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Stable position despite flagging performance

Au / Wädenswil, 2009-8-21

Von Roll Holding AG, one of Switzerland’s longest established industrial companies and the world market leader for insulation products, systems and services, felt the effects of the global economic and financial crisis in the first half of 2009.

Von Roll has reacted quickly to the challenging environment and, in addition to its Operational Excellence program implemented two years ago, it has also put in place a restructuring programme. The reduction of administration costs and adjustment of operating costs envisaged by this programme is designed to secure the Group’s continued success and competitiveness.

Thomas Limberger, CEO and Chairman of the Board of Directors of Von Roll says, “Von Roll has adjusted to the change in the overall business environment from economic boom to recession. The results of the measures taken by us can already be seen. We are thus convinced that Von Roll is well set up for the future and will emerge from the crisis stronger than before.”
 
In the first half-year of 2009 Von Roll’s sales fell 17 % from the previous year’s high level to CHF 291 million. Adjusted for exchange rate, currency translation and copper price effects, sales decreased 5 % to CHF 332 million, with changes in the price of copper reducing the sales figure by a total of CHF 32 million. The order book, which was four percentage points above the level recorded in the first quarter of 2009, dropped 32 % to CHF 259 million.
Operating EBIT fell to CHF 4 million and the operating EBIT margin dropped to 1.4 %. Including restructuring expenses for the first half of 2009, Von Roll recorded a net income of CHF 0.5 million.
 
These developments are attributable to the economic crisis, which caused customer demand to drop in the company’s traditional segments, Von Roll Insulation and Von Roll Composites. On top of this, the fall in the price of copper of almost 50 % in comparison to the previous year, as well as exchange rate effects, also had an impact on the company’s overall performance. This was offset by the positive performance in the Von Roll Elco Transformers segment, where both sales and earnings were significantly above expectations and orders extend into 2012. This segment will thus in future make an important contribution towards Von Roll’s positive results.
 
“Despite the economic crisis our transformers business is operating at full capacity and is in fact supporting our traditional segments, Insulation and Composites. This shows that our acquisition strategy was exactly on target,” said Thomas Limberger. “Operating cash flow of the group, at approximately CHF 15 million, was only slightly below the previous year’s level. The increase in our equity ratio from 69 % to 71 % shows that Von Roll is financially stable,” he adds.
 
Strengthening market leadership despite falling overall demand in the Von Roll Insulation segment
Sales in the Insulation segment decreased from CHF 261 million to CHF 197 million. The reasons for this are the fall in demand in the automotive and consumer goods industries and the resulting drop in inventories, the slump in demand for electricity by industrial customers as a result of the economic crisis, and the deterioration in financing conditions for major projects. The resulting lower capacity utilisation in production led to a drop in the margin to 4 %. Order entry decreased from CHF 292 million to CHF 155 million. Thanks to the early introduction of measures to increase profitability and efficiency as well as a reduction in costs, it was possible to limit the decline in operating EBIT to CHF 8 million. However, despite the difficult economic environment, Von Roll was able to strengthen its position as an international leader in the market for insulation products, systems and services, and increase its market share as a result.
 
Decline in sales and earnings proportional to cyclical market weakening in the Von Roll Composites segment
Sales in the Composites segment in particular showed a decrease, falling by 42 % to CHF 51 million. The US and European markets were particularly affected. Operating EBIT was CHF -4 million, compared with CHF 9 million in the previous year. While the high-margin business with systems for ballistics and personal protection grew, falling sales and earnings from the construction and consumer goods industries, which are heavily dependent on the overall economic situation, had a noticeable impact and led to a drop in orders of 48 %.
 
Positive performance in the Von Roll Elco Transformers segment
Both the sales and operating result figures for Von Roll Elco Transformers were better than expected. Sales of transformers improved 38 % to just under CHF 43 million. This increase was largely due to sales of high-voltage transformers. Growth in this segment is attributable to the replacement of ageing electricity infrastructure, as well as to increasing efficiency requirements in western industrialised countries. Operating EBIT improved to CHF 4 million, compared with CHF -1 million in the previous year. The operating EBIT margin improved in the first half of 2009 to 10 %. The Elco Transformers segment will be operating at almost full capacity until 2010, with a substantial level of orders extending into 2012. In order to increase productivity further and be able to meet continuously increasing customer demand in North America, Von Roll plans to expand this segment and is examining the possibility of building a new transformer plant in the USA.
 
Well positioned for the future
Uncertainty regarding an economic recovery, the stability of commodity prices and the availability of financing for projects mean that it is difficult to make a reliable forecast of how the Group’s business will develop through the end of the 2009 financial year. Furthermore, exact predictions as regards when and to what extent government economic programmes will begin to take effect cannot be made. Despite the sharp drop in orders and the resulting notable fall in sales in the first half-year, Von Roll has identified the first signs of a slight improvement in business as of the middle of 2009. For the second half of 2009 highest priority is being given to the further implementation of the restructuring programme in order to align the Group with the changed market conditions. Initial positive effects of this will be visible in the second half of the year.

“Given the uncertain economic environment we are unable at present to say anything about a clear objective for 2009,” explains Thomas Limberger. “However, we are well positioned for the future,” he adds.

 
Journalists are invited to take part in the telephone conference on August 21st at 10:30 regarding the presentation of the half-year results for 2009 (Language: German):
Dial-in number: +41 (0)44 800 9659
Confirmation number: 5364774
 
Analysts and investors are invited to take part in the telephone conference on August 21st at 09:15 regarding the presentation of the half-year results for 2009 (Language: English):
Dial-in number:  +41 (0)43 456 9299
Confirmation number:  7946236
About Von Roll Holding AG:
As one of Switzerland’s longest established industrial companies, Von Roll Holding AG focuses on products and systems for power generation, transmission and distribution. Von Roll is the global market leader in insulation products, systems and services and is represented in 19 countries with around 3,100 employees at more than 30 sites.
 
Contact:
Sven Ohligs, Media Relations
T: +41 44 204 3034, F: +41 44 204 3039, E: press@vonroll.com
 
Luitpold Wüsthof, Investor Relations
T: +41 (44) 204 3050, F +41 44 204 3008, E: investor@vonroll.com
 
This press release is based on information currently available. Unforeseeable risks and influences may lead to discrepancies with statements portrayed here. Rounding differences may furthermore result in discrepancies in the reported figures. The release and the consolidated financial statements are originally prepared in German and then translated into English. In the event of any discrepancy, the German version prevails.
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