In fiscal 2009/10 Schaffner emerged all the stronger from the economic crisis and surpassed even the good results of 2007/8. This was driven by product innovations for the strategic growth markets of energy-efficient drive systems, renewable energies and rail technology as well as the focus on Asia and further operational improvements in manufacturing. Consolidated net sales grew by 41.7% (49.7% in local currencies) to CHF 188.9 million (FY 2008/09: CHF 133.4 million) despite the shortage of electronic components in 2010. Operating profit rose to CHF 15.0 million from a prior-year loss of CHF -9.2 million, the EBIT margin increased to 7.9% from a negative margin of 6.9%, and net profit for the period grew to CHF 12.0 million (prior year: net loss of CHF -10.9 million). In 2009/10 the Schaffner Group recorded a vigorous increase of 56.6% in order intake to CHF 207.3 million (prior year: CHF 132.5 million). Propelled by the positive book-to-bill ratio in fiscal 2009/10, the Group has also made a buoyant start to 2010/11.
Dynamic trend in all markets and segments
The Asia/Pacific region, with sales growth of 71%, was where the Schaffner Group achieved the strongest expansion in fiscal 2009/10. Sales in China grew by 94% in local currency. At 22% of Group sales (prior year: 17%), China was Schaffner’s second largest national market after Germany in the year under review. Europe remains the Group’s foremost regional market at 60% of sales (prior year: 66%), followed by Asia/Pacific at 33% (prior year: 27%) and the Americas at 7% (prior year: 7%). For fiscal 2009/10 the Schaffner Group’s detailed segment reporting is for the first time based on the three business segments of Electromagnetic Compatibility (EMC), Power Quality (PQ) and Automotive (AM). All three segments performed well.
Electromagnetic Compatibility (EMC)
The EMC segment increased its sales by 35.4% to CHF 111.5 million in fiscal 2009/10 (prior year: CHF 82.3 million). The segment operating profit (operating result before costs for group functions, other income, restructuring costs and amortization of customer relations) of CHF 18.3 million (prior year: CHF 0 million) benefited from the restructuring measures implemented; the segment operating margin was 16.4%. EMC recorded a real boom in orders from the solar inverter industry in the year under review due to very high demand for solar power installations. Demand in the traditional European EMC markets of machine tools and robotics and power supply systems for electronic devices recovered gradually over the course of fiscal 2009/10 following the fall in the previous year. EMC accounted for 59% of Group sales.
Power Quality (PQ)
PQ’s sales rose by 42.6% year-on-year in fiscal 2009/10 to CHF 60.9 million (from CHF 42.7 million). The largest share of the sales increase came from the Asian market. The growing market for harmonic filters to ensure interference-free power supply in buildings and infrastructure installations also delivered a very pleasing performance; Schaffner is already one of the world‘s leading providers in this field just two years after it first entered the market. Active and passive harmonic filters accounted for around 5% of Group sales in fiscal 2009/10. In rail technology, Schaffner is now the global leader for auxiliary transformers and other magnetic power components for vehicle drives. Segment operating profit (operating result before costs for group functions, other income, restructuring costs and amortization of customer relations) increased to CHF 3.1 million (prior year: CHF 0 million). The segment operating margin improved considerably to 5.0% in the year under review following high development costs and capital investment in business expansion. Schaffner intends to further increase operating profitability over the medium term. PQ generated 32% of Group sales.
Automotive (AM)
Sales in the AM segment increased by 98.6% year-on-year in fiscal 2009/10 to CHF 16.6 million (from CHF 8.3 million). Segment operating profit (operating result before costs for group functions, other income, restructuring costs and amortization of customer relations) amounted to CHF 1.5 million (CHF 0.8 million) and the segment operating margin was 9.4%. Drivers of the jump in sales included the general recovery in the market and newly acquired projects for automobile manufacturers in Asia and Europe, production for which commenced during the first half of the year under review. New projects to develop EMC filters for use in hybrid and electric vehicles will have a positive impact on segment sales in the medium term. The AM segment contributed 9% of Group sales.
Sound financing structure
Given the strong increase in sales, net working capital rose to CHF 38.3 million (end of prior year: CHF 30.7 million). Net debt was nonetheless held steady at CHF 11.8 million (prior year: CHF 11.9 million) and the gearing ratio of net debt to equity improved from 25% to 21%. With shareholders’ equity of CHF 56.0 million (prior year: CHF 47.3 million), Schaffner’s equity ratio improved to 44.2% (prior year: 37.3%), which is in the target range.
Proposal on dividend
In view of the positive annual result for 2009/10, the Board of Directors of Schaffner Holding AG will propose to the 15th Annual General Meeting on January 12, 2011 a distribution of CHF 4.50 per share (exempt from Swiss anticipatory tax) in the form of a repayment from the reserve for additional paid-in capital. This is in line with the target payout ratio of 25 percent of the net result.
Outlook
The management of the Schaffner Group anticipates that growth particularly for power quality solutions in the Asia/Pacific region and the recovery in the cyclical EMC markets will continue. Demand in the automotive market is likely to remain constant at a high absolute level and will to generate additional sales potential for Schaffner over the medium term as a result of new electromobility applications. The outlook for the photovoltaic applications market is very difficult to assess: contrasting with the anticipated decline in demand from Germany, for example, are extremely good expectations for China and Italy. For 2010/11, in local-currency terms, the Schaffner Group is targeting renewed double-digit sales growth in the high single digits and a further improvement in operating margins.
Luterbach, December 7, 2010
