COMET Group: Strong and profitable growth in first half of 2010
In the first half of 2010 the COMET Group benefited very visibly from the economic upswing in its key markets, achieving substantial sales growth of 38% from one year earlier, to CHF 97.2 million. This together with the previous year's successful reduction of the cost base led to operating income (EBIT) of CHF 6.3 million and net income of CHF 2.1 million.
The COMET Group took advantage of the tangible improvement in its markets to expand net sales by 38.4% compared with the prior year's first half, to a total of CHF 97.2 million (prior year: CHF 70.2 million). At constant exchange rates this represents revenue growth of 43.6%, to which both divisions contributed, although to different degrees. The Group's strongest growth by far was achieved in the semiconductor market. Demand also increased in the automotive, aerospace, electronics and steel industries. Geographically, this was reflected especially in strong sales growth in North America and Asia.
The higher unit sales and the previous year's effective measures to boost efficiency led to a marked improvement in profitability. The Group recorded positive operating income (EBIT) of CHF 6.3 million in the first six months of 2010 (HY1 2009: loss of CHF 12.9 million after special charges). At EBITDA level, earnings were CHF 12.3 million (HY1 2009: loss of CHF 5.7 million after special charges).
As a result of a growth-induced increase in net working capital and the expansion of production capacity, COMET registered a negative free cash flow of CHF 2.2 million. The equity ratio increased slightly from the end of 2009, to 49.3%.
Buoyed by the strong demand especially in the semiconductor market, the Modules & Components division took in CHF 63.8 million, a powerful increase of 79.6% in sales from the year-earlier period (CHF 35.5 million). This represents growth of 86.0% when currency effects are excluded. The high sales with existing and new customers and the efficiency improvements launched last year had a pronounced positive impact on earnings, with EBITDA of CHF 13.3 million (prior year: loss of CHF 0.7 million after special charges).
Modules & Components division
Within Modules & Components, the Industrial X-Ray product area increased its sales to CHF 28.2 million or by 9.2% from the prior year's first half (CHF 25.9 million), thanks both to rising demand in the markets for non-destructive testing (automotive and aircraft industries) and thickness measurement (steel industry), and the successful launching of new products. In constant-currency terms, Industrial X-Ray's sales even grew by 12.9%. Next to ongoing programmes to optimize profit margins, a particularly positive driver was the relocation of the generator business in fall 2009 from Hamburg to Flamatt. Both of these factors resulted in significant profitability growth from the prior-year comparative period.
The Vacuum Capacitors product area was able to nearly quadruple its net sales in the first half of the year to a new all-time high of CHF 35.5 million (from CHF 9.6 million in HY1 2009). Thanks to various new RF modules, innovative products, lean and flexible processes and effective marketing, Vacuum Capacitors fully exploited the vigorous recovery in the semiconductor market and parts of the flat panel market and significantly expanded its market position. As planned, Vacuum Capacitors ramped up production in Shanghai for the assembly of RF modules, boosting the share of RF modules in the product area's sales mix to 45%. In addition, with the newly launched Solacon capacitor, developed specifically for the solar market, an important foundation was laid for future new sources of revenue.
Thanks to the rising demand in the automotive market (notably the tire and wheel segment) and the aerospace and electronics industries, the Systems division recorded brisk new orders of CHF 62.0 million, with a book-to-bill ratio of 1.41. As a result of structurally induced longer production lead times in the system business, however, these strong new orders will not unfold their full effect on sales and earnings until the second half of the year. Sales in the Systems division, at CHF 43.9 million, were therefore only slightly above the year-earlier level of CHF 43.4 million. On a constant-currency basis, the division's sales grew by 5.2%. At EBITDA level, the Systems division posted a loss of CHF 0.8 million (HY1 2009: loss of CHF 5.6 million after special charges). However, with its comfortable book-to-bill ratio and the measures taken to increase efficiency and adjust production capacity and delivery processes to the heightened demand, Systems heads into the second half of the year with confidence.
The positive trend in the COMET Group's key markets justifies optimism for the second half of the year. Based on the assumption that the economic recovery continues, the management and Board of Directors are projecting a somewhat stronger second half of the year overall and are now targeting full-year growth of about 30% in sales to approximately CHF 200 million, with an EBIT margin of more than 5%.
At 10:00 a.m. today, COMET will present the published financial results for the first half of 2010 at the media and analyst conference in Zurich (SIX Swiss Exchange, Convention Point, Selnaustrasse 30).
Media and analyst conference