Measures were taken to generate a higher profit contribution in the competitive communication and railway markets. A positive report can be made regarding investments in new growth areas, which were driven forward decisively. Progress has been made in all key markets, as evidenced by future-oriented projects with potential new customers and the first orders.

Growth in net sales, adjusted for currency and copper effects (+0.3 %) and portfolio effects (+2.2 %) was 5.2 %. The in­creased order intake compared to the previous year’s period, which grew at a higher rate than net sales, led to a slight in­crease in the book-to-bill rate to 1.04 (previous year 1.02). The targeted upfront investments in opportunities with growth potential and the expansion of production capacities at various production sites led to an increase in the number of employees to 4 241 (previous year 3 942). As already announced, the Board of Directors decided to switch the accounting standard from IFRS to Swiss GAAP FER as of 1 January 2017. The first half-year financial statements for 2017 were prepared for the first time in accordance with Swiss GAAP FER.

Communication and industrial markets grew significantly, while the transportation market reported the expected decline in the railway market but an increase in the auto­motive growth market

The communication market once again contributed the most to positive net sales performance. The pleasing growth of 14.7 % was mainly driven by projects with large-scale communication equipment manufacturers, supported by a marked increase in the data center market segment. In the transportation market (−4.2 %), growth in net sales in the automotive submarket could only partially offset the decline in railway business. Net sales rose in all industrial high-tech niches and led to growth of 6.7 % in the industrial market.

Radio Frequency remained on a growth path and kept the EBIT margin high

With an order intake increase of 8.9 % to CHF 123.1 million and net sales rising by 7.0 % to CHF 118.1 million, the Radio Frequency division experienced very strong development. This resulted in a high EBIT margin of 13.1 % and an EBIT of CHF 15.5 million. The Aerospace+Defense and Test+Measurement market segments contributed to this successful first half of the year. Increased interest in radar sensors and radio frequency connections underlined the unstoppable development towards the growth trend for autonomous driving. Increased demand for on-board WLAN equipment on trains also had a positive effect.

Fiber Optics net sales even higher – increased margin pressure

In the first half of 2017, net sales also grew very dynamically in the Fiber Optics division, reaching CHF 186.4 million (+18.2 %). Order intake increased by 6.7 % to CHF 181.7 million. The steady expansion of mobile radio networks to the 4G/LTE stan­dard in price-sensitive emerging markets such as India contrib­uted significantly to this development. Business in the data cen­ter segment also developed positively, where significant growth potential is still to be expected and appropriate investments have been made. The two technology acquisitions Cube Optics and Polatis also contributed to a further increase in net sales. The pleasing development in net sales did not hide the fact that the price pressure on large-scale projects in the communication market has reduced margins. EBIT declined to CHF 16.2 million (−28.1 %) and the EBIT margin to 8.7 %.

Low Frequency just in the profit zone – positive signals on the order side

Net sales in the Low Frequency division fell by 6.2 % in the first half of the year to just CHF 106.2 million; again lower than the previous year, this was foreseeable due to the low order intake during the second half of 2016. EBIT amounted to CHF 0.5 million, which corresponds to an EBIT margin of 0.4 %. On the other hand, order intake showed a gratifying trend: at CHF 120.3 million it was 14.4 % higher than the figure for the previ­ous year period. This positive development was due to a resur­gent railway market in Asia. The continued unsatisfactory profit­ability in the Low Frequency division was the result of the difficult cable systems business with European railway customers, and restructuring measures introduced in the first half of 2017 have had a negative impact on the results. Their positive effects will, however, become evident in the second half of the year. After the balance sheet date, the business with build-to-print harnessing operated from Poland was sold as part of a strategic streamlin­ing. Upfront investments in the automotive market began to have beneficial effects, e.g. approvals from manufacturers of electric vehicles in the field of high-voltage systems. Worth mentioning is the award received from the European Association of Automotive Suppliers CLEPA for the RADOX® High Power Charging System.

Outlook

Compared to a very dynamic first half of the year, which was given an extraordinary boost by the customer project to expand the mobile radio network in India, a slightly lower business volume is assumed for the second half. For this reason, HUBER+SUHNER expects growth of around 5 % in 2017 compared to the previous year, assuming the currency situation remains similar. The EBIT margin is likely to be in the lower half of the mid-term target range of 8–10 %.

Urs Kaufmann                                                               Urs Ryffel     
Chairman of the Board of Directors                              CEO