Difficult 2009 - Significantly better second half
The worldwide economic crisis left its mark on the results of the COMET Group for 2009, with the second half of the year showing clear signs of the recovery. Overall, the Group registered a sales decline of 32.3% from the prior year and an operating loss of CHF 14.0 million after non-recurring special charges of CHF 7.0 million. Thanks to rapidly taken countermeasures, the cost base was reduced significantly. This led to distinctly improved positive EBITDA of CHF 5.2 million in the second half of the year (H1: EBITDA loss of CHF 5.6 million) and an almost neutral EBITDA result for the full year at a deficit of CHF 0.4 million. The Group is reporting positive free cash flow of CHF 2.6 million and a continuing sound equity ratio of 48.9%. In addition, important projects were implemented for lasting efficiency improvements. Despite the consolidated loss, the Board of Directors will propose to the annual shareholder meeting to pay a dividend of CHF 0.50 per share.
In 2009 the COMET Group generated consolidated net sales of CHF 150.8 million, compared to CHF 222.6 million in the year before. This represents a sales decrease of approximately 32.3% (or 31.2% on a constant-currency basis), even if a significant recovery was noticeable in the second half of the year as a result of the upswing in the semiconductor industry. The contraction affected both of the two divisions and all regions, although to different degrees.
The operating loss (EBIT) of CHF 14.0 million (prior year: operating income of CHF 11.0 million) was driven in large part by special charges of CHF 7.0 million, of which CHF 5.0 million resulted from the restructuring measures and CHF 2.0 million from the impairment charge associated with the exit from the minitube activities. At EBITDA level, the COMET Group was able despite the adverse economic environment to improve the result substantially in the second half of the year, to a profit of CHF 5.2 million, compared to the first six months (EBITDA loss of CHF 5.6 million). For the year as a whole this led to a near-break-even EBITDA deficit of CHF 0.4 million after special charges (prior year: positive EBITDA of CHF 24.6 million) and positive EBITDA of CHF 5.3 million before special charges. Thanks to disciplined working capital management, the Group recorded positive free cash flow of CHF 2.6 million. The equity ratio, at 48.9%, remained sound and broadly stable (prior year: 50.7%). The early and rigorous implementation of the cost-saving measures yielded a significant reduction in the cost base. Despite the tough market environment, the Group also carried out important efficiency-enhancing projects (notably the launch of SAP in Europe and lean management projects) and growth initiatives. As a result of the transfer of the X-ray generator product line to the Modules & Components division, the following segment comparisons with the prior year are based on pro-forma data.
The product areas in the Modules & Components division differed in the extent to which the crisis affected them in their particular markets. Over the year as a whole, sales in this division declined to CHF 78.6 million (prior year: CHF 111.4 million) or by 29.4% (29.0% on a constant-currency basis). In the latter half of the year, however, rising demand in the semiconductor industry pushed up the division's sales by 21.4% compared to the first six months. This in combination with determined cost reduction efforts resulted in positive EBIT operating income of CHF 0.5 million (prior year: CHF 10.6 million) and EBITDA of CHF 6.1 million (prior year: CHF 15.4 million) after special charges of CHF 2.3 million, of which CHF 0.9 million represented the discontinuation of the minitube activities and CHF 1.4 million arose from the relocation of the generator business.
Modules & Components division
In the Industrial X-Ray product area, the difficult economic environment was felt most in the core markets of non-destructive testing and thickness measurement. Sales amounted to CHF 47.9 million (prior year: CHF 61.1 million), a reduction of 21.7% from 2008 (or 20.8% at constant exchange rates). Two market segments that were less affected were security and portable non-destructive examination, where (thanks in part to new products) Industrial X-Ray achieved sales almost matching the prior-year level. Through consistent optimization of manufacturing processes, Industrial X-Ray was able to improve its profitability in spite of the challenging business setting.
After the steep demand decline in the first half of the year, the Vacuum Capacitors product area saw a continuous increase in new orders, with the result that sales in the second half were more than twice as high as in H1. Sales in Vacuum Capacitors for the full year were CHF 30.8 million (prior year: CHF 50.3 million), a decrease of 38.8% (38.9% at constant currencies). In RF modules, despite a clear contraction in this industry, sales remained almost at the year-earlier level. Process and structural improvements, as well as various new projects with OEM customers in the semiconductor, flat panel and solar markets, are cause for optimism for 2010.
An investment halt and significant cost cuts by customers in service and maintenance caused a pronounced sales reduction in the Systems division to CHF 88.1 million (prior year: CHF 134.2 million). This represents a decline of 34.3%, or 32.4% on a constant-currency basis. Positive exceptions to the general trend were customer solutions (where sales grew) and computed tomography systems (where sales held steady at the prior-year level). On balance, the sales erosion could only partly be made up for by the cost-saving measures initiated. Coupled with the inventory reduction of demonstrator systems at lowered prices toward the end of the year and the special charges of CHF 3.6 million from the move of the Feinfocus activities to Hamburg, the division thus recorded an EBITDA deficit of CHF 8.6 million (prior year: EBITDA profit of CHF 6.9 million).
Despite the consolidated net loss in 2009, the Board of Directors will propose to the annual shareholder meeting to pay a dividend of CHF 0.50 per share. This also reflects the Group's more positive outlook compared to the year completed.
The COMET Group is structurally on solid footing as a result of swift corrective measures, and with lean processes and innovative products is well-positioned for the market recovery. The current new orders signal a positive start to 2010, although the durability of the rebound cannot be gauged until later in the year. From the vantage point of the present, the management is targeting sales growth in 2010 of between 15% and 20% over the prior year and expects net income to be moderately positive.
Media and analyst conference
COMET will present the published results for 2009 today at 10:00 a.m. at the media and analyst conference in Zurich (SIX Swiss Exchange, Convention Point, Selnaustrasse 30).