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20.02.2024 06:30:03 - Resilient Operational Results in Highly Demanding Environment; Taking Final Step to Become a Pure-Play Surface Solutions Leader Over Next 12-36 Months
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OC Oerlikon / Key word(s): Annual Results/Strategic Company Decision
Resilient Operational Results in Highly Demanding Environment; Taking Final Step to Become a Pure-Play Surface
Solutions Leader Over Next 12-36 Months
20-Feb-2024 / 06:30 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.
. 2023 Group orders, sales and EBITDA impacted by Polymer Processing Solutions downturn. Strong performance
in Surface Solutions with 7% organic sales growth at constant FX and sequentially improved profitability throughout
2023.
. Oerlikon took substantial actions in Q4 to secure future growth and improved profitability; one-off
charges, primarily non-cash, included in Q4 results.
. Taking final strategic step to become a pure-play global market leader in surface solutions within next
12-36 months. Executive Chair Model to discontinue upon completion of this step.
. Board to propose an ordinary dividend of CHF 0.20 per share in line with dividend policy.
. 2024 outlook: Expecting high single-digit percentage decrease in FX-adjusted organic sales and
operational EBITDA margin of 15.0-15.5%. Anticipate growth in Surface Solutions to be offset by Polymer Processing
Solutions.
Key Figures of the Oerlikon Group as of December 31, 2023 (in CHF Million)
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1 For the reconciliation of operational and unadjusted figures, please see tables I and II on page 3 of this news release. 2 Operational EBITDA and operational EBIT were restated for effects from discontinued activities. 3 Operational ROCE, excl. M&A, is 7.7% in 2023 (2022: 10.8%).
Pfaeffikon, Schwyz, Switzerland - February 20, 2024 - "In 2023, we managed short-term market headwinds and adverse currency effects (CHF -174 million on 2023 sales) and executed on our strategy," said Michael Suess, Executive Chairman, Oerlikon. "Our swift and decisive strategic actions, particularly in Q4, streamlined our existing business and strengthened our foundation for growth and profitability."
Today, we announce our final strategic step to become a pure-play leader in the broad surface solutions markets with attractive organic and inorganic growth opportunities. We will further leverage our technology leadership to drive growth and profitability by expanding regionally and into new applications and end markets," added Suess. "The board and management will evaluate options for the separation of Polymer Processing Solutions with the aim of optimizing value for all stakeholders."
Taking the Final Step to Become a Pure-Play Surface Solutions Leader
Oerlikon began executing its strategy in 2014 to become a pure-play Surface Solutions leader. From five divisions, the Group has streamlined to its current two divisions. Both divisions occupy "sweet spots" in their respective markets, delivering leading technologies that act as high barriers to entry. The synergies between the divisions though are limited.
Oerlikon announces today its intent to take the final step in becoming a pure-play Surface Solutions leader. Oerlikon will implement this step over the next 12-36 months as Polymer Processing Solutions' filament cycle recovers. The Group will look for the best value creative option for Polymer Processing Solutions, where it can better leverage its distinct brands and leading technologies in its end markets, which are driven by long-term growth trends, such as population expansion and increasing demand for clothing and housing.
With the final step, Oerlikon will become a pure-play leader in the Surface Solutions' attractive end markets. The division serves a broad base of customers in diverse industries - from automotive, aerospace and energy to luxury, medical and semiconductors. Oerlikon will drive profitable growth by delivering innovative technologies that help customers achieve greater efficiency and productivity, while using less energy and producing less waste and fewer emissions. Oerlikon will continue to leverage its core competencies to grow and expand into Surface Solutions' broad end markets. This includes exploiting new applications, markets and geographies.
Oerlikon confirms its mid-term target of 4-6% organic sales growth (at constant FX) for Surface Solutions. Disciplined cost management and the application of the strengthened capital allocation framework will support the division to achieve its mid-term operational EBITDA margin target of 20%+.
The Executive Chair Model is required to smoothly execute this final step in going pure play. With the completion of this step, the Model will be discontinued.
2023 Results Impacted by Challenging Environment in Polymer Processing Solutions
Group order intake decreased by 17.8% to CHF 2 457 million. Adjusted for FX and the Riri acquisition, orders decreased by 16.8%. Group sales decreased by 7.4% to CHF 2 693 million, including an FX headwind of -6.0% and an impact of +4.5% from the Riri acquisition. The FX-adjusted organic decline of 5.9% was driven by the filament downturn in Polymer Processing Solutions, while Surface Solutions saw an FX-adjusted organic sales growth of +7.0%.
EBITDA and EBIT
Group operational EBITDA decreased by 13.4% to CHF 444 million, versus CHF 513 million in 2022. The operational EBITDA margin was at 16.5% versus 17.6% in 2022, due to lower sales, higher input costs, adverse currency impact and unfavorable mix effects. The operational EBIT margin was 8.7% (CHF 235 million) compared with 10.4% (CHF 301 million) in the previous year.
Group unadjusted EBITDA decreased by 8.2% year-over-year to CHF 384 million, or 14.2% of sales (2022: CHF 418 million, or 14.4% of sales). Group unadjusted EBIT was CHF 105 million, or 3.9% of sales (2022: CHF 176 million, or 6.0% of sales).
Oerlikon has strategically realigned its additive manufacturing (AM) business, consolidating production and focusing the business in the U.S. to take advantage of the U.S. as the largest growth market for AM.
