Realigned Schaffner significantly improves profitability

Ad hoc announcement pursuant to Art. 53 LR

Luterbach, Switzerland, 7 December 2021 - The Schaffner Group realigned its business portfolio in fiscal year 2020/21. With a clear focus on the core business of EMC solutions, on the most attractive growth markets and the highest-margin applications, the company has adopted a strong positioning for the future. This is underlined by a 34.2% increase in new orders and an EBIT margin of 10.9% in continuing operations. At the Annual General Meeting on 11 January 2022, the Board will propose a dividend of CHF 9.00 per share. The outlook for fiscal 2021/22, the year now underway, also inspires optimism. For the years ahead, Schaffner is raising the EBIT target range to 10-12%.
 

'The Schaffner Group took a strategic step of transformative importance in fiscal 2020/21 by divesting the Power Magnetics division,' says Marc Aeschlimann, Chief Executive Officer of the Schaffner Group. 'We are now focused on our core business of EMC filter solutions and magnetic components for high-growth industrial markets and for e-mobility, and thus on the highest-margin applications. Schaffner also now has a more homogeneous product range, less complexity and a leaner cost structure. The realignment already had a positive impact in fiscal 2020/21.'
 

Good demand in all markets

In fiscal year 2020/21, the Schaffner Group generated net sales of CHF 172.5 million. This was slightly more than the prior-year comparative level of CHF 171.7 million, despite the fact that 2020/21 included only the first nine months of the Power Magnetics division's sales. Buoyed by good demand in all markets served, new orders grew by 14.4% to CHF 191.0 million, for a book-to-bill ratio of 1.11 (prior year: CHF 167.0 million and 0.97, respectively).

Looking at continuing operations only, i.e., excluding the Power Magnetics division, net sales rose by 15.9% to CHF 147.3 million in the year as a whole, and by a strong 19.6% in the second half of the year. What is more, new orders in continuing operations jumped by 34.2% in the year, to CHF 170.3 million.

In the year under review, the COVID pandemic led only to limited restrictions. The Schaffner Group was always fully operational and production was maintained at all times, while observing strict safety measures for employees. Challenges arose only in visits to customers and in global logistics, owing to longer transport times and in some cases significantly higher costs.
 

EMC division delivers strong business performance

The EMC division (known as the Industrial division since 1 October 2021), the market leader in EMC filter solutions for applications in machinery and robotics, medical technology, building-systems engineering and energy management, recorded pronounced growth in new orders beginning in March 2021 thanks to the recovery in industrial markets and the pent-up demand for certain industrial goods. Schaffner maintained its readiness to deliver throughout this stage and successfully converted the high order backlog into corresponding sales growth.

Net sales of the EMC division grew by 14.4% in fiscal year 2020/21 to CHF 108.6 million (prior year: CHF 94.9 million). While net sales in the first half of 2020/21, at CHF 48.3 million, were up only slightly from the same period of the prior year, they were significantly higher in the second half of the year at CHF 60.3 million. The acceleration in business was even more evident in the year's new orders, which at CHF 131.8 million were 38.2% above the year-ago level. Intra-year, new orders grew from CHF 59.6 million in the first six months of 2020/21 to CHF 72.1 million in the second half.
 

Automotive division expands electromobility business

In the automotive sector, the growth experienced since the fall of 2020, driven by a post-lockdown rebound in purchases in much of the world and by electromobility demand, continued apace in the first half of 2020/21. The Automotive division significantly expanded its business and, in addition to ramping up newly won projects, also implemented individual high-margin special projects for automobile manufacturers. From the second half of the year, Schaffner too felt the implications of the fact that auto makers and tier-1 suppliers were held back by the shortage of available semiconductor chips.

The Automotive division increased its net sales by 17.8% to CHF 38.7 million in fiscal 2020/21. A strong first six months with net sales of CHF 21.8 million was followed by a slower second half at CHF 16.8 million. Thanks to the successful expansion of the product portfolio for filter solutions and magnetic components, the share of the division's sales accounted for by electromobility-related products was pushed up from the prior year's 25% to 33%.
 

Target of double-digit EBIT margin achieved

The more attractive margin profile resulting from the realignment of the business portfolio was evident in earnings for the full fiscal year 2020/21: Operating EBIT of CHF 18.2 million represented an EBIT margin of 10.6%, compared with an - albeit pandemic-depressed - margin of 2.7% in the prior year. The earnings growth is all the more noteworthy in light of higher logistics costs and raw material prices.

Even after the non-cash recycling (required by Swiss GAAP FER) of the goodwill[1] of CHF 14.9 million from the sale of the Power Magnetics division, Group EBIT for 2020/21 was still a profit of CHF 3.3 million. After goodwill recycling, the net loss for the period amounted to CHF 2.3 million.

In continuing operations, the Schaffner Group delivered EBIT of CHF 16.1 million, corresponding to an EBIT margin of 10.9%.
 

High free cash flow, net cash position and sound balance sheet

Free cash flow in the year was a robust CHF 15.3 million, and investment broadly normalized to CHF 5.8 million after years of high capital expenditures for the manufacturing plant in Thailand and e-mobility projects. In the fiscal year, Schaffner went from net debt to a net cash position of CHF 11.4 million. With equity of CHF 67.6 million and a high equity ratio of 56.3%, the Schaffner Group is even more soundly financed than in the prior year.
 

