Kloten/Stein am Rhein, 18 February 2011. In 2010, the Phoenix Mecano Group’s provisional consolidated gross sales rose by 26.4% from €396.9 million to €501.6 million. Excluding currency effects, sales were up by 24.1%. Corrected for changes in the scope of consolidation, the increase was 24.5%. Despite the significantly higher basis of comparison, sales in Q4 2010 still grew by 11.8%. Over 2010 as a whole, the consolidated volume of incoming orders totalled €522.5 million, resulting in a book-to-bill ratio of 104%.

Operating result and result for the period under review

Provisional operating profit (EBIT) climbed by 289% from €13.5 million to around €52.5 million. The operating margin was 10.5%, its highest level in a decade, even outstripping the boom years of 2007 and 2008. Aside from the cyclical recovery in many industrial markets, the main drivers of this positive development were the rigorous cost-cutting measures implemented in 2009 and the successful integration of acquisitions Okin and Lohse in 2009 and 2010.

The Group’s operating cash flow (EBITDA) increased by 125% from €31.4 million to around €70.5 million. The (not yet audited) figures suggest a result of approximately €44 million, equivalent to a rise of 279% on the previous year. The net margin in the reporting year therefore works out at around 8.8%.

Development of the Group’s divisions

The Enclosures division benefited from the growing momentum in its key target markets of industrial electronics and mechanical engineering. The cyclical upturn triggered a surge in demand which the division was able to meet thanks to its cost-effective and flexible supply chain organisation. The ongoing investment programme, which continued throughout the crisis in 2009, really proved its worth during this period of dynamic recovery.

In the Mechanical Components division, the profitability of Rose&Krieger’s industrial components range was substantially boosted by the strategic development of new products and the successful implementation of measures to enhance sales efficiency. In the electric linear drives business for the furniture, care and medical technology industry, the integration of parts of insolvent former competitor Okin was completed successfully and on schedule. The acquisition in Q4 2010 of a majority stake in the newly formed joint venture Okin Refined Electric Technology Co., Ltd., as a Chinese production and sales partner for Okin, paves the way for significant further growth in this business area.

The ELCOM/EMS division benefited substantially from the booming photovoltaic industry. Sales of components such as specialised toroidal transformers, chokes, enclosures, membrane keyboards and rotary coding switches totalled more than €70 million – up by over 100% on the previous year. The traditional markets of industrial electronics, railway and medical technology also saw double-digit increases in sales.

Outlook

The current market environment for industrial component manufacturers is favourable. Following the substantial growth of 2010, Phoenix Mecano has every chance of further increasing its sales and income in the current year. Given the significantly higher baseline levels in 2010, growth rates in 2011 will inevitably be lower.

It is not yet clear how the photovoltaic market will develop. Although weaker growth is expected in the German solar market, this is offset by attractive growth opportunities in other international markets. Though difficult to predict, government subsidisation will be vitally important for the solar inverter components business.

Mechanical engineering, a key market segment for Phoenix Mecano, is currently developing positively. The exchange-rate turbulence discussed at length in the media has limited implications for our Group because Phoenix Mecano has a well-developed system of natural hedging. In other words, sales and costs are roughly proportional in each currency area.

Tunisia, an important production location for the Group, experienced short-term disruptions in manufacturing and the logistics chain in early 2011 due to the collapse of the regime of former president Ben Ali. Manufacturing and delivery conditions are now largely back to normal as far as Phoenix Mecano is concerned, so from today’s perspective there is unlikely to be any tangible impact on the 2011 accounts. All in all, the Group aims to increase its sales and result in 2011 compared with the record year of 2010.