Kloten/Stein am Rhein, 15 February 2013. In the financial year just ended, the Phoenix Mecano Group’s provisional consolidated gross sales fell by 5.5% to €500.5 million. Unaudited net sales were €495.6 million, with positive currency effects accounting for 1.7%. Excluding changes in the scope of consolidation, sales were down by 6.2%. The main causes of the decline in sales were the downturn in the photovoltaic components market in the reporting year and the weakness of the industrial components market in Europe due to the sovereign debt crisis. By contrast, the American and Asian markets were generally stable.
Consolidated incoming orders in the reporting year totalled €506 million, corresponding to a book-to-bill ratio of 101.1%.
Operating result and result for the period under review
Provisional operating result (EBIT) fell by 22% from €36.1 million to around €28 million.
This result includes the one-off charges, reported in September 2012, linked to an impairment of fixed assets and losses on goods and production materials in the photovoltaic components business totalling approximately €8 million. This was caused by the general weakness of the photovoltaic market and the cancellation of a multi-annual supply contract with a major customer. In the industrial business, the margin was squeezed by a moderate decline in sales combined with a high share of fixed costs, unfavourable changes to the product mix and a comparatively high wage settlement in the key market of Germany.
The operating margin (unaudited) was 5.6%, compared with 6.8% the previous year. Excluding one-off items, the EBIT margin was 7.2%.
The provisional operating cash flow (EBITDA) decreased by 20% to around €54.5 million. The (not yet audited) figures indicate a result for the period of approximately €18 million.
Development of the Group’s divisions
The Enclosures division remained the Group’s best performing division in terms of income and margin. However, it was operating in a challenging environment. The sovereign debt crisis in Europe dampened appetite for investment among export-oriented customers in core markets such as Germany and Switzerland. The eurozone’s Mediterranean members slid into recession, resulting in reduced demand and increasing numbers of customer insolvencies. The economic downturn in China led to project delays in the renewable energy and machine tool manufacturing sectors. Explosion-proof enclosures for the oil and gas industry continued to perform well, particularly in Asia and Russia. Business in North and South America was stable.
The Mechanical Components division saw slight increases in sales and income in electrically adjustable comfort and healthcare furniture and medical technology (DewertOkin), with Asia and North America in particular generating growth. However, the capital goods markets (RK Rose&Krieger) were depressed, mainly by the sluggish economic situation in Europe.
The ELCOM/EMS division had to cope with a marked reduction in demand in the renewable energies market in 2012, especially in the photovoltaic sector. This was compounded for Phoenix Mecano by a customer cancellation of a long-term supply contract for chokes and transformers used in solar inverters. Electrotechnical components for general industrial applications were also negatively affected by the weak economy in Europe. However, demand for high-performance power supply units for science and research applications in the USA developed positively.
General industrial activity slowed in the second half of 2012. Sectors such as the automotive and photovoltaic industries and parts of the general mechanical engineering industry are cautious in their outlook for 2013. At the same time, a number of leading indicators have started to pick up again, fuelled by mounting confidence that the eurozone has – in the short term at least – acquired greater control over its sovereign debt problems. If this confidence is sustained over a longer period, there is a strong evidence to suggest that the economic environment for capital goods will gradually improve in 2013. For the time being, Phoenix Mecano remains cautious in its expectations. The focus of our investment decisions is on the long-term improvement of our processes and market positions. After a weak second half of 2012, the Group has had a generally solid start to 2013. Optimisation projects such as the relocation of logistics processes at DewertOkin (Germany) to Hungary and the development of electromechanical components production in southern China (through the acquisition of Bond Tact) are being rigorously pursued. Our excellent equity ratio of over 60% allows us to make further strategic bolt-on acquisitions. The share buyback programme of up to 10% of shares outstanding, scheduled to run until 2015, is being continued. Even in the current challenging climate, our ability to pay dividends can be considered as secure in the long term.
Dates for your diary:
Balance sheet media conference
25 April 2013
9.30 a.m. Widder Hotel, Zurich
Financial analysts’ conference
25 April 2013
11.30 a.m. Widder Hotel, Zurich
For more information, please contact:
Phoenix Mecano Management AG
Benedikt Goldkamp / CEO
Lindenstrasse 23, CH-8302 Kloten
Tel.: +41 (0)43 255 4 255
Phoenix Mecano is a leading technology company active in the production of enclosures and industrial components.