Schaffner boosts sales and profit in fiscal 2016/17

Media Release

In fiscal year 2016/17 the Schaffner Group’s sales grew by 5.5% to CHF 195.7 million (prior year or PY: CHF 185.6 million); growth in local currency was 6.6%. Operating profit (EBIT) improved to CHF 11.5 million (PY: CHF 1.4 million), with the EBIT margin rising to 5.9% (PY: 0.7%). Net profit for the period also increased substantially to CHF 8.7 million (PY: CHF 0.2 million) and earnings per share expanded to CHF 13.77 (PY: CHF 0.29). Schaffner will propose to shareholders at the Annual General Meeting on 11 January 2018 to pay a distribution of CHF 6.50 per share in the form of a tax-free repayment of capital. At 47% of current net profit for the period, the proposal is at the upper end of the target range for the payout ratio, which has been raised to 40–50% of net profit.

Luterbach, 7 December 2017 – The Schaffner Group returned to growth in fiscal year 2016/17 and strongly improved its profitability. Compared to the prior year (PY), order intake rose by 6.5% to CHF 199.5 million (PY: CHF 187.4 million). In the year under review, gross margin improved by 2.8 percentage points to 28.4% (PY: 25.6%) thanks in part to higher volumes, and free cash flow grew to CHF 5.0 million (PY: CHF 2.4 million). As in the prior year, the Group invested CHF 16.7 million in research and development.

Strong growth in Europe

In fiscal 2016/17, Schaffner’s sales in Europe expanded by 11.4% and its share of the Group total rose to 42% (PY: 40%). In North America, sales increased by 4.3%, accounting for 22% of Group sales as in the prior year. Sales revenue in Asia dipped slightly by 0.2%, bringing the region’s share of the total to 36% (PY: 38%). Sales were up 40% year-over-year in the market sector of machine tools and robotics, up 12% in power supplies for electronic devices, and up 8% in products for rail technology. The largest markets, as in the year before, were automotive electronics at 24% of Group sales (PY: 25%) and energy-efficient drive systems at 20% (PY: 22%).

EMC division

The EMC division increased the number of its new customers worldwide in fiscal 2016/17 and, with growth of 4.7% in segment sales to CHF 98.3 million (PY: CHF 93.8 million), generated 50.2% (PY: 50.6%) of Group sales. Its segment profit was raised by 52.9% to CHF 13.3 million (PY: CHF 8.7 million) and the segment profit margin increased to 13.6% (PY: 9.3%). In the fiscal year the power quality business, which is integrated in the EMC division, launched the second generation of passive harmonic filters and expanded its service and sales network. Through advances in operational excellence, EMC was able to somewhat reduce production costs despite higher raw material prices. As a global organization, the EMC division is well-positioned to grow slightly faster than the market in the long term. One area of potential is electromobility. In this space the division already supplies EMC filters to manufacturers of rapid charging stations for electric vehicles.

Power Magnetics division

With growth of 10.3% to sales of CHF 50.0 million (PY: CHF 45.4 million), the Power Magnetics division accounted for 25.6% (PY: 24.5%) of the Schaffner Group’s sales in 2016/17. The segment loss was reduced from the prior year’s CHF 13.8 million (which included restructuring costs of CHF 4.6 million) to CHF 7.0 million in the year under review. After sweeping structural adjustments in Europe and North America, the Power Magnetics division remains in turnaround mode. Schaffner expects a continuing gradual improvement in the situation. As in the previous year, the drive systems business, with solutions for the oil, gas and mining industry, was difficult as a result of the low commodity prices. By contrast, Power Magnetics sees attractive business opportunities in the global rail technology market and in components for rapid charging stations for electric vehicles, as well as in directly supplying OEM manufacturers, particularly in North America.

Automotive division

In fiscal year 2016/17 the sales of the Automotive division increased by 2.2% to CHF 47.4 million (PY: CHF 46.4 million). With a sales share of 24.2% (PY: 25.0%), the division confirmed its strategic position as the third pillar of the Schaffner Group. Segment profit eased somewhat to CHF 9.4 million (PY: CHF 11.3 million); the segment profit margin was 19.9% (PY: 24.5%). After a slight softening in demand at the beginning of the fiscal third quarter – mainly in North America and South Korea – sales picked up again in the fourth quarter. More than 90% of the division’s revenue was earned with antennas for use in keyless entry systems for vehicles. In the promising market for filters for electromobility, the Automotive division is working on multiple projects and it expects that, in two to three years, the electric vehicle market will provide a growing share of the division’s sales.

Outlook

Following a subdued third quarter of 2016/17, the Schaffner Group registered growing demand from the fourth quarter of the year under review and had a good start to fiscal 2017/18. Given an unbroken positive economic environment and a stable trend in currency markets, Schaffner expects continuing sales growth, especially in the core markets of rail technology, energy-efficient drive systems, power supplies for electronic devices, machine tools, and electromobility. On the assumption of a merely small increase in raw material prices, and despite lasting price pressure in some market segments, an EBIT margin in the mid-single digits is currently expected for fiscal year 2017/18. As before, the Schaffner Group continues to aim for organic sales growth of 5% per year on a multi-year average basis, and for an EBIT margin of at least 8% in the medium term.

Schaffner Group | Key financials

Income statement | in CHF million

2016/17

2015/16

Net sales

195.7

185.6

Net sales, EMC

98.3

93.8

Segment profit, EMC

13.3

8.7

Net sales, Power Magnetics

50.0

45.4

Segment loss, Power Magnetics

-7.0

-13.81

Net sales, Automotive

47.4

46.4

Segment profit, Automotive

9.4

11.3

EBIT

11.5

1.4

In % of net sales

5.9

0.7

Net profit for the period

8.7

0.2

In % of net sales

4.5

0.1

Earnings per share in CHF

13.77

0.29

Free cash flow

5.0

2.4

Balance sheet | in CHF million

30 Sep. 2017

30 Sep. 2016

Total assets

137.3

122.7

Net working capital

35.7

34.1

Liabilities

82.9

76.5

Shareholders’ equity

54.4

46.2

Equity ratio in %

39.6

37.6

Key share data

30 Sep. 2017

30 Sep. 2016

Shareholders’ equity per share in CHF

85.54

72.64

Repayment of capital per share in CHF

6.502

0.00

Share price in CHF

317

240

Market capitalization in CHF million

202

153

1  Including restructuring costs in fiscal year 2015/16.

2  Subject to approval by the Annual General Meeting on 11 January 2018.

Annual report

The complete Schaffner annual report 2016/17 is available at:

www.schaffner-ir.com

Webcast

The webcast of the presentation of Schaffner’s full-year results for 2016/17 is available from 10:30 a.m. (CET), 7 December 2017 at 78449.choruscall.com/dataconf/productusers/schaffner/mediaframe/20653/indexl.html

Contacts

Marc Aeschlimann

Chief Executive Officer

T +41 32 681 66 01

marc.aeschlimann@schaffner.com

Kurt Ledermann

Chief Financial Officer

T +41 32 681 66 01

kurt.ledermann@schaffner.com

Financial calendar

11 January 2018

9 May 2018

6 December 2018

15 January 2019

22nd Annual General Meeting

Publication of half-year report 2017/18

Publication of annual report 2017/18

23rd Annual General Meeting

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