Good order intake despite a difficult first half of 2015 – strength of the Swiss franc affects sales and earnings

Wed, 12 Aug 2015

Zurich, Wednesday, August 12, 2015 – Cicor (SIX Swiss Exchange: CICN), a high-tech industrial group and international leader in the fields of printed circuit boards, microelectronics and elec-tronic solutions, with its head office in Boudry (Switzerland), reports good order intake despite a difficult first half of 2015; however, the strength of the Swiss franc has affected sales and earnings. The discontinuation of the minimum rate of CHF 1.20 per euro had a negative impact on Cicor's business with Swiss customers and its outsourcing business in Switzerland. The Group experienced reductions in EBITDA and in sales of 10.0 % and 10.5 % to CHF 7.9 million and CHF 92.1 million respectively. The Group's management anticipates slightly higher volumes in the se-cond half of 2015, as well as upward momentum in terms of operating result and profit-ability compared with the first six months – but precise forecasts for the whole of 2015 are difficult from the current perspective.

In the first half of 2015, the Cicor Group recorded order intake of CHF 98.6 million, which in Swiss franc terms was only 1.6 % down on the robust order intake seen in the first half of 2014 (first half of 2014: CHF 100.2 million). In local currencies, the order intake for the first half of 2015 even exceeded the prior-year period by 3.9 %. The Cicor Group's sales fell 10.5 %, from CHF 102.9 million (first half of 2014) to CHF 92.1 million in the first half of 2015. Adjusted for currency effects, sales declined by 6.3 % in the first six months of 2015. The Cicor Group's EBITDA in the first half of 2015 amounted to CHF 7.9 million, 10.0 % lower than EBITDA in the prior-year period (first half of 2014: CHF 8.8 million.). EBITDA profitability of 8.6 % was maintained in the first half of 2015. EBIT amounted to CHF 3.4 million, which was 21.6 % down on the prior-year period (first half of 2014: CHF 4.3 million). Operating profit was greatly affected by the relatively high cost base in Swiss francs and the increased pressure on sales prices.

Electronic Solutions: Challenging first half of the year

The Electronic Solutions Division suffered heavily as a result of the difficult market situation in the first half of 2015, recording sales of CHF 65.7 million. This sales total was 12.4 % below that in the prior-year period (first half of 2014: CHF 75.0 million) and in local currencies equates to a drop of 8.2 %. Thus, with sales falling and currency effects weighing on business, the pleasing EBITDA of CHF 6.5 million achieved in the first half of 2014 could not be replicated. As at the end of June 2015, EBITDA amounted to CHF 5.1 million – a drop of 22.4 %. At CHF 3.2 million, EBIT for the first six months of 2015 likewise fell short of the CHF 4.7 million reported for the prior-year period. In the final weeks of the first half of 2015, slightly more positive sentiment was discernible in general, and new customers were also acquired with promising projects, such as the Elster Group.

Advanced Microelectronics & Substrates: Improved EBIT and EBITDA

Earnings in the AMS Division presented a mixed picture of good performance on the one hand and areas that were negatively impacted by the current economic climate on the other hand. In the reporting period, the Division registered a 5 % increase in its order intake in Swiss franc terms compared to the prior-year period (first half of 2014: CHF 26.7 million). In Swiss francs, sales generated in the first half of the year were 5.2 % lower than in the prior-year period, at CHF 26.4 million (first half of 2014: CHF 27.9 million). In local currencies, sales in the first half of 2015 amounted to CHF 27.5 million, 1.2 % below the previous year. Despite a drop in sales, EBIT and EBITDA rose significantly as a result of strict cost management and other operational optimizations, amounting to CHF 0.9 million and CHF 3.5 million respectively (first half of 2014: EBIT CHF 0.4 million, EBITDA CHF 2.9 million). Irrespective of negative currency effects and their impact on the competitiveness of the Swiss AMS companies, the Division's performance improved markedly in the first half of 2015. The good book-to-bill ratio for the first half of 2015 constitutes a positive sign for sales growth in the second half of the year, especially since new major customers have placed orders for highly promising development projects.

Outlook: Upward momentum expected for the second half of the year

For the second half of 2015, price pressure caused by the ongoing strength of the Swiss franc is expected to continue to weigh on volume and margin growth. The measures that have already been initiated to consolidate the Group's earning power will mitigate some of the negative currency effects. The Group's management anticipates slightly higher volumes in the second half of the year, as well as upward momentum in terms of operating result and profitability compared with the first six months – but only if the currency situation does not cause economic conditions to deteriorate any further.