COMET Group in 2014: Growth strategy successful – Company value and net income up substantially
- Sales growth of 15.3% to CHF 287.9 million
- Net income up 63.3% to CHF 26.3 million
- Operating earnings (EBITDA) improved by 10.5% to CHF 39.8 million
- ROCE strengthened from 10.8% to 15.6%
- Dividend increase to CHF 11 per share (2013: CHF 8)
- 2015: Expecting sales of CHF 280-300 million and EBITDA margin of 13-15%
The COMET Group delivered further organic growth in 2014, with sales up in all regions and operating segments. Consolidated net sales rose from CHF 249.6 million to CHF 287.9 million, surpassing the strong prior year by 15.3% (17.2% in local currencies).
The high sales and the continued strategic work to improve operating efficiency led to tangible profit growth. EBITDA earnings of the COMET Group increased from CHF 36.0 million to CHF 39.8 million, even amid strategic investment in future growth. The EBITDA margin was 13.8% (2013: 14.4%). Group net income rose markedly to CHF 26.3 million (2013: CHF 16.1 million). A driving factor next to the strong sales was a one-time positive tax effect of CHF 6.1 million from the utilization and recognition of tax loss carryforwards in the USA. COMET also raised its economic profit severalfold, and significantly boosted the value of the Group: Return on capital employed went from 10.8% to 15.6%, compared to a cost of capital of 9%. Free cash flow was CHF 18.5 million (2013: CHF 10.7 million). The equity ratio increased to a very good 65.0%. Net debt fell to the low level of CHF 2.0 million.
Strategy succeeds – COMET Group more robust than ever
The steady focus on global marketing of innovative products and technologies made the COMET Group even stronger than before. Critical headway was achieved in all core dimensions of Group strategy. The relationships with key accounts were deepened and new growth-driving projects started in areas such as the semiconductor industry, security inspection and non-destructive testing. As well, new customers were acquired and important design wins paved the way for future growth. Process efficiency continued to be improved. The product portfolio was bolstered with innovative solutions such as the intuitive FeinFocus (FF) computed tomography systems, portable Smart Evo x-ray modules for pipeline inspection, and the sophisticated SmartCon vacuum capacitor.
The Group also made extensive progress in its emerging businesses: In radio frequency (RF) generators, COMET developed new solutions for future use by the semiconductor industry. In the ebeam activities, development of the business is on track. The rollout of this technology with Tetra Pak was initiated with the delivery of the first ebeam-equipped beverage packaging systems to Japan. In Flamatt the unit began to implement a scalable manufacturing concept that in the medium term will enable the production of larger series of ebeam equipment. To expand market access for ebeam, the business unit launched a collaboration with two system integration firms for the European and North American markets.
In the first half of the year, to raise more synergies in market development, the COMET Group transferred the portable-x-ray modules business from the X-Ray Systems segment (IXS) to the X-Ray & ebeam Technologies segment (XET).
PCT: Expansion of business in US semiconductor market
With sales rising by 29.7% to CHF 105.8 million, the Plasma Control Technologies (PCT) segment contributed most to the growth of the COMET Group (2013: CHF 81.5 million). In local-currency terms, PCT grew by 31.3%. The strong result was driven primarily by the expansion of business with major accounts in the US semiconductor market, which started to convert their facilities to accommodate new 3D storage technologies. The COMET Group's investment over the past years in the right impedance-matching network technology paid off. As well, market share was captured in vacuum capacitors in Asia and a foothold in the LED business was established in China. In Korea, where COMET has had a subsidiary since 2013, projects were launched with a number of suppliers to the semiconductor industry. Measures for further efficiency improvement already gained traction intra-year, boosting profit in terms of EBITDA to CHF 18.3 million (2013: CHF 10.7 million).
