The growth strategy adopted by the COMET Group bore fruit in the first half of 2011. At constant exchange rates, growth was recorded in all business divisions and regions. In Swiss franc terms, the COMET Group grew consolidated net sales by 20% year-on-year to CHF 116.8 million (HY 2010: CHF 97.2 million), or 36% on a currency-adjusted basis.
The largest growth was posted by the Systems division, as a result of strong demand from the Chinese automotive industry. The geographical distribution of Group sales shifted further towards Asia (from 37% share of total sales in HY 2010 to 40% share of total sales in HY 2011). The share of Group sales accounted for by Europe rose to 28% (HY 2010: 24%), while North American sales dropped to 30% of Group sales due to the weak US dollar (HY 2010: 37%).
The high sales volume coupled with strict cost management cushioned the negative effects of the strong Swiss franc and resulted in a marked improvement in profitability, with operating income (EBIT) up 50% to CHF 9.4 million (HY 2010: CHF 6.3 million) and EBITDA at CHF 15.5 million (HY 2010: CHF 12.3 million). At CHF 5.4 million, net income more than doubled, resulting in a marked increase in earnings per share from CHF 2.78 to CHF 7.09.
Free cash flow improved to CHF 7.2 million (HY 2010: CHF -2.2 million). With an increased equity ratio of 53.8%, the COMET Group continues to boast a sound balance sheet.
Systems division – robust profitable growth
With sales up 35.8% to CHF 59.6 million, the Systems division made the largest contribution to growing the COMET Group’s sales (HY 2010: CHF 43.9 million). In local currency terms, growth was 54%. In addition to strong demand in the automotive, energy and aviation markets, the division benefited from the successful marketing of customized software and product features as well as an increase in the service business. Thanks to the focus on strong-margin applications and additional efficiency enhancements, this resulted in a significant rise in profitability. After reporting a loss in the prior year, Systems ended the first half of 2011 with a positive and much-improved EBITDA of CHF 3.9 million, despite negative currency factors (HY 2010: CHF -0.4 million).
Modules & Components division – strong Swiss franc weighs down results
Sales generated by the Modules & Components division grew moderately year-on-year to CHF 66.3 million (HY 2010: CHF 63.8 million) or by 17.8% in currency-adjusted terms. The negative impact of the weak US dollar led to slightly lower earnings, with EBITDA ending the first six months at CHF 12.3 million compared to CHF 14.8 million for the first half-year 2010.
At CHF 26.5 million, sales generated by Industrial X-Ray fell short of the 2010 half-year figure of CHF 28.2 million due to the strong Swiss franc. In currency-adjusted terms, the division recorded growth of 4.7%. Gains in the share of the markets for non-destructive testing (automotive and aerospace) and thickness gauging (steel industry) are being offset by a decline in investment spending in the security sector and strong competition in the US dollar zone. Thanks to an ongoing program to optimize margins, however, Industrial X-Ray improved profitability year-on-year.
Vacuum Capacitors increased net sales over the strong prior-year figure by 12% to CHF 39.8 million (HY 2010: CHF 35.5 million), representing growth of no less than 28.2% in currency-adjusted terms. This growth is primarily due to sustained strong demand by the semiconductor industry. In the solar panels area, Vacuum Capacitors won the first contract to deliver a complete Solar ThinFab with RF modules, which will boost earnings in the second half-year.
For the second half of 2011, the COMET Group expects the Swiss franc to remain strong, and consequently expects to face tougher competition, particularly from rivals in the dollar zone. In addition it anticipates a slowdown in demand, from the semiconductor industry among others. Accordingly, the Group expects to end the second half-year with sales and profitability below the strong first half-year figures.
Due to the balanced sales-cost ratio in the euro zone, the euro exchange rate risk is largely hedged. To minimize the US dollar exchange rate risk COMET is taking short- and medium-term measures such as forward exchange contracts and currency clauses, and is increasingly buying in materials in foreign currencies. Targeted measures to enhance efficiency and optimize costs are also being pursued. Additional structural measures will be examined if the Swiss franc continues to appreciate.
Against this backdrop, management and the Board of Directors expects to close 2011 with sales and EBITDA on a par with the prior year.
2011 Half Year Results
The 2011 half-year results of the COMET Group are available at www.comet-group.com.
Media and analyst conference:
COMET will present the published results for the 2011 half-year today at 10 am at the media and analyst conference in Zurich (SIX Swiss Exchange, Convention Point, Selnaustrasse 30).