Oerlikon Group with third quarter 2016 results

Oerlikon Group with third quarter 2016 results

  • Group results impacted by weak Manmade Fibers and Drive Systems Segments’ markets
  • Group EBITDA margin of 14.7 %
  • Group book-to-bill ratio above 1
  • Surface Solutions Segment with slightly increased top line and operating profitability
  • Manmade Fibers Segment improved results from a low base level compared to prior quarter
  • Drive Systems Segment increased orders with further customer wins

Full-year guidance for 2016 confirmed

The group performance

“The Group’s overall performance in the third quarter builds on the continued solid performance of our surface solutions business. The Surface Solutions Segment improved its top line and operating profitability year-on-year, confirming the potential of this business and our strategy going forward. While the low demand in the filaments equipment and drive systems end markets continued in the third quarter, the efforts taken to actively manage the markets’ challenges have led to first results. In the Manmade Fibers Segment, we see indications that the bottom of the trough will likely be reached in 2016. In the Drive Systems Segment, good progress has been made thanks to reshaping measures,” said Dr. Roland Fischer, CEO of the Oerlikon Group.

Group performance in Q3 2016


Oerlikon’s results in the third quarter of 2016 reflect the continued positive development in the surface solutions business, but were still impacted by weak market demand in filaments equipment, and in the agriculture and energy sectors.

The Surface Solutions Segment saw stable sales development in most of its key markets (tooling, automotive, general industries and power generation). The exception was aviation, where an uptick was registered. The filaments equipment market continued its downtrend, in line with China’s 13th Five-Year Plan and Oerlikon’s expectations. However, there appears to be the first light on the horizon and the Segment expects that the filaments equipment market will see a turnaround in 2016. A positive trend was also noted in staple fibres, bulked continuous filaments (carpet yarn) and plastic processing markets, which contributed to the Segment’s improved order intake. In the Drive Systems Segment, all of the key markets demonstrated flattish demand, though there was some encouraging development in the Indian construction and agriculture industries, as well as in the automotive sector.

Group orders for the third quarter decreased year-on-year by 6.1 % to CHF 572 million (Q3 2015: CHF 609 million) and sales decreased by 13.4 % to CHF 549 million (Q3 2015: CHF 634 million). At constant exchange rates, sales stood at CHF 544 million. The Group’s EBITDA came in consequently lower year-on-year at CHF 81 million, or 14.7 % of sales (Q3 2015: CHF 111 million, 17.5 %). EBIT for Q3 2016 stood at CHF 37 million, correlating to a margin of 6.8 % (Q3 2015: CHF 70 million, 11.1 %). The third quarter performance resulted in a rolling 12-month Oerlikon Group return on capital employed (ROCE) of 6.2 % (normalized; excluding the restructuring and impairment effects in Q4 2015) versus 9.3 % (reported) in the same period in 2015.

The Group continued to increase the proportion of its service revenues to total group sales as it strengthened its focus on improving customer value and services. In the third quarter, the share of service revenues was 38.0 % of total Group sales (Q3 2015: 34.7 %), bringing the year-to-date ratio to 36.7 % of total Group sales (2015: 33.3 %).

2016 outlook confirmed

Oerlikon expects the remaining months of 2016 to remain challenging as a result of the ongoing uncertain global economic climate and conservative investment attitudes in several of its end markets. However, given the positive results from the surface solutions business and indications that 2016 will see a trend reversal in the manmade fibres business, Oerlikon confirms its 2016 guidance. The company expects to deliver order intake and sales between CHF 2.3 billion and CHF 2.5 billion and an EBITDA margin in the mid-teens for the full year 2016.

Performance of the manmade fibres segment


Oerlkon Manmade Fibres Segment

The prevailing overcapacity in the filaments equipment business continued to impact the Segment’s performance. The Segment’s efforts in diversifying its focus on other areas outside of the China-led filaments market has started to bear fruit and contributed to the improved sequential performance of the Segment compared to the previous quarter. Staple fibres, bulked continuous filaments (BCF) and customer services are the main areas where the Segment has grown its business.

The lower top line due to the ongoing market weakness also resulted in a significantly lower EBITDA (Q3 2016: CHF 1 million, margin 0.6 %). EBIT for Q3 2016 stood at CHF -4 million (Q3 2015: CHF 25 million). However, sequentially, the Segment managed to improve its top line and operating profitability (Q2 2016: order intake CHF 125 million, sales CHF 98 million, EBITDA margin -1.6 %), albeit from a low base level.

As the filaments market further consolidates, the Segment is seeing some signs that shelved investment plans are being resurrected and evaluated. Based on the overall filaments market sentiments and indications, Oerlikon expects that the market is bottoming out and a trend reversal will be seen in 2016.

At the recent ITMA Asia + CITME 2016 show, the Segment showcased numerous innovations. It presented its Plant Operation Center (POC) 4.0 with new features, a predictive maintenance concept using Microsoft’s HoloLens (the first company in the industry to do so), new additions to WINGS POY for processing high titres, its customizable “specialists” – WINGS FDY SD/WINGS FDY BR – for semi-dull and trilobal bright yarn luster, the flexible WINGS FDY PLUS and WINGS FDY PLUS eco variant for a broader application window, a highly productive automatic texturing and space saving machine (eAFK HQ), a fully-comprehensive staple fibre production plant portfolio including the acquired Trützschler technologies, and new multifunctional forming tables and a FAUS operating unit for nonwoven meltblown systems with smaller footprint and higher reliability.






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