Improved figures from Schmolz + bickenbach
publication date: Mar 8, 2012
In fiscal year 2011, Swiss public limited company Schmolz + Bicknebach, again markedly improved its revenue and earnings relative to the previous year. Revenue attained EUR 3 942.9 million (2010: EUR 3 119.3 million). Relative to 2010, operating profit before depreciation and amortisation (EBITDA) increased by EUR 63.3 million to EUR 296.2 million (2010: EUR 232.9 million), which represents a margin of 7.5% (2010: 7.5%). Operating profit (EBIT) increased by 47.3% to EUR 179.6 million (2010: EUR 121.9 million). Despite tax effects and non-recurring costs associated with the refinancing, net income after taxes (EAT) increased from the previous year to EUR 42.7 million (2010: EUR 38.6 million). The Board of Directors proposes payment of a dividend of CHF 0.10 per share.
Relative to the previous year, the demand for our special steel again increased in all segments of the markets that we serve. This resulted in higher orders received, production volumes and revenue. Owing to the uncertainty in the markets resulting from the financial and currency crisis, in the second half-year a slight weakening in demand with falling alloy prices caused an erosion of margins. Based on feedback received from our customers, we are cautiously optimistic for the current year. Particularly the first half of 2011 was characterised by strong demand for our special steel. Substantial impulses came from the automotive and automotive components supply industry. The other market segments that we serve, including machinery and apparatus construction as well as the hydraulic, energy extraction, energy generation, aircraft and chemical industries, also developed positively. Our plants mostly operated at full capacity. In the first half of 2011, revenue progressively increased. Scrap prices were relatively stable throughout the year. Most noteworthy of the alloy prices is nickel, which after a prolonged climb lasting until March 2011 dropped back until December and thereby substantially reduced our margin in the second half-year.
Outlook
Relative to the previous year, the demand for our special steel again increased in all segments of the markets that we serve. This resulted in higher orders received, production volumes and revenue. Owing to the uncertainty in the markets resulting from the financial and currency crisis, in the second half-year a slight weakening in demand with falling alloy prices caused an erosion of margins. Based on feedback received from our customers, we are cautiously optimistic for the current year. Particularly the first half of 2011 was characterised by strong demand for our special steel. Substantial impulses came from the automotive and automotive components supply industry. The other market segments that we serve, including machinery and apparatus construction as well as the hydraulic, energy extraction, energy generation, aircraft and chemical industries, also developed positively. Our plants mostly operated at full capacity. In the first half of 2011, revenue progressively increased. Scrap prices were relatively stable throughout the year. Most noteworthy of the alloy prices is nickel, which after a prolonged climb lasting until March 2011 dropped back until December and thereby substantially reduced our margin in the second half-year.
Investigation
The investigation that was ordered by the Board of Directors into the circumstances relating to improper separation of private and company expenses that resulted in the immediate resignation of the former Chairman of the Board of Directors is not yet complete. Since the former Chairman has undertaken to fully repay any deficit, the company is not expected to suffer any damage from the incident. The operating business of SCHMOLZ + BICKENBACH is unaffected by this situation. A report on the state of the investigation will be given at the General Meeting of 19 April 2012.
The investigation that was ordered by the Board of Directors into the circumstances relating to improper separation of private and company expenses that resulted in the immediate resignation of the former Chairman of the Board of Directors is not yet complete. Since the former Chairman has undertaken to fully repay any deficit, the company is not expected to suffer any damage from the incident. The operating business of SCHMOLZ + BICKENBACH is unaffected by this situation. A report on the state of the investigation will be given at the General Meeting of 19 April 2012.
Outlook
Order bookings in the second half of 2011 were weaker than in the first half-year. This was partly because of the darkening economic outlook associated with the international financial and currency crisis. Another reason was that our customers reduced their inventory levels at the end of the year to optimise their balance sheets. Since the beginning of 2012, the overall order intake has increased again. From this we conclude that the markets for our special steel are in substantially better health than the markets for commodities. Particularly the premium suppliers in the automotive industry, as well as the markets in the energy extraction and energy generation segments, are still running at high levels. The megatrends of mobility, urbanisation and energy provision which are important for our business still apply. The future development in the financial sector as well as the difficult currency situation in our production and customer countries, may continue to exert a negative impact on our business.
Positive for our outlook are the investments of the last few years in modern production systems, in additional operations for the production of higher-value qualities, and in the international market organisation. A substantial income potential will come online when the new steelmaking and forging plant at A. Finkl & Sons. Co., Chicago, starts full-scale operation. Assuming stable raw-material and alloy prices, we expect revenue and income for the current year to