Sales growth in local currencies was 5.8%. Changes in the scope of consolidation contributed 1.7% to the increase in sales.

The strongest organic growth was recorded by the Group's largest division, Mechanical Components. In the Enclosures division, the sideways trend in the oil and gas sector and the general restraint in the capital goods sector in much of Europe were offset by growth in Asia. In the ELCOM/EMS division, some major milestones were reached. Initiatives to open up new sales markets are delivering successes, and there was a turnaround in operating cash flow following challenging integration activities.

Operating result and result for the period under review

The provisional operating cash flow (EBITDA) rose by an impressive 12.8%, from €52.3 million to around €59 million. The unaudited operating result (EBIT), adjusted for exceptional expenses in the previous year, also increased disproportionately by 13.5% to around €34.5 million (previous year: €15.0 million, or €30.4 million before exceptional expenses).

This result includes one-off costs of €2.4 million relating to the integration of German firm Ismet GmbH, which was acquired on 1 July 2016.

The (as yet unaudited) figures indicate a result for the period of around €23 million (previous year: €6.7 million).

Development of the Group's divisions

The Enclosures division faced heterogeneous markets in parts of the eurozone and in North America in 2016. The varying regional dynamics in the oil and gas sector and declines in some European markets were offset by positive development in Asia, where further project successes were achieved particularly in the Indian and South Korean markets. The operating margin stabilised.

The Mechanical Components division continued on its successful course. Growth was broad-based in the Rose&Krieger industrial segment and in the DewertOkin product area, while the operating margin also improved. Rose&Krieger experienced growth in Europe thanks to stable demand for automation components in the industrial manufacturing sector. DewertOkin benefited from continuing increases in production volumes for electrically adjustable comfort and reclining furniture in China.

The ELCOM/EMS division implemented an ambitious package of turnaround measures and substantial growth investments in 2016, enabling it to reach some important milestones. Market successes in instrument transformers, particularly with promising HVDC applications, bear out the intensive development work undertaken in sales and production structures. Overall, the division was able to achieve a turnaround in EBITDA and generate a positive operating cash flow in 2016. The target of a breakeven operating result was not met last year, partly owing to the one-off costs associated with the integration of Ismet (€2.4 million). The division's result was also impacted by amortisations of acquisition-related intangible assets totalling €3.4 million.

Outlook

For the most part, the financial markets have had a promising start to 2017. This has a positive impact on expectations for the industrial markets relevant to Phoenix Mecano.

Rising oil prices, the expected return of inflation and generally improving economic data in the United States and important core European markets, in particular Germany, raise the hope of an increased willingness to invest, at least in the short term. In this environment, Phoenix Mecano has had a solid start to 2017.

At present, it is difficult to say how likely this positive sentiment is to continue throughout the year in the light of the increasingly protectionist rhetoric of the US government and the still unclear ramifications of the Brexit vote.

Phoenix Mecano is well-prepared for both the growth scenario and a continuation of the anaemic sideways movement of recent years. Our long-term investments in new growth areas are an expression of our future ambitions as a global SME.

Key examples of this include mechanical and electronic solutions for ergonomic seating and reclining furniture, a wide range of instrument transformers to address the challenges posed by renewable energy and smart grids, as well as various new industry-specific enclosures for protecting sensitive electronics in harsh industrial operating environments.

The management and Board of Directors of the Phoenix Mecano Group will observe economic developments closely and if necessary take prompt action to align the company flexibly to changing circumstances. While forecasts are unusually difficult under the present circumstances, the management and Board of Directors anticipate an increase in sales and operating result in 2017, barring any extreme volatility in our global target markets.

Dates for your diary: