Successful year thanks to consistent execution of strategy

Media Release

Successful year thanks to consistent execution of strategy

Robust growth in sales and earnings

The Schaffner Group increased its net sales by 10.1% in fiscal 2013/14, from CHF 194.9 million to CHF 214.6 million. In local currencies, sales growth was 12.1%. This growth was primarily organic in nature. Around 25% of the sales growth reported is attributable to the acquisition of Trenco. The Schaffner Group’s new orders amounted to CHF 215.9 million in the period under review (prior year: CHF 196.8 million), bringing the book-to-bill ratio to 1.01. The Group’s gross margin widened from 27.0% to 29.2% and the operating margin (EBIT margin) was pushed up from 4.7% to 7.0%. Operating profit (EBIT) increased by 60% to CHF 15.0 million (prior year: CHF 9.2 million) and net profit doubled, reaching CHF 12.6 million (prior year: CHF 6.1 million). A proposal will be put at the Annual General Meeting of 15 January 2015 to pay a dividend of CHF 6.50 per share (prior year: CHF 4.50). The distribution will be made in the form of a tax-free repayment of capital.

Growth in North America and Europe – strategic market sectors gain in importance

In fiscal 2013/14 the primary drivers of growth were the Europe and North America regions. Sales in the Asia-Pacific region dropped on falling demand for components of photovoltaic inverters in China. During the year under review, the Schaffner Group benefited from market share gains in Europe as well as a slight economic recovery in Germany in the first half of the year. Europe remained the top region with a 47% share of Group sales (prior year: 44%), followed by Asia-Pacific at 35% (prior year: 41%) and North America at 18%, up from 15%. In line with its globalization strategy, Schaffner continues to target growth in North America above the Group average. The strategic growth markets’ share of sales continued to rise during the fiscal year, reaching 68% (prior year: 66%). Energy-efficient drive systems accounted for 23% (prior year: 23%), while sales with customers in the global automotive industry rose from 16% of Group sales to 17%. The renewable energy sector saw a significant decrease to 14% (prior year: 18%) due to the downturn in the Chinese market. In rail technology, on the other hand, important projects were won, increasing its share from 9% to 14%, helped also by a renewed pick-up in demand in China.

Positive development in the divisions

The Power Magnetics and Automotive divisions again grew at a more rapid pace in the period under review than EMC, the largest division. EMC’s share of sales continued to decline, easing to 51% from 56% in the previous year. The Power Magnetics and Automotive divisions increased their respective share of sales from 28% to 31% and from 16% to 18%.

The EMC division posted steady net sales of CHF 110.0 million (prior year: CHF 109.7 million). Continued efforts to increase the gross margin led to an improvement of 13.3% in segment profit to CHF 15.9 million (prior year: CHF 14.0 million). The segment profit margin increased from 12.8% to 14.4%. New orders totaled CHF 107.8 million (prior year: CHF 109.7 million), giving rise to a book-to-bill ratio of 0.98.

Since its market entry in 2006, the Power Magnetics division has grown by an average of about 20% annually. In fiscal 2013/14, it achieved sales growth of 24.8% to a new total of CHF 67.3 million (prior year: CHF 53.9 million). The division’s segment profit was CHF 4.3 million (prior year: CHF 3.0 million), with the corresponding profit margin coming in at 6.4% (prior year: 5.5%). New orders of CHF 68.9 million in 2013/14 (prior year: CHF 54.2 million) resulted in a book-to-bill ratio of 1.02.

The acquisition of Trenco has substantially improved the strategic market position in North America, particularly in the market for energy-efficient drive systems. The company’s integration into the Schaffner Group was completed successfully and Schaffner is now one of the leading vendors of power magnetic components world-wide.

The Automotive division returned to profit on significantly higher sales of CHF 37.3 million in fiscal 2013/14 (a 19.1% increase from the prior year’s CHF 31.3 million), reaping the rewards of three years of high outlays. Segment profit amounted to CHF 2.5 million (prior year: loss of CHF 2.0 million) and the EBIT margin was 6.7% (prior year: -6.5%). New orders of CHF 39.3 million (prior year: CHF 32.9 million) represented a book-to-bill ratio of 1.05.

