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Operating profit up by 68.5% at Gurit in H1

27 Aug '12

4 min read

Gurit achieved 20.0% higher net sales of CHF 195.6 million in reported Swiss francs in the first half of 2012. The operating profit increased by 68.5% to CHF 17.2 million, yielding a return on sales of 8.8%.

Gurit achieved a solid operating cash flow of CHF 16.8 million, compared with CHF 4.6 million for the same period a year ago, allowing to reduce net debt from CHF 32.6 million at year-end 2011 to CHF 25.6 million by end of June 2012.

Gurit recorded one-off impairments of CHF 2.9 million, mostly related to expected lower demand in the US wind energy markets due to the uncertainties around the production tax credit subsidies in the US. This impairment impacted the operating profit by 1.4 percentage points, reducing the margin from 10.2% to 8.8% of sales.

In spite of this impairment and a higher overall tax rate due to not capitalized tax losses and profit generation in countries with higher tax rates, profit for the period increased by 12% to CHF 10.6 million. Expecting a certain sales decrease for the remainder of 2012, Gurit confirms its goal of an operating profit margin of 8-10% for the full year 2012.

Wind Energy – In the first half of 2012, Wind Energy sales grew by 34.0% (FX adjusted: 33.4%, acquisition and FX adjusted: 29.7%) to CHF 120.7 million. Uninterrupted demand from customers in Europe and higher sales of carbon prepreg materials to American customers supported the growth momentum over the first half of 2011. The market in China was affected by a strong decline both in volumes and prices and Indian demand suffered from customer specific issues. Gurit projects a good level of business momentum for the second half of 2012, yet expects the US demand for carbon fibre prepreg materials to decline in Q4, with continuing effect in 2013.

Tooling – The Tooling market continued to develop cyclically: in Q1 2012, overall demand levels were even lower than in the prior year, while Q2 2012 saw a significant rebound. In China, the demand for wind turbine blade moulds was almost down to zero in Q1 and improved in Q2, 2012. With shipments to Europe, North America and India, the internationalization of Gurit's mould supplies went on. The Indian market was, however, weaker compared with last year. Overall, Tooling reports -6.9% (FX adjusted -12.3%) lower sales of CHF 17.4 million for the first half of 2012. Gurit expects a soft sales activity for Q3 and currently anticipates a stronger Q4, both in China and on the export markets.

Transportation – Overall sales achieved in Transportation markets remained stable over the corresponding prior-year period, reflecting the steady, long-term character of the aerospace business. A significant sales increase resulted, however, in the Automotive business, thanks to additional models of existing and new customers. Gurit expects a steady sales trend in the Aerospace business and strong ongoing growth in the Automotive business, supported by the launch of the new car models where Gurit had won body panel programs.

Marine – The Marine business continued to recover gradually in Europe and the Americas and also recorded again higher sales in Asia-Pacific. Sales grew by 13.5% (FX adjusted 11.9%) to CHF 27.6 million not least supported by a stronger presence in various local marine markets and a growing demand for pre-cut and kitted B3 SmartPac technology and material packages. Reflecting the formation of Gurit's new Engineered Structures unit, prior-year sales figures were restated: The formerly included engineering fees are now reported in Engineered Structures. Gurit expects further growth both from the marine sector and from new industrial applications for which resins and adhesives are supplied through the fine-mesh marine sales and service organization.

Engineered Structures – Gurit's new entity combining extensive engineering know-how with prototyping and parts production capabilities reports sales of CHF 1.8 million compared with CHF 1.9 million in the respective prior-year period. Successfully completed ventures include amongst others the manufacture of tidal turbine blades, engineering and material concepts for London's new double-deck busses and various civil engineering and architectural projects.

Outlook: Gurit expects sales to decrease during Q4 2012 due to the decline of the carbon fibre prepreg business in the US, yet remains from a current perspectictive confident in achieving its operating profit margin target of 8-10% also for the full year 2012.

Gurit