Schaffner posts significant growth in sales and operating profit

Operating profit (EBIT) rose substantially to CHF 9.0 million (previous year: CHF 6.0 million), while the EBIT margin increased to 8.3 per cent (previous year: 6.4 per cent). The result of the first half of 2017/18 includes various one-time items. Adjusted for the positive impact of the insurance settlement for the fire at the Schaffner plant in Thailand at the end of 2017 as well as costs in connection with the restructuring of the Power Magnetics division, EBIT was CHF 7.5 million and the EBIT margin 6.9 per cent. The net profit of CHF 4.0 million (previous year: CHF 4.2 million) was also affected by a one-time adjustment in connection with the 2017 Tax Cuts and Jobs Act in the USA. Adjusted for these one-time items, the Schaffner Group recorded a net profit of CHF 5.7 million. Earnings per share were CHF 6.24 (previous year: CHF 6.57).

Total assets rose to CHF 155.6 million (30.9.2017: CHF 137.3 million). The equity ratio was 35.9 per cent (30.9.2017: 39.6 per cent). Free cash flow was CHF -1.6 million (previous year: CHF -3.1 million).

The EMC division expanded its leading market position in all market regions in the first half of 2017/18. Segment sales were up 21.4 per cent to CHF 55.5 million (previous year: CHF 45.7 million). Segment profit also rose 21.4 per cent to CHF 7.5 million (previous year: CHF 6.2 million). The Power Quality business, which is part of the EMC division, successfully launched the new generation of active harmonic filters and posted growth during the reporting period that exceeded the strong overall increase recorded by the EMC division. Thanks to continued progress in operational excellence and the successful implementation of price adjustments, the segment profit margin was maintained at the high prior-year level of 13.6 per cent, despite the ongoing margin pressure and higher material costs.

Restructuring program

The Power Magnetics division increased segment sales despite a weak start in North America by 15.8 per cent to CHF 27.1 million (previous year: CHF 23.4 million). Under the leadership of the turnaround manager appointed at the end of 2017, the implementation of the restructuring program was accelerated and the structures were streamlined, which generated additional costs in the reporting period. Renegotiations for supply contracts with poor margins are progressing gradually. Year-on-year, the Power Magnetics division reduced the segment loss to CHF 3.2 million (previous year: CHF 3.5 million) and posted a negative segment profit margin before restructuring costs of -12.0 per cent (previous year: -14.8 per cent).

The Automotive division recorded a strong first half of 2017/18. At CHF 25.7 million (previous year: CHF 25.4 million), sales were 0.8" per cent above the high level of the previous year. The segment result was CHF 8.9 million (previous year: CHF 5.9 million), positively impacted by a one-time effect in connection with the insurance settlement following the fire at the Schaffner plant in Thailand at the end of 2017. The segment profit margin was 34.5 per cent (previous year: 23.1 per cent). Adjusted for this one-time effect, the operating profit margin was slightly higher than in the previous year at 23.6 per cent (previous year: 23.1 per cent). In the reporting period, additional projects for filters to be used in electromobility were pushed ahead. These projects will have a positive impact on Schaffner's business within the next few years

Outlook

In a continuing positive economic environment and at comparable exchange rates, Schaffner expects sales growth to continue. Assuming that material prices remain constant in the second half of the year, Schaffner strives to maintain the EBIT margin (excluding one-time effects) at least at the level of the first half. As before, the Schaffner Group continues to aim for organic sales growth of 5 per cent per year on a multi-year average basis, and for an EBIT margin of at least 8 per cent in the medium term.

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