Stein am Rhein/Kloten, 27 April 2011. The Phoenix Mecano Group’s consolidated gross sales rose by 26.4% in 2010 to a record high of EUR 501.6 million (previous year EUR 396.9 million). Corrected for differences in foreign-exchange rates, sales were up by 24.1%. Corrected for changes in scope, sales were up by 24.5%. Consolidated incoming orders totalled EUR 522.5 million, compared with EUR 407.5 million the previous year, an increase of 28.2%. Having successfully weathered the economic and financial crisis of 2009, Phoenix Mecano is back on the dynamic growth path of the years preceding the crisis.
Sales by division
All three divisions contributed to the Group’s sales growth. The Enclosures division increased its sales by 21.7%. The ELCOM/EMS division achieved dynamic sales growth of 64.6%. This division benefited heavily from the booming photovoltaic industry as well as from increased demand for electrotechnical components generally. Sales in the Mechanical Components division were up by 9.5%.
Operating result
Operating result (EBIT) soared by 288.3% in 2010, from EUR 13.5 million to EUR 52.6 million. The operating (EBIT) margin was 10.5% (3.4% the previous year), outstripping the two boom years of 2007 (10.0%) and 2008 (10.3%). All three divisions delivered a greater contribution to the result and increased their operating margin and return on capital.
Result of the period
The result of the period rose by 278.3% in 2010, from EUR 11.6 million to an all-time high of EUR 43.9 million.
Equity ratio and net indebtedness
Due to the 26.7% increase in total assets, the equity ratio fell slightly to 61.9% (previous year 64.2%), despite the high result of the period for 2010. Having achieved a net cash position (of EUR 3.8 million) the previous year for the first time in its history, the Group saw its net indebtedness increase to EUR 24.9 million in 2010 owing to acquisitions. Phoenix Mecano acquired Lohse GmbH (D) on 1 May 2010, and with effect from 22 November 2010 it acquired a 90% stake in the newly founded joint venture Okin Refined Electric Technology Co. Ltd. (China).
Q1 2011
Compared with the same quarter the previous year, incoming orders were up by 7.3% to EUR 143.9 million, sales by 13.6% to EUR 136.9 million and operating result by 30.2% to EUR 18.2 million, corresponding to an operating margin of 13.3%. As a result, the first quarter of 2011 was the most successful in Phoenix Mecano’s history in terms of incoming orders, sales and operating result.
In the Enclosures division, sales totalled EUR 45.4 million (up 30.5%). The operating result was EUR 10.2 million (up 52.3%). The operating margin was 22.5%. In the ELCOM/EMS division, sales fell by 4.4% compared with the previous year, to EUR 33.2 million, owing to the consolidation phase experienced by our photovoltaic customers. However, there are signs that demand in this area is picking up. The operating result was EUR 3 million (down 32.4%). The operating margin was 9.1%, a satisfactory result in view of the above-mentioned circumstances. Sales in the Mechanical Components division rose by 15.7% to EUR 58.3 million, while the operating result increased by 84.3% to EUR 6.1 million. Particularly noteworthy was the increase in operating margin from 6.5% to 10.4%.
Outlook
The market environment for technical components manufacturers has improved significantly in Europe, Asia and most recently the USA. The economic indicators suggest that the recovery phase witnessed in 2010 could be followed by a growth phase, for which our company is well positioned. Uncertainties exist owing to the massive increase in industrial metal prices, which will result in higher material costs, particularly in the electronics and electrical engineering sectors. As we know from past experience, passing on the costs to end markets will only work in part, owing to the global competition that exists in these sectors. The current unrest in north African countries is also pushing up the price of petroleum-based plastics and energy costs. Furthermore, the debt situation in many industrialised nations is creating uncertainty about the further expansion of renewable energy infrastructure, particularly in the photovoltaic sector, where some significant cuts in subsidies are planned for 2011. The effects of these are difficult to assess at present. The natural disasters and resulting damage in Japan are currently having no discernible impact on Phoenix Mecano; however, given Japan’s leading role as a manufacturer of electronic components, this cannot be ruled out. Although these factors must be taken into account, they do not alter our fundamentally positive expectations for 2011. As far as can be ascertained today, the increased willingness to invest prompted by the global economic recovery should enable Phoenix Mecano to improve its sales and operating profit once again this year.
Dividend
Our solid balance sheet, excellent cash flow, low level of debt and dividend policy geared towards continuity all argue in favour of an increase in dividend. The Board of Directors will therefore propose to the Shareholders’ General Meeting a dividend of CHF 13.00 per bearer share – an increase of 30%.
Link to the annual report:
http://www.phoenix-mecano.com/annualreports.html
