Stein am Rhein/Kloten. 2 November 2010. Phoenix Mecano, a leading technology company active in the production of enclosures and industrial components, continued to grow significantly in the third quarter of 2010, with further double-digit rises in incoming orders, gross sales and income. All three divisions substantially increased their operating result. The growth area of photovoltaics performed excellently, in line with expectations, and the established industrial business continued to recover. The integration of the Okin businesses taken over in 2009 (Mechanical Components division) remains on course.
Consolidated gross sales in Q3 were up 26.1% compared with the same quarter last year, from €104.3 million to €131.5 million. The scope of consolidation remained unchanged during the quarter. Positive currency effects contributed to the growth to the extent of 3.1%. Incoming orders rose by 23.6% over the period under review, to €129.8 million. Operating cash flow totalled €20.8 million, up 108% on the same quarter last year. Operating result increased by 191% from €5.6 million to €16.3 million. The operating margin was 12.4%. Non-recurring expenses of €0.7 million were recorded in connection with the integration of Okin.
The result of the period after tax rose by 210% to €12.7 million, compared with €4.1 million last year.
Excellent results in all three divisions
Sales in the Enclosures division rose to €39.2 million in Q3, an increase of 32.9% on last year. The recovery in the mechanical engineering sector continued apace, and the oil and gas sector picked up again during the quarter. The industrial electronics sector was similarly buoyant, although a tight supply situation for electronics components is leading to longer delivery times and higher air-freight costs in this area.
In the Mechanical Components division, sales in the quarter under review remained generally stable, but the income position improved, as planned, in comparison with last year. This was boosted by the integration of Okin (comfort furniture drives business), which is proceeding successfully. While the industrial goods sector revived, the performance of the electrically adjustable healthcare, hospital and comfort furniture segment varied from region to region.
The ELCOM/EMS division saw its sales increase by 63.7% compared with Q3 2009, to €44.7 million. Once again, growth was primarily driven by the booming business in solar inverter components for the photovoltaic industry. General industrial electronics also recovered steadily, returning in some areas to the pre-crisis levels of 2008. Bottlenecks in the supply of basic materials prevented an even better result in this division. Phoenix Mecano expects to face a tight supply chain situation in the coming months. Moreover, the opening of a new plant manufacturing solar inverter components for the photovoltaic industry will require increased warehousing and some duplication in production over the next six months. In 2010-11, Phoenix Mecano will invest around €13 million in capacity increases for photovoltaic components.
Outlook
The present economic climate for industrial goods is strong and stable. However, we currently face industry-specific risks caused by partial overheating tendencies, especially in electronic components and industrial metals. In the context of future development, this could lead to a certain volatility within the long-term growth trend.
The photovoltaic sector has grown very strongly this year, which has resulted in supply bottlenecks for electronic inverter components. It is to be expected that delivery times will return to normal over the coming months and that the clearing of blocked supply chains will lead to a degree of sales volatility in the next few quarters. The effects of current subsidy cuts in the photovoltaic sector, especially in Germany, are hard to estimate at present, although market players do not currently anticipate any impact on the sector’s long-term growth potential.
The industrial goods sector is growing steadily, already exceeding pre-crisis levels in some areas. Even late-cycle subsectors are now displaying clear signs of revival.
The current strong double-digit growth rates are partly attributable to the low comparative values from last year. They are therefore bound to fall soon. However, this should by no means be interpreted as evidence of a market slowdown. Despite the known risks in the current economic environment, the Board of Directors and Management of Phoenix Mecano expect the Group to continue to develop positively. The result of the period for 2010 will possibly slightly exceed the figure announced at the time of the 2010 half-year results, namely €35-40 million.