Sound financing structure

The Schaffner Group’s balance sheet structure remains sound, having absorbed the Trenco acquisition well. At the reporting date of 30 September 2014, net working capital was CHF 30.6 million (year earlier: CHF 25.5 million) and the ratio of this measure to Group sales increased slightly. At CHF 8.9 million, free cash flow remained satisfactory in fiscal 2013/14 after the previous year’s very high free cash flow of CHF 16.0 million. As a result, net debt did not increase by much after the Trenco acquisi­tion, rising from CHF 13.4 million to CHF 16.6 million. The gearing ratio (net debt to shareholders’ equity) went up slightly to 25% (prior year: 23%). Shareholders’ equity rose markedly to CHF 66.6 million (prior year: CHF 58.1 million) in spite of the negative effects of IFRS adjustments, enabling the equity ratio to be kept steady year-on-year at 43%. The Schaffner Group’s good performance also positively impacted the key figures agreed with lending banks for the calculation of interest rates. Net interest payments thus fell by about CHF 0.4 million in fiscal 2013/14. With currency translation gains and losses virtually off setting each other in the period under review, net finance expense improved by a further CHF 0.6 million compared with the prior year.

Outlook

The global economic outlook has deteriorated in the second half of 2014. Going forward, this should detract from Group performance in the first six months of fiscal 2014/15. On the strength of its strate­gic growth initiatives, however, Schaffner expects to achieve further expansion in spite of the chal­lenging environment. Moreover, the continuous enhancement of operational excellence should result in further earnings improvements. For fiscal 2014/15 the Schaffner Group is targeting a percentage growth rate in the mid-single digits for sales, as well as a continuing improvement in EBIT margin. The strategic growth target over the economic cycle stands unchanged at 8% per year, as does the me­dium-term EBIT margin target of 9-12%.

Luterbach, 9 December 2014

Key figures

in CHF  '000

2013/14

2012/13

2011/12

Net sales

214,572

194,889

176,942

Net sales EMC division

109,993

109,686

105,784

Segment profit EMC division

15,850

13,987

12,552

Net sales Power Magnetics division

67,311

53,924

46,495

Segment profit/(loss) Power Magnetics division

4,302

2,963

-284

Net sales Automotive division

37,268

31,280

24,663

Segment profit/(loss) Automotive division

2,499

2,037

563

Operating profit (EBIT)

15,012

9,205

7,243

in % of net sales

7.0%

4.7%

4.1%

Net profit

12,627

6,108

3,909

in % of net sales

5.9%

3.1%

2.2%

Earnings per share in CHF

19.86

9.64

6.17%

Total assets

154,452

138,727

140,843

Net working capital

30,585

25,484

37,824

Free Cash flow

8,892

15,959

1,537

Net dept

16,631

13,351

25,897

Gearing in %

25

23

43

Equity ratio in %

43.2%

41.9%

42.8%

Shareholders' equity  per share in CHF

104.80

91.33

94.87

Repayment of excess share premium, per share in CHF

6.501

4.50

3.50

1Subject to approval by the Annual General Meeting on 15. January 2015

Annual report

Schaffner Annual Report 2013/14 is available at:

annualreports.schaffner.com/fileadmin/annual-reports/2013-2014/141207_Final-Gesamtbericht_EN-online.pdf

Webcast

The webcast of the presentation of Schaffner's full-year results for 2013/14 is available from 10:15 am CET on 9 December 2014 at:

services.choruscall.com/dataconf/productusers/schaffner/mediaframe/10226/indexr.html

Calendar

15 January 2015

19th Annual General Meeting

12 May 2015

Publication of Half-Year Report 2014/15 (half-year results)

  8 December 2015

Publication of Annual Report 2014/15 (full-year results)

12 January 2016

20th Annual General Meeting

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