Broad-based organic growth both geographically and by market segment – EBIT margin in the upper half of the medium-term target range
|in CHF million||H1 2018||H1 2017||Change|
|in % of net sales||9.4||8.0|
|in % of net sales||6.7||5.8|
|Free operating cashflow||21.5||8.9|
|Radio Frequency technology segment|
|in % of net sales||15.2||13.1|
|Fiber Optics technology segment|
|in % of net sales||6.4||8.7|
|Low Frequency technology segment|
|in % of net sales||10.1||0.4|
|* n/m = not meaningful|
HUBER+SUHNER had a strong first half of the year. The Group’s net sales and profitability improved significantly. The order intake of CHF 516.8 million was up 21.6 % on the same period in the previous year. Net sales also followed this positive development, up 15.4 % to CHF 474.0 million. This resulted in an EBIT of CHF 44.3 million, 35.1 % higher than in the previous year. The EBIT margin of 9.4 % was thus in the upper half of the medium-term target range of 8 – 10 %. Net income rose by 32.2 % to CHF 31.6 million, and the return on sales reached 6.7 %. Organically, i.e. excluding the positive effect of currency and copper of 3.9 %, growth in net sales was still 11.5 %.
The first half of 2018 was characterised by above-average growth in order intake and net sales, which was reflected in double-digit growth rates in all three main regions. The shares of total sales remained virtually unchanged at 42 % in EMEA (including Switzerland), 40 % in APAC and 18 % in the Americas.
Higher order volumes led to an increase in the workforce from 4 241 to 4 348, particularly at the production plants.
Transportation and industrial markets drive growth; communication market holds its own
With an increase of 2.4 %, net sales in the communication market were slightly higher than the high figure for the same period in the previous year. The transportation market confirmed the upward trend with a broad-based plus in net sales of 44.3 %. The railway and automotive submarkets both contributed significantly to the dynamic growth, with the positive development in the Asian railway market being particularly pronounced. In the industrial high-tech niches, growth was recorded in all submarkets, which resulted in overall growth in net sales of 14.9 % in the industrial market.
Impressive renewed growth in Radio Frequency – attractive profitability increased further
The Radio Frequency technology segment remained on a path of growth and continued the positive development of recent years. Order intake rose by 16.8 % to CHF 143.7 million compared to the same period of the last year. Net sales were also well up by 10.7 % to CHF 130.7 million. EBIT stood at CHF 19.9 million, equating to an EBIT margin of 15.2 %, which is 2.1 percentage points higher than in the same period last year. The strongest sales growth was recorded in the two submarkets of test and measurement, and aerospace and defense. The latter reflected the stronger demand for radio frequency components for private satellite projects. Thanks to the dynamic development in the railway market, the business with radio frequency solutions for fast data connections in trains made a significant contribution to sales growth.
Fiber Optics growing compared to a strong prior-year period – below-average profitability
With an order intake of CHF 203.6 million (+12.0 %) and net sales of CHF 190.1 million (+2.0 %) in the first half of 2018, the Fiber Optics technology segment exceeded the high levels of the previous year. Significant volumes were generated by major projects to expand mobile networks to the 4G/LTE standard in price-sensitive emerging markets, while sales to communications equipment suppliers declined. Business in the data centers growth initiative made further progress and recorded double-digit growth. EBIT stood at CHF 12.1 million, equating to an EBIT margin of 6.4 %. It was thus below the 8.7 % of the same period of the previous year, but recovered slightly compared to the weak second half of 2017.
Low Frequency continues impressive upward trend – design-ins for electric vehicles
In the Low Frequency technology segment, the momentum gained in the second half of 2017 was stepped up further in the first half of the current year. Order intake rose by 40.8 % compared to last year to CHF 169.5 million; net sales were up by 44.2 % to CHF 153.2 million. This resulted in an EBIT of CHF 15.4 million or an EBIT margin of 10.1 %. Customer projects with both Asian and European manufacturers made a significant contribution towards the increase, which was widespread geographically. With its electric vehicles growth initiative in the automotive market, the company succeeded in designing in high-voltage systems in new platforms of some manufacturers of passenger and commercial vehicles. This will mainly have an impact on sales in the medium term. A significant portion of the marked improvement in earnings in the Low Frequency technology segment was due to the more favourable cost structure, which had a full impact following the strategic alignment of the previous year.
Compared with the previous year, HUBER+SUHNER expects the positive development to continue in the second half of 2018. Although the momentum is likely to be lower in the second half of the year due to project-related influences, the company expects growth in net sales of at least 10 % in 2018 compared to the previous year, provided that there is a comparable currency situation. The EBIT margin for 2018 as a whole should be in the middle of the medium-term target range of 8 – 10 %.