Oerlikon Manmade Fibre business outlook
According to a press and investor’s event, Helvea analyst Reto Amstalden gives the most important additional facts to the outlook of Oerlikon Manmade Fibre business
Oerlikon declares that there is an ongoing strong demand for higher margin carpet yarn equipment, representing around 25 % of its segment. On the other hand, the management sees the beginning of a more normal, meaning lower, investment levels in China, Oerlikon Manmade Fibre business’ major market, plus a difficult and weak business environment. The analyst expects lesser sales and margins for the coming quarters of 2014. Thus he is slightly revising his estimates for Oerlikon Group from CHF 3334 to CHF 3325 million for 2014 and CHF 3764 to CHF 3755 million in 2014. He estimates EBIT at CHF 425 (431) million in 2014 and CHF 483 (489) million, meaning each 1 % less. EBIT margin thus a bit lower, namely 12.8 % (12.9 %) in 2014 and 12.8 % (13.0 %) in 2015 and by excluding Metco’s contribution in the coating area the margin is earmarked at 13.1 % (13.3 %) in 2014 and 13.5 % (13.7 %) in 2015.
Reto Amstalden marks some reservations on Oerlikon large Manmade Fibre business, namely “that the investment cycle of manmade fibre equipment seems to have peaked and that it may enter a longer period of depressed investments given the risk of a further tightening overcapacity situation, with new significant capacity additions coming on stream, especially in the main market of China over the next quarters”. He adds: “This is a controversial view when set against the market’s expectation that sales and profits of Oerlikon Manmade Fibre segment will remain at strong levels in 2015 and beyond”.