First Half-Year 2018: Gurit Reports Strong Net Sales Growth of +11.5% and Operating Profit Margin of 8.2%
Zurich, Switzerland, August 17, 2018 - Gurit (SIX Swiss Exchange: GUR) reports net sales of CHF 195.3 million for the first six months of 2018. This represents a growth of +11.5% in reported Swiss francs and a currency-adjusted increase of +6.1% over the previous year. Operating profit amounted to CHF 16.0 million and the operating profit margin came in at 8.2% of net sales for the first half-year 2018.
The market environment was very favorable for Gurit Tooling in the first six months of 2018, while wind material demand was still weak in India, stagnating in China, and fair in other global regions. The new Aero Business Unit suffered from a temporary lower customer build rate. The Automotive Business Unit had a bad start into the year as it got hurt by a sharp demand decline in the biggest volume contract which affect the first eight months of 2018. It also was impacted by start-up efforts for three new programs ramping-up in the plants in Hungary and the UK.
Chemical raw material cost were on the rise across all Gurit businesses compared to 2017, while corresponding client price increases in majority will only materialize in the second half year 2018.
Gurit now reports net sales in four segments: “Composite Materials”, “Aerospace”, “Composite Components” and “Tooling”. Aerospace was detached from the Business Unit Composite Materials and established as an independent Business Unit as of April 1, 2018. Prior year net sales figures have been restated accordingly in order to reflect the new structure.
The Composite Materials Business Unit achieved net sales of CHF 102.8 million in the first half-year 2018 (1HY 2017: CHF 104.2 million). This represents a decrease of -1.3% in reported Swiss francs and -5.9% on currency-adjusted basis. Sales to the wind energy industry declined by ‑10.2% (currency-adjusted: -15.1%) to CHF 62.1 million in the first six months of 2018 (1HY 2017: CHF 69.1 million). The decline mainly results from the ongoing weak wind material demand in the wind energy markets in India and China which could not be fully compensated by the demand in Europe and good growth in North America. Material supply to other material markets (excluding aerospace) increased by +16.1% (currency-adjusted: +12.9%) to CHF 40.7 million in the first half-year 2018 (1HY 2017: CHF 35.0 million). Growth resulted from favorable demand in the global marine industry as well as a healthy flow of material orders from industrial customers in North America and Asia-Pacific.
In the Aerospace Business Unit, sales temporarily decreased by -2.2% (currency-adjusted: ‑7.0%) to CHF 25.0 million in the first six months of 2018 compared to net sales of CHF 25.5 million in the first half-year 2017. Lower sales resulted from lower OEM build rates. This OEM is planning to recover the shortfall in the second half-year 2018 and likely also in early 2019. On the favorable side, sales to the US OEM are increasing steadily.
The Composite Components Business Unit reported net sales of CHF 7.3 million for the first half-year 2018. This represents a decrease of ‑25.4% (currency-adjusted: -30.5%) over net sales of CHF 9.8 million generated in the first half-year 2017. The abrupt demand decline in Gurit`s biggest car part volume program caused a sales drop and underutilization cost and thus had a major adverse impact on the operating profitability margin of the business unit and the Group. At the same time, the component business unit is in the start-up phase for three new programs which initially have an adverse margin impact as volumes are not yet produced at final tact rate and cost. Full focus will be placed on improving the situation going forward.
In Gurit`s Tooling Business Unit, sales of wind turbine blade moulds and related equipment reached a new record level. Net sales increased by +68.9% (currency-adjusted: +60.5%) to CHF 60.2 million compared to CHF 35.6 million in the first half-year 2017. Multi mould programs from globally operating OEM’s, especially moulds with extra-long size as well as new client wins, all contributed to this extraordinary positive result which should also continue at a good pace into the second semester of 2018.
Key Financial Figures
Key Financial Figures
rounded up to MCHF
% change in reported CHF
% change at constant 2018 rates
Other Material Markets
Gurit Composite Materials
Gurit Composite Components
TOTAL NET SALES
Profit for the period
Operating cash flow
Operating Profit and Balance Sheet
The operating profit result took benefit from the Tooling growth but at the same time was impacted by the Automotive Components results, the demand stagnation in wind materials paired with sales price decreases and delayed cost recovery from raw material price increases. Additionally, one-off costs related to the transfer of the UK prepreg business to Spain continued in the first half-year 2018 while benefits from lower fixed cost are to be captured from the second semester 2018 onwards. In summary, operating profit came in at the lower end of the Company`s target range. Gurit reported an operating profit of CHF 16.0 million for the first six months of 2018 (1HY 2017: CHF 21.2 million). The operating profit margin amounted to 8.2% of net sales (1HY 2017: 12.1%).
Net profit for the first half-year 2018 decreased to CHF 11.2 million (1HY 2017: CHF 15.3 million) equaling earnings per listed bearer share of CHF 24.13 (1HY 2017: CHF 32.78).
Gurit generated a positive net cash flow from operating activities of CHF 8.3 million in the first six months of 2018. Capital expenditures amounted to CHF 8.9 million in the first half-year 2018 and were mainly used for the construction of a larger production bay at the Company`s Tooling premises in China, continued investments into the industrialization of car part production in Hungary as well as for the set-up of the balsa wood factory in Indonesia.
Given a fair sales outlook for the Group’s businesses and due to the many one-time market and internal effects on the 1HY 2018 operating profit, Management expects to achieve a high single-digit net sales growth in Swiss francs and an operating profit margin at the mid-level of the Company`s target guidance range of 8-10% of net sales for the full-year 2018.
Online publication of Half-Year Report 2018, Media/Analyst conference and international webcast today, Friday, August 17, 2018
Gurit has published its Half-Year 2018 Report online at http://www.gurit.com/Investors/Reports
Management will discuss the results today in further detail at a joint media and analyst conference in Zurich at 09:00 a.m. CEST. The conference will take place at the Zurich Marriott Hotel, Neumuehlequai 42, CH-8006 Zurich. As always, the presentations will be held in English and will also be accessible as webcast at http://www.gurit.com/Investors/Webcasts where an archived version will later be available for download.
The companies of Gurit Holding AG, Wattwil/Switzerland, (SIX Swiss Exchange: GUR) are specialized on the development and manufacture of advanced composite materials, related technologies and select finished parts and components. The comprehensive product range comprises fiber reinforced prepregs, structural core products, gel coats, adhesives, resins and consumables. Gurit supplies global growth markets with composite materials on the one hand and composite tooling equipment, structural engineering and select finished parts on the other. The global Group has production sites and offices in Switzerland, Germany, Hungary, Italy, Spain, the U.K., Poland, Canada, the U.S.A., Ecuador, New Zealand, India, Indonesia, and China. For more information, please visit www.gurit.com
Gurit Group Communications
Head of Marketing & Corporate Communications
T +41 44 316 15 55
M +41 79 722 84 71
All trademarks used or mentioned in this release are protected by law.
To the extent that this announcement contains forward-looking statements, such statements are based on assumptions, planning and forecasts at the time of publication of this announcement. Forward-looking statements always involve uncertainties. Business and economic risks and developments, the conduct of competitors, political decisions and other factors may cause the actual results to be materially different from the assumptions, planning and forecasts at the time of publication of this announcement. Therefore, Gurit Holding AG does not assume any responsibility relating to forward-looking statements contained in this announcement.