. At constant exchange rates, sales stood at CHF 634 million. EBITDA for the second quarter increased to CHF 113 million, corresponding to a margin of 17.1 %. EBIT for Q2 2018 was at CHF 72 million, or 10.8 % of sales. The second quarter performance resulted in an improved rolling 12-month Oerlikon Group return on capital employed (ROCE) of 10.7 %.

Oerlikon Group half-year overview

In the first half of 2018, the Group’s order intake increased year-on-year by 35.4 % to CHF 1 434 million, while sales came in 38.5 % higher than the prior year, reaching CHF 1 269 million. With the top-line increase, the EBITDA for the half year amounted to CHF 208 million, corresponding to a margin of 16.4 %. EBIT stood at CHF 128 million, or 10.1 % of sales. Net income for the first half of the year increased significantly by 136.2 % year-on-year to CHF 111 million. In the first six months of 2018, Oerlikon’s service business contributed to 39.0 % of total Group sales.

As of June 30, 2018, Oerlikon had equity (attributable to shareholders of the parent) of CHF 1 945 million, representing an equity ratio of 43 % (2017: 45 %). Net cash amounted to CHF 363 million (2017: CHF 499 million) and the cash flow from operating activities increased by 74.8 % for the first half of 2018 to CHF 194 million, compared to CHF 111 million in 2017.

Delivering on strategy: divestiture of Drive Systems Segment

A definite agreement has been signed for the sale of Drive Systems Segment to Dana Incorporated for an enterprise value of CHF 600 million. The transaction is expected to close in late 2018 or the first quarter of 2019, pending customary approvals and closing conditions. In the second quarter, the Drive Systems Segment delivered a notable increase in orders and sales (over 20 %) by securing new business in all its end markets, particularly considerable growth was registered in the China and India transportation market. The Segment achieved an EBITDA margin of over 12 %, marking the fifth consecutive quarter of double-digit operating profitability.

2018 outlook confirmed

Global economy is still expected to grow for the rest of 2018, albeit at a slower pace and with risks mounting, triggered by sentiment shifts following escalating trade tensions and geopolitical uncertainties. However, based on the strong set of results in the first half of 2018, Oerlikon is confident that it will be able to sustain growth and is thus raising its outlook for the year. For the full year 2018 continued operations, Group order intake is expected to exceed CHF 2.6 billion, sales to be around CHF 2.6 billion, and Group EBITDA margin to exceed 15.5 %, after accounting for increased operating expenses from higher investments, particularly in AM, and impacts from the divestment of the Drive Systems Segment.

Manmade Fibers Segment

Key figures of Manmade Fibers Segment as of June 30, 2018 (in CHF million), 1 Restated according to new IFRS 15 (revenue recognition) accounting standard (c) 2018 Oerlikon
Key figures of Manmade Fibers Segment as of June 30, 2018 (in CHF million), 1 Restated according to new IFRS 15 (revenue recognition) accounting standard (c) 2018 Oerlikon


The Manmade Fibers Segment continued its success streak, significantly boosting orders and sales in the second quarter. The filament equipment market, led primarily by China, was the main contributor to the excellent top-line improvement, and was strongly supported by business wins for texturing, carpet yarn (bulked continuous filament, BCF) and polymer processing equipment and systems. In the second quarter, Segment sales doubled in China, and tripled in India and North America as compared to the same period in the previous year.

The Segment significantly improved operating profitability with an EBITDA margin for Q2 2018 of 11.8 %, while continuing to ramp up production capacities to manage the significant increase in orders. EBIT for Q2 2018 stood at CHF 26 million (Q2 2017: CHF -2 million) and the EBIT margin was 9.5 % (Q2 2017: -1.2 %).

In the second quarter, the Segment acquired AC-Automation, an engineering company based in Germany, enabling the Segment to integrate additional large-scale plant automation solutions for customers in the textile industry. The Segment also announced the divestment of its technology solutions for tape and monofilament plants to the Austrian Starlinger Group, allowing the Segment to focus on its filament, staple fiber and nonwovens businesses. For its nonwovens business, the Segment has received a new order from Germany and foresees a promising pipeline, especially in Europe and Asia.




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