XET: Strong sales with new customers
In 2014, for the third consecutive year, XET was able to further enlarge its already strong market position in the core business of non-destructive testing. Sales grew by 7.8% to CHF 74.1 million (2013: CHF 68.7 million), or by 9.4% in local currencies. The forward strategy of marketing complete x-ray sources, the intensified market development and the focus on small and medium companies proved effective. Two-thirds of the growth came from new customers. In the market segment of security inspection, development projects for next-generation security screening at airports were driven forward and inroads were made in China. XET made big strides in building up the recently started ebeam business, which, while representing a singledigit share of segment sales, now has the highest growth rate in the COMET Group. Important progress was also achieved by XET in the projects for the inactivation of dehydrated food and sterilization of pharmaceutical tissues. Despite increased investment spending for the development of the ebeam activities, the segment recorded EBITDA earnings of CHF 7.3 million (2013: CHF 11.2 million).
IXS: Capabilities in computed tomography amplified
X-Ray Systems (IXS) expanded its sales by 10.9% to CHF 124.7 million. Measured in local currencies, growth was 13.2%. The operating segment saw its strongest gains in the tire market, particularly in China, where IXS benefited from brisk demand. IXS also grew in the customer segment of foundries; here, producers of castings in the automotive supply industry were impressed with the new CT-capable version of the proven MU2000 inspection system. In the heavily regulated aerospace segment, IXS likewise achieved growth and forged closer ties to its customers.
Important milestones in 2014 were the launch of the new product family of Feinfocus computed-tomography systems and the concentration of the CT capabilities in a single location, in Hamburg. This will heighten the efficiency of new product development based on a shared software platform and will shorten time to market. As part of strategy execution, the sales, marketing and service organization was improved and expanded. Even with the cost of these investments, EBITDA operating earnings were steady at CHF 16.1 million (2013: CHF 16.0 million).
Further dividend increase
At the coming Annual Shareholder Meeting, the Board of Directors will propose a distribution of CHF 11.00 per share to shareholders from distributable paid-in capital (2013: CHF 8.00 per share), exempt from Swiss anticipatory tax. This represents a dividend payout ratio of 32% of the Group’s net income.
Demanding environment – Good prospects for growth
Thanks to its strategy, the COMET Group is ideally placed to exploit current market trends with its innovative customer solutions and further strengthen its leading position in the market. Important business drivers are the development of three-dimensional memory chips, the trend toward 3D-rendering of x-ray images through CT, and the treatment of various surfaces with ebeam. COMET helps to power these trends with its technologies. The Board and management are convinced that, barring a significant deterioration in the economic environment, the Group will be able to continue to grow its value.
Despite the Swiss central bank's decision to end the peg of the franc against the euro, COMET's expectation for 2015 – based on the assumptions of EUR/CHF parity and an exchange rate of CHF 0.90 per US dollar – is for sales of CHF 280-300 million and an EBITDA margin of 13-15%. As a result of the non-recurring positive tax effect of CHF 6.1 million in 2014 and one-time net currency translation losses of about CHF 3 million in 2015, net income this year will, however, be correspondingly lower than in 2014.
At the site in Flamatt, in spite of the recent exchange rate trend, the present work schedules are being maintained in light of the current sustained high utilization.
Next to organic growth, COMET is also looking at acquisitions that can accelerate the strategic initiatives and open up attractive growth opportunities. To ensure sufficient production capacity for future growth, the COMET Group is also working on a project to expand the building in Flamatt.
Access to the Online Annual Report 2014
Online Annual Report 2014
Media and analyst conference
COMET will present the published annual results for 2014 today, March 19, 2015, at 10:00 a.m. at the media and analyst conference in Zurich (location: SIX Swiss Exchange, Convention Point, Selnaustrasse 30).
Conference call in English
A conference call in English will be held today, March 19, 2015 from 4:00 pm to 5:00 pm CET, with Ronald Fehlmann, CEO, and Markus Portmann, CFO. To participate, please dial in 10 to 15 minutes before the scheduled start of the call, using one of the following telephone numbers:
+41 (0)58 310 50 00 (Europe)
+44 (0)203 059 58 62 (UK)
+1 (1)631 570 56 13 (USA)