Dividend

In view of the good operating business performance and the high free cash flow, the Board of Directors will propose at the Annual General Meeting on 11 January 2022 to pay a total distribution of CHF 9.00 per share for fiscal year 2020/21. It consists of an ordinary dividend of CHF 4.50 per share from retained earnings and a distribution (exempt from withholding tax) of CHF 4.50 per share from the distributable share premium reserve. The combined amount proposed is the highest ordinary distribution since Schaffner Holding AG was first listed on the stock exchange.
 

Confident outlook

Schaffner has made a good start to the new fiscal year and there are currently no signs that the Group's business environment will change significantly in the coming months. Both the benign business conditions generally and the positive trend in the markets served should continue. Although the recently very high level of new orders must be expected to normalize, the strong order backlog and the project pipeline assure good capacity utilization until well into 2022. Given the high raw material prices and elevated energy and logistics costs, the Schaffner Group will make certain price adjustments this fiscal year. Schaffner does not expect the supply bottlenecks for microchips in the automotive industry to ease substantially in the short term. Sooner or later, supplies should nonetheless stabilize, which would significantly boost production figures in view of backed-up orders. On balance, conditions are right for 2021/22 as well to prove a good year for the Schaffner Group.

In the medium term, Schaffner continues to aim for organic growth of more than 5% per year. The target range for the EBIT margin is raised from 8-10% to 10-12%. For this new fiscal year 2021/22, Schaffner expects earnings to be within the new multi-year target range.
 


[1]In conformity with Swiss GAAP FER 30, Schaffner has in the past offset goodwill from acquisitions against equity. The accounting rules of Swiss GAAP FER require that, in the event of disposal of a business unit, the related goodwill is recycled through the income statement. For Schaffner, the sale of the Power Magnetics division therefore resulted in a one-time, non-cash charge of CHF 14.9 million for goodwill recycling. The Schaffner Group's equity is not affected by the recycling of goodwill.

 

Key financials of the Schaffner Group

Group results in CHF million

2020/21

2019/20

Change

Order intake

191.0

167.0

14.4%

EMC division

131.8

95.4

38.2%

Automotive division

38.5

31.5

22.2%

Power Magnetics division

20.7

40.1

-48.4%

Net sales

172.5

171.7

0.5%

EMC division

108.6

94.9

14.4%

Automotive division

38.7

32.8

18.0%

Power Magnetics division

25.2

44.0

-42.7%

Operating profit (EBIT) before goodwill recycling

18.2

4.7

287.2%

In % of net sales

10.6%

2.7%

 

Goodwill recycling

-14.9

-

 

Operating profit (EBIT)

3.3

4.7

-29.8%

In % of net sales

1.9%

2.7%

 

Net (-loss)/profit for the period

-2.3

2.7

N/A

In % of net sales

-1.3%

1.6%

 

Free cash flow

15.3

-0.4

N/A

Net cash/(-debt)

11.4

-20.8

N/A

Total assets

120.0

128.1

-6.3%

Non-current assets

34.5

43.4

-20.5%

Current assets

85.5

84.7

0.9%

Total liabilities

52.4

71.2

-26.4%

Shareholders' equity

67.6

57.0

18.6%

Equity ratio in %

56.3%

44.5%

 

Number of employees (headcount)

1,739

2,180

-20.2%

Continuing operations in CHF million

2020/21

2019/20

Change

Order intake

170.3

127.0

34.1%

Net sales

147.3

127.7

15.3%

EBITDA

20.8

7.2

188.9%

In % of net sales

14.1%

5.6%

 

Operating profit (EBIT)

16.1

2.5

544.0%

In % of net sales

10.9%

2.0%

 

Key share data

30.09.2021

30.09.2020

Change

Number of shares entitled to dividends

630,495

632,986

-2,491

Earnings per share in CHF

-3.63

4.28

N/A

Shareholders' equity per share in CHF

106.26

89.55

+16.71

Repayment of excess share premium per share in CHF

4.501

1.00

 

Dividend per share in CHF

4.501

1.00

 

Total distribution per share

9.001

2.00

 

1 Subject to approval by the Annual General Meeting on 11 January 2022.

 

Annual report

You can access and download the annual report 2020/21 of Schaffner Holding AG using this link.

 

Presentation

You can access and download the presentation on the 2020/21 annual results via this link.

 

Webcast

The presentation of Schaffner's full-year results for 2020/21 will be broadcast as a live audio webcast from 10:30 a.m. (CET) on 7 December 2021. A recording will be available afterwards at this link.

 

Financial Calender
11 January 2022          26th Annual General Meeting
5 May 2022                  Publication of half-year results 2021/22
6 December 2022        Publication of annual report 2021/22

 

Contact
Schaffner Holding AG, Investor Relations and Media Office: c/o Dynamics Group, Zurich
Thomas Balmer, +41 43 268 32 34 or +41 79 703 87 28
investor-relations@schaffner.com