The business of Oerlikon in the first quarter shows some cracks

The business of Oerlikon in the first quarter shows some cracks

“In the first quarter, we performed reasonably well in the difficult market environment and in line with our guidance. The macroeconomic developments and geopolitical tensions continued to generate uncertainties, which resulted in a slowdown in investments and trade at the beginning of the year, with a gradual pick up in momentum toward the end of the quarter. For the surface solutions business, we saw continued good development for our coatings service business despite an overall lower global industrial production output. The lower top line of the Surface Solutions Segment was mainly attributed to the thin-film equipment project business and the impact of commodity prices on the materials business. For the Manmade Fibres and Drive Systems Segments, we saw restrained investment spending from customers in their respective key end markets,” said Dr Roland Fischer, CEO of the Oerlikon Group

Oerlikon Group

“The strategic development of the Group is on track and we continue to make progress in developing our surface solutions business, managing the Manmade Fibers Segment through the cycle and fixing our Drive Systems Segment,” added Fischer. “The investments in further surface solutions service centres, good initial inroads in the additive manufacturing business, and the recently announced acquisition of Trützschler’s staple fibres technologies are examples of concrete strategic steps we have taken. We will continue to systematically execute the next steps of our strategy. Our priorities are set on improving asset turnover, capitalizing on our innovations, strengthening our resilience to the constantly changing markets, increasing proximity to customers and distinguishing Oerlikon through efficiency, agility and productivity.”

The manmade fibers segment

The overall trend of the manmade fibres market is still strongly dictated by the considerable overcapacity in the filaments equipment market, where China holds a dominant position. The Chinese Chemical Fibres association confirmed in March 2016 that its government’s 13th Five-Year Plan (2016-2020) indicates a slower development in the filament equipment business for the next two to three years. The oversupply and negative investment trend affected the Manmade Fibres Segment’s performance in the first quarter and the effects are projected to continue for the remainder of the year. On the positive side, some promising signs for sales and orders were seen in the U.S. and Turkish BCF (Bulk Continuous Filament) market and in the European and Asian staple fibres business. Orders and sales came in more than one third lower year-on-year. The EBITDA consequently fell more than 75 % compared to the same period in 2015. EBIT for Q1 2016 stood at CHF 4 million (Q1 2015: CHF 32 million).

Oerlikon Manmade Fibers

The Segment is on track with its restructuring measures, specifically in reducing its cost base, and is consistently working on improving its resilience to better manage the anticipated and ongoing tough market conditions. In the first quarter, the Segment increased the ratio of its service business to 12.5 % of total Segment sales (Q1 2015: 10.2 %), and will continue to put a strong focus on expanding its service business, allowing it to mitigate the impact from the downturn in demand for equipment.

The Segment strengthened its technology and market position in the staple fibres business with the acquisition of Trützschler’s staple fibres technologies and the related intellectual property. The Segment took advantage of the ongoing consolidation in the manmade fibres market, and thereby becomes the leading technology and equipment provider in the global staple fibres market. The acquisition also enabled the Segment to have a more balanced and diversified portfolio, beside the strong filaments business.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.