At the Comet Group’s Investor Day on November 13, 2018, Chairman of the Board Hans Hess and the management, led by CEO René Lenggenhager, provided updates on the status of strategy execution, the current and future direction as well as key projects of the Group and its divisions.
The Comet Group delivered good results with its “Strategy 2020” in the last several years. As communicated on November 2, 2018, the Group has adjusted its outlook for 2018 and provided information on corrective measures. The Board of Directors is confident that Comet’s Strategy 2020 will create added value for investors, customers and other stakeholders even in a more challenging economic and geopolitical environment.
Measures in 2018 completed at EBT, well-advanced in x-ray systems business (IXS)
The programs of measures for both the IXS and the EBT division reduce costs, risks and losses, but go far beyond pure cost-saving initiatives. They aim at greater focus, agility and speed in many processes. The planned actions will significantly improve the profitability of both businesses in 2019 and 2020 compared to 2018.
With the sale of its US site in Davenport, Iowa, announced today, and the focus on the OEM business, the Comet Group places the ebeam business on a new footing and completes its corrective measures (see the separate media release).
An earnings improvement program is being implemented in the x-ray systems business. IXS is accelerating the development, renewal and production of systems on a sustained basis. A new prioritization in the planning of its development projects is designed to promote focused and rapid commercialization.
PCT sees great potential in its markets
Comet’s plasma control division (PCT) is one of the world’s leading vendors of RF power technology and a strong growth driver of the Comet Group.
PCT is the only manufacturer worldwide to develop and produce all core components of the RF power delivery system in-house. The division has adapted to the current slowdown in the semiconductor market with capacity adjustments and is using spare capacity to drive lean initiatives and innovation. The PCT business is based on strong fundamental growth drivers such as digitalization, the Internet of things and artificial intelligence. The division has excellent potential for further strong growth at high profitability. With its new generators, PCT will address a significant market from 2020 and expand its position as an RF power delivery system provider in the semiconductor market. Based on customer responses and market studies, the Comet Group expects the semiconductor market to recover again starting in the middle of 2019.
IXM working on forward integration toward handling the entire image data chain
With its superior industrial x-ray tubes, unique process know-how and the ability to deliver tailor-made solutions for OEM customers, the Comet Group’s x-ray module business is superbly positioned in the non-destructive testing and security inspection markets. The division has strong potential for further profitable growth. Growth drivers such as digitalization (predictive maintenance), automation (material recognition and testing) and miniaturization enable the widening of the addressed market and the further expansion of the business beyond 2020. Since the introduction of the iVario generator, the new product package which combines this generator with the x-ray tube creates additional short- and medium-term potential for IXM for the period to 2020. In the medium and long term, attractive growth opportunities are offered by the product portfolio expansion that is underway for both markets of the division as well as by activities for further forward integration toward covering the entire image data chain.
X-ray systems business enjoys good positioning in the market
The Board of Directors and management are confident that the x-ray systems business (IXS) has strong potential.
With the more efficient organization that has been created, IXS will again be able to achieve profitable growth from 2019. The division is well positioned in the x-ray inspection market and has potential that goes far beyond the defect analysis currently offered. Strong drivers are 3D printing, metrology, computed tomography and in-line testing. By leveraging data analysis and machine learning, x-ray technology will in future play an important role in optimizing customers’ manufacturing processes. The Board of Directors and management are firmly convinced that the current x-ray systems business should continue to be operated within the Comet Group and generate value going forward. In addition, through the close collaboration between the x-ray modules activities and the x-ray systems business, commonalities in data analysis methods and algorithms between the two divisions will allow new solutions and added value to be created in the future for the Comet Group’s customers.
EBT opens up growth opportunities in adjacent markets
For the ebeam business (EBT), which is now focused on OEMs, the Board and management see attractive medium-term opportunities to grow into adjacent and new markets with its core competencies and technologies and to add value for the Comet Group and its shareholders. The manufacturing of ebeam lamps is based on the same technological competencies as the production of radio frequency and x-ray technology (namely, expertise in high vacuum, high voltage and materials science), which today enables various synergies, such as in the manufacturing of input parts for all three technologies.
Digitalization and data analysis create new opportunities
With its three core divisions of PCT (one of the world’s leading vendors of radio frequency technology), IXM (among the top manufacturers of x-ray modules for non-destructive testing and security inspection) and IXS (one of the foremost suppliers of industrial x-ray systems) as well as its attractive leading-edge ebeam technology, the Comet Group is well positioned in markets with high growth potential.
“Digitalization and data analysis open up new growth potential for the Group. One of the questions management is tackling in developing the strategy for the coming period is which common approaches – shared across technologies and markets – are the most promising ways to address these growth drivers,” says René Lenggenhager, CEO of the Comet Group.
Outlook for 2019 and 2020
For 2019 and 2020 the Comet Group is not publishing revenue and EBITDA targets, in view of the geopolitical uncertainty, the lack of visibility especially in the semiconductor market, and the structural changes in the ebeam business.
Comet Group enters fiscal year 2019 on a more robust base: PCT and IXM have a high degree of flexibility to adjust their organization with market demand.
The measures completed in 2018 will have a positive impact on profitability in the EBT and IXS divisions: For 2019, a positive difference compared to 2018 will be made by the non-recurrence of exceptional expenses of about CHF 17 million at EBITDA level. This figure is made up of non-recurring one-time losses of approximately CHF 7 million in the ebeam division and about CHF 5 million in the IXS division, as well as the absence of around CHF 5 million of losses incurred through the divestiture of the ebeam systems business. Both divisions will be able to operate with a significantly lower cost base as a result of their restructuring.
Current and future direction of the Group
At the Investor Day, Chairman of the Board Hans Hess commented on the current and future direction of the Comet Group. In line with the Strategy 2020, the Comet Group intends to grow by building on its existing core competencies and technologies and on the pooling of its strengths to leverage new applications while intensifying the cooperation with key accounts. The Board of Directors is convinced that this strategy will enable Comet to create value even in a more difficult environment.
In 2018, the Board instructed management to review the strategy within the usual process in regard to the next period and to draw up proposals for the strategy’s evolution. The Board and management believe that the medium-term potential of the Group remains remains as high as ever. They are convinced that with its broad positioning based on multiple technologies and markets, the Comet Group has unique strengths that come to the fore with the ongoing digitalization of processes and industries.
November 13, 2018: Investor Day
March 14, 2019: Publication of full-year results for 2018
April 25, 2019: Annual Shareholder Meeting
The Comet Group is a globally leading, innovative Swiss technology company focused on the x-ray, radio frequency and ebeam businesses. With premium high-tech components and systems, we enable customers in numerous industries to both enhance the quality of their products and make their manufacturing more efficient and eco-friendly. Our innovative solutions under the Comet, Yxlon and ebeam brands are in demand for applications such as non-destructive testing and security inspection, the coating and treatment of surfaces, and non-contact sterilization.
Based in Flamatt, Switzerland, the Comet Group has a presence in all world markets. We employ more than 1,400 people worldwide, including over 500 in Switzerland. Besides production facilities in China, Denmark, Germany, Switzerland and the USA, we maintain various subsidiaries in the USA, China, Japan and Korea. Comet (COTN) is listed on the SIX Swiss Exchange.