Schlatter confirms results for first half of 2019 Dienstag, 20. August 2019 - 06:00

Media information

Schlieren, 20 August 2019. In the first half of 2019, the Schlatter Group reported an order intake of CHF 43.1 million (H1 2018: CHF 59.4 million) and generated net sales of CHF 54.7 million (H1 2018: CHF 53.7 million). The order backlog stood at CHF 33.6 million as at 30 June 2019 (31 December 2018: CHF 45.2 million). Schlatter’s operating result (EBIT) for the first half of 2019 was up on the previous year to CHF 1.9 million (H1 2018: CHF 1.6 million). The net result for the first half of 2019 was CHF 1.4 million (H1 2018: CHF 1.8 million).

The Schlatter Group generated somewhat higher net sales in the first half of 2019 compared with the previous year. The operating result (EBIT) was up slightly on the prior-year period at CHF 1.9 million (H1 2018: CHF 1.6 million). In the welding segment, the profitability of customer projects improved and the products developed over the last few years have reached a high level of maturity. The weaving segment saw a decline in net sales that prevented the Münster site in Germany from reaching the profit zone. With the trade tariffs introduced in various regions inhibiting investment in mesh welding and weaving systems, order intake in the first half of the year fell sharply. Our customers' capacity utilisation rates are high in all product areas, however, and this is having a positive knock-on effect on after sales business.

Welding Segment

Order intake in the welding segment came to CHF 33.9 million in the first half of 2019 (H1 2018: CHF 49.8 million). Net sales were up on the prior-year period to CHF 44.7 million (H1 2018: CHF 42.3 million). The order backlog stood at CHF 26.7 million as at 30 June 2019 (31 December 2018: CHF 37.5 million).

Sizeable resources continued to be invested in the development of a new, modular machine platform. The thinking behind this is to significantly reduce the complexity resulting from the broad product portfolio and to cut production costs. This project, which will unfold over the medium to long term, is expected to deliver lasting competitive advantages for the wire product area.

Introduced several years ago, the flexible and productive MG950 generation of industrial mesh machines now enjoys good stability and high demand. This generation of machines is also being continuously expanded on a modular basis for additional applications and enhanced to create sector solutions.

Weaving Segment

The weaving segment achieved an order intake of CHF 9.1 million in the first half of 2019 (H1 2018: CHF 9.6 million). Net sales reached a volume of CHF 10.0 million (H1 2018: CHF 11.3 million). The order backlog stood at CHF 6.9 million as at 30 June 2019 (31 December 2018: CHF 7.7 million).

The weaving segment dropped back to operational break-even in the first half of the year. This was due to the insufficient profitability of customer projects, a too high cost base and a lack of orders in the profitable product areas. The cost-cutting and productivity enhancement measures already initiated will not be enough to bring the weaving segment into the profit zone in the current financial year.

Development of new business fields in the area of technical textiles

The volatile market for weaving machines for the production of paper machine clothing is causing significant fluctuations in capacity utilisation at the Münster site. Product development projects were launched in the first half of the year to facilitate the entry into growth markets for the production of technical textiles outside the paper industry. Schlatter expects this to reduce its dependence on the unsteady market for weaving machines used in the production of paper machine clothing and hence to generate additional growth. Plans are in the pipeline to build a prototype for these machines in the 2020 financial year.

A further priority is increased modularisation and a reduction in the production costs of weaving machines for the paper industry.

Outlook

The innovation initiative pursued in recent years has given the Schlatter Group a boost, and the cost-cutting programmes are having a positive impact. On the other hand, the current uncertain market environment is resulting in a lower order intake. While the welding segment will continue to see an increase in profitability, the weaving segment requires time and further measures to achieve a turnaround. Wide-scale projects are under way, including the sales offensive to reinforce marketing activities, cost-cutting and productivity enhancement measures, as well as service initiatives. In spite of the current uncertain market environment and the accompanying decrease in the order volumes, the Schlatter Group will continue to invest in product development at a high level.

For the current financial year, the Board of Directors and the management expect the welding segment increasing profitability and the weaving segment posting a loss.

The full 2018 half-year report can be downloaded from the Schlatter Group website: http://www.schlattergroup.com/en/investor-relations/annual_and_semester_reports/

Further information

Schlatter Industries AG

Werner Schmidli

Chief Executive Officer

Telephone +41 44 732 71 70

Mobile +41 79 343 62 62

werner.schmidli@schlattergroup.com

Agenda

Schlatter Group (www.schlattergroup.com)

The Schlatter Group is one of the leading specialists in plant engineering for resistance welding systems for reinforcement mesh, industrial mesh and butt welding systems for rails as well as weaving and finishing equipment for the production of paper machine clothing, wire fabrics and wire mesh. Thanks to its many years of experience in the field of plant technology, its innovative strength and its reliable service, the Schlatter Group – which is listed on the SIX Swiss Exchange in the Swiss Reporting Standard – guarantees its customers a range of powerful and high-quality production equipment.

This media information contains certain forward-looking statements including statements using the words "believes", "assumes", "expects" or formulations of a similar kind. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which could lead to substantial differences between the actual future results, the financial situation, the development or performance of the Company and those either expressed or implied by such statements. Such factors include, among other things: competition from other companies, the effects and risks of new technologies, the Company's continuing capital requirements, financing costs, delays in the integration of acquisitions, changes in the operating expenses, the Company's ability to recruit and retain qualified employees, unfavorable changes in the applicable tax laws, and other factors identified in this communication. In view of these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company accepts no obligation to continue to report or update such forward-looking statements or adjust them to future events or developments.

Key figures of the Schlatter Group