H1 2018: Schlatter increases net sales and profit

Media information

H1 2018: Schlatter increases net sales and profit

Schlieren, 21 August 2018. The Schlatter Group posted an order intake of CHF 59.4 million in the first half of 2018 (H1 2017: CHF 49.1 million) and generated net sales of CHF 53.7 million (H1 2017: CHF 47.4 million). The order backlog stood at CHF 48.2 million as at 30 June 2018 (31 December 2017: CHF 42.5 million). The Group's operating result (EBIT) for the first half of 2018 was up on the previous year to CHF 1.6 million (H1 2017: CHF 1.0 million). The net result for the first half of 2018 was CHF 1.8 million (H1 2017: CHF 1.3 million). Schlatter generated positive free cash flow of CHF 2.0 million in the reporting period (H1 2017: CHF 0.3 million).

The Schlatter Group's production capacities were well utilised in the first half of 2018, enabling it to post a substantial rise in net sales and earnings. In the welding segment, however, the commissioning of new generations of plant led to increases in expenditure. Investment activity in the market for mesh welding systems was strong. The volatile but high-volume reinforced mesh welding business in particular achieved a sharp increase. In the weaving segment, production capacity utilisation among Schlatter's customers is at a high level. Schlatter is seeing encouraging demand for new high-quality machines, driven by the large number of new paper machines being ordered for Asia and particularly China.

Welding segment

Order intake in the welding segment came to CHF 49.8 million in the first half of 2018 (H1 2017: CHF 35.3 million). Net sales were up on the prior-year period to CHF 42.4 million (H1 2017: CHF 40.2 million). The order backlog stood at CHF 42.0 million as at 30 June 2018 (31 December 2017: CHF 34.5 million).

Wire product area (reinforcing and industrial mesh)

The completion of new plant concepts for the production of reinforcing wire mesh pushed up costs significantly in the first half of 2018. The new generation of the MG316 high-performance standard mesh system is now ready for the market. The flexible and automatically retoolable MG800 will also achieve technical stability in the second half of the year, enabling higher revenues to be generated on future sales.

Significant capacity was invested in developing a new, modular machine platform. This project, which will unfold over the medium to long term, is expected to deliver lasting competitive advantages for the wire product area.

Rail welding product area

In the stationary segment of the rail welding product field, the Schlatter Group expects the market to remain stable rather than grow. In mobile rail welding, it has put in place a partner for more attractively priced vehicle solutions so that Schlatter solutions can also be offered in additional markets.

Weaving segment

The weaving segment achieved an order intake of CHF 9.6 million in the first half of 2018 (H1 2017: CHF 13.8 million). Net sales reached CHF 11.3 million (H1 2017: CHF 7.2 million). The order backlog stood at CHF 6.3 million as at 30 June 2018 (31 December 2017: CHF 8.0 million).

The weaving segment returned to profit in the first half of the year. Although order intake was down on the prior-year period, expectations for the year as a whole are upbeat. Order intake is irregular due to the small number of projects involving relatively large order volumes.

The cycle rate of machines for the production of paper machine clothing was boosted further, enabling customers to improve productivity. There was increased demand for finishing machines. This gives Schlatter the opportunity to deploy its newly developed heat-setting system, a core module in the finishing machines. The wire weaving business made a sound contribution to sales in the first half of the year. Machines for the production of security and anti-mosquito fabrics in particular are in demand.

Outlook

Order intake in the welding segment increased sharply in the first half of 2018. The marketing drive in sales, which included putting in place additional sales resources in the emerging markets and opening a sales and service facility in China, is having a positive impact, and the implementation of the package of measures to expand the service business is on schedule. Other focal points include projects to increase efficiency, programmes to cut costs and the development of a product platform. The lead time on customer projects is to be shortened and the organisation made more flexible.

The trade tariffs that have been introduced in various regions create some uncertainty. In the near term, these may have a negative impact on appetite for investment in mesh welding systems and weaving systems.

The Board of Directors and the management still expect the results for the current financial year to show an improvement over the previous year.

The full report for the first half of 2018 can be downloaded from the Schlatter Group website: http://www.schlattergroup.com/en/investor-relations/annual_and_semester_reports

Further information

Schlatter Industries AG

Werner Schmidli

Chief Executive Officer

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Agenda

19.03.2019	Publication of detailed results for the financial year 2018
14.05.2019	Annual General Meeting
20.08.2019	Publication of 2019 half-year report

Schlatter Gruppe (www.schlattergroup.com)

The Schlatter Group is one of the leading specialists in plant engineering for resistance welding systems as well as weaving and finishing equipment for the production of paper machine clothing, wire fabrics and wire mesh. Thanks to its many years of experience in the field of plant technology, its innovative strength and its reliable service, the Schlatter Group - which is listed on the Swiss Reporting Standard of SIX Swiss Exchange - guarantees its customers a range of powerful and high-quality production equipment.

This media information contains certain forward-looking statements including statements using the words "believes", "assumes", "expects" or formulations of a similar kind. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which could lead to substantial differences between the actual future results, the financial situation, the development or performance of the Company and those either expressed or implied by such statements. Such factors include, among other things: competition from other companies, the effects and risks of new technologies, the Company's continuing capital requirements, financing costs, delays in the integration of acquisitions, changes in the operating expenses, the Company's ability to recruit and retain qualified employees, unfavorable changes in the applicable tax laws, and other factors identified in this communication. In view of these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company accepts no obligation to continue to report or update such forward-looking statements or adjust them to future events or developments.

Key figures of the Schlatter Group

		1st half of 2018	1st half of 2017	2nd half of 2017	2017
Net sales	CHF million	53.7	47.4	53.7	101.1
Change compared to previous year	%	13.3	19.1	5.9	11.7
Operating result (EBIT)	CHF million	1.6	1.0	1.5	2.5
in % of net sales	%	3.0	2.1	2.8	2.5
Net result	CHF million	1.8	1.3	1.6	2.9
in % of net sales	%	3.4	2.8	2.9	2.8
Net result per registered share	CHF	1.66	1.19	1.41	2.60
Order intake	CHF million	59.4	49.1	45.5	94.6
Order backlog at period end	CHF million	48.2	50.9	42.5	42.5
Free cash flow1	CHF million	2.0	0.3
Headcount at period end2	FTEs	356	335	345
Average headcount	FTEs	348	326	340
		30.6.2018	31.12.2017
Interest-bearing liabilities	CHF million	0.5	0.3
Net financial position (debt)3	CHF million	13.0	11.2
Gearing4	%	0.0	0.0
Current assets	CHF million	51.9	49.8
Non-current assets	CHF million	6.7	6.3
Liabilities	CHF million	31.5	30.7
Equity	CHF million	27.1	25.4
Equity ratio	%	46.3	45.3

1	Free Cash Flow: cash flow from operating activities less purchase of property, plant and equipment, intangible assets and financial assets, plus sale of property, plant and equipment, intangible assets and financial assets
2	Total full-time equivalents incl. temporary employees, excl. apprentices
3	Net financial position (debt): cash and cash equivalents less interest-bearing liabilities
4	Gearing: net financial position divided by equity

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