In the first half of 2013, the COMET Group recorded consolidated net sales of CHF 106.0 million, 2% more than in the year-earlier period (H1 2012: CHF 104.1 million). In local currencies, sales were up 1% year-over-year. The first six months were marked by solid growth in x-ray sources for non-destructive testing and by the recovery of the semiconductor market, while a weak start to the year and reluctant investment especially in customized solutions held back the performance in the systems business.
As a result of investing as planned in the marketing channels and in strategic initiatives (ebeam, portable x-ray systems, RF generators), operating profit at EBITDA level eased somewhat to CHF 9.8 million (H1 2012: CHF 11.0 million) and the EBITDA margin decreased to 9.2% (H1 2012: 10.6%). Thanks to lower interest expenses and to currency translation gains, the Group nonetheless achieved net income of CHF 2.7 million, matching the year-earlier result (H1 2012: CHF 2.7 million).
In keeping with high sales at the end of the first six months of 2013 and with preparations for the expected strong growth in the second half, working capital was increased considerably from the start of the year. Together with slightly higher investment, this had the effect of significantly reducing free cash flow to a negative CHF 3.3 million (H1 2012: positive FCF of CHF 5.2 million). However, with a robust equity ratio of 58.3% (H1 2012: 56.4%), the COMET Group continues to have a very sound balance sheet.
Reporting in three market-based segments
As part of its strategy of focused growth, the COMET Group adjusted its organizational structure in the first half of the year. The two former divisions have been reorganized into three market-based segments:
- X-Ray & ebeam Technologies (parts of the former Modules & Components division)
- Plasma Control Technologies (the other part of the former Modules & Components division) and
- X-Ray Systems (the former Systems division).
X-Ray & ebeam Technologies: Further sales growth through broad-based marketing
Solid growth marked the first half of the year for the X-Ray & ebeam Technologies segment. Sales increased by 12.6% to CHF 31 million (H1 2012: CHF 27.5 million), or 11.1% in local currencies.
Through intensified marketing, X-Ray & ebeam Technologies continued to significantly expand its market position in the core business of non-destructive testing. This in combination with new and custom-made products drove robust revenue growth, especially in China and North America. Investment in the expansion of the ebeam business, together with shifts in the product mix of the X-Ray & ebeam Technologies segment, resulted in a slightly reduced segment EBITDA margin of 18.6% (H1 2012: 22.3%). For the second half of the year, the segment's revenue is expected to continue on a gently rising trajectory, assisted by new products and applications.
Plasma Control Technologies: On track, with recovery in semiconductor industry
Thanks to the recovery in the semiconductor market, demand for the products of the Plasma Control Technologies segment increased continually since February. At CHF 33.3 million, sales narrowly missed reaching the year-earlier level (H1 2012: CHF 35.0 million) and were down 4.8%, or 5.6% in local currencies.
With its innovative matchboxes, Plasma Control Technologies benefited from contract chip manufacturers' switch to new technologies (TSV, multi-layer, 3D). Moreover, the display and flat panel market revived, and thus so did demand especially for vacuum capacitors. With RF generators, the segment was able to make inroads in the laser industry and drive forward promising projects in the solar and semiconductor industries. Executing on its strategy, the segment aligned itself for greater market orientation and realized cost synergies. The EBITDA margin thus improved to 8.7% (H1 2012: 7.2%). For the second half of the year, COMET anticipates a continuing stable demand in the semiconductor and display flat panel market, as well as the first signs of a recovery in the solar market (particularly in Asia), and expects sustained strong, profitable sales growth.
X-Ray Systems: Weak start, strong order books, gross margin improved
Following a slow start to the year, the X-Ray Systems segment delivered modest growth of 1.4% in revenue to CHF 52.2 million, up from CHF 51.5 million in H1 2012 (growth in local currencies: 0.6%). Especially in Japan and the USA, reluctant investment by customers meant that fewer major orders for custom systems were executed than in the prior year. However, this effect was cushioned by the performance in standard systems and portable inspection products. Beginning in the second quarter, the X-Ray Systems segment booked growing new orders, reflected in the high book-to-bill ratio of 1.33 at the end of June.
The measures to boost profitability drove another improvement in gross margin over the year-earlier level. As a consequence of following through on the planned investment in the further development of strategic products and in the expansion of sales channels, the EBITDA margin decreased to 4.2% (H1 2012: 7.6%). However, the attractive book-to-bill ratio of 1.33 and the fact that the order backlog is up 20% year-over-year point to visibly stronger, profitable revenue growth for the segment in the second half.
Outlook for 2013 reaffirmed: Significantly stronger, profitable growth in second half
Reaffirming its guidance for 2013, the COMET Group is projecting sales to grow to CHF 230-250 million, with an EBITDA margin of 12-14%.
As previously stated, the Board of Directors and Executive Committee thus expect a significantly stronger second half of 2013 relative to the first six months of the year, and are predicting a considerably better trend even compared to the strong second half of 2012. Further high demand is expected from the semiconductor market, and steady growth is forecast in sales of x-ray sources. As well, the high order backlog and expected new orders in the X-Ray Systems segment will have a positive impact on results.
Media and analyst conference
COMET will present the published financial results for the first half of 2013 today, August 22, 2013, at 10:00 a.m. at the media and analyst conference in Zurich (location: SIX Swiss Exchange, Convention Point, Selnaustrasse 30).
COMET Group conference call
Thursday, August 22, 2013, from 4:00 p.m. to 5:00 p.m. CET. Ronald Fehlmann, CEO, and Markus Portmann, CFO, will provide information about the Group’s half-year results 2013 during a telephone conference call and answer questions. The dial-in conference call will be held in English. To participate in the conference call, please dial the following number (please call 10 to 15 minutes before the hour):
+41 (0)58 310 50 00 (Europe)
+44 (0)203 059 58 62 (UK)
+1 (1)631 570 5613 (USA)
Financial calendar for the COMET Group
November 14, 2013
Investor Day 2013
March 20, 2014
Publication of annual report 2013