To strengthen the division's resilience, Surface Solutions is optimizing its coating centers footprint in Germany and discontinuing its U.S. thermal spray coating services. In Polymer Processing Solutions, the Teknoweb business was discontinued, and its intralogistics offering was divested. These actions led to one-off charges, largely non-cash, which were included in the Q4 results. Operational EBIT and EBITDA for 2023 and 2022 were adjusted to exclude these activities.
The reconciliation of the operational and unadjusted figures can be seen in the tables below.
Table I: Reconciliation of Q4 2023 and FY 2023 Operational EBITDA and EBITDA1
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In CHF million Q4 2023 Q4 2022 FY 2023 FY 2022
Operational EBITDA 100 127 444 513 Expenses/income from restructuring2 1 -53 1 -54 Expenses related to discontinued activities3 -36 -15 -58 -32 Expenses related to acquisition and integration costs -1 -3 -3 -9 EBITDA 64 55 384 418 ===
Table II: Reconciliation of Q4 2023 and FY 2023 Operational EBIT and EBIT1
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In CHF million Q4 2023 Q4 2022 FY 2023 FY 2022
Operational EBIT 47 72 235 301 Expenses/income from restructuring2 1 -53 1 -54 Impairment charges -14 0 -14 0
Expenses related to discontinued activities3 -83 -37 -114 -63 Expenses related to acquisition and integration costs -1 -3 -3 -9 EBIT -49 -22 105 176 ===
1 All amounts (including totals and subtotals) have been rounded according to normal commercial practice. Thus, an addition of the figures presented can result in rounding differences. 2 Includes provisions for personnel expenses, primarily aimed at reducing costs in the divisions. 3 Includes costs from discontinued businesses, thus 2023 and 2022 numbers have been restated accordingly.
The Group's net result was impacted by the downturn in Polymer Processing Solutions and the previously mentioned cost actions. It amounted to CHF 23 million in 2023, compared with CHF 93 million in 2022. Earnings per share in 2023 stood at CHF 0.10 (CHF 0.27 in 2022).
As of December 31, 2023, Oerlikon had net debt of CHF 1 151 million, corresponding to a net debt/operational EBITDA ratio of 2.6. This represents an increase compared to the ratio of 0.9 as of year-end of 2022 and was mainly driven by the acquisition of Riri and the downturn in Polymer Processing Solutions impacting EBITDA and net working capital. Oerlikon's total equity ratio was 25% as at the end of 2023.
Continued Commitment to Sustainable R&D
In 2023, Oerlikon filed 78 patents and continued to invest in innovation, spending 3.8% (CHF 103 million) of 2023 Group sales on R&D to develop new, improved and sustainable technologies designed to meet customer needs and demands.
Q4 2023 Performance
MORE TO FOLLOW) Dow Jones Newswires
February 20, 2024 00:30 ET (05:30 GMT)
OC Oerlikon / Key word(s): Annual Results/Strategic Company Decision
Resilient Operational Results in Highly Demanding Environment; Taking Final Step to Become a Pure-Play Surface
Solutions Leader Over Next 12-36 Months
20-Feb-2024 / 06:30 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.
. 2023 Group orders, sales and EBITDA impacted by Polymer Processing Solutions downturn. Strong performance
in Surface Solutions with 7% organic sales growth at constant FX and sequentially improved profitability throughout
2023.
. Oerlikon took substantial actions in Q4 to secure future growth and improved profitability; one-off
charges, primarily non-cash, included in Q4 results.
. Taking final strategic step to become a pure-play global market leader in surface solutions within next
12-36 months. Executive Chair Model to discontinue upon completion of this step.
. Board to propose an ordinary dividend of CHF 0.20 per share in line with dividend policy.
. 2024 outlook: Expecting high single-digit percentage decrease in FX-adjusted organic sales and
operational EBITDA margin of 15.0-15.5%. Anticipate growth in Surface Solutions to be offset by Polymer Processing
Solutions.
Key Figures of the Oerlikon Group as of December 31, 2023 (in CHF Million)
FY 2023 FY 2022 ? Q4 2023 Q4 2022 ? Order intake 2 457 2 990 -17.8% 552 663 -16.7% Sales 2 693 2 909 -7.4% 633 736 -14.0% Operational EBITDA1 444 5132 -13.4% 100 1272 -21.0% Operational EBITDA margin1 16.5% 17.6%2 -110 bps 15.8% 17.22 -140 bps Operational EBIT1 235 3012 -21.9% 47 722 -34.0% Operational EBIT margin1 8.7% 10.4%2 -170 bps 7.5% 9.7%2 -220 bps Net result 23 93 -74.9% - - - ROCE 2.7%3 5.3% - - - -
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1 For the reconciliation of operational and unadjusted figures, please see tables I and II on page 3 of this news release. 2 Operational EBITDA and operational EBIT were restated for effects from discontinued activities. 3 Operational ROCE, excl. M&A, is 7.7% in 2023 (2022: 10.8%).
Pfaeffikon, Schwyz, Switzerland - February 20, 2024 - "In 2023, we managed short-term market headwinds and adverse currency effects (CHF -174 million on 2023 sales) and executed on our strategy," said Michael Suess, Executive Chairman, Oerlikon. "Our swift and decisive strategic actions, particularly in Q4, streamlined our existing business and strengthened our foundation for growth and profitability."
Today, we announce our final strategic step to become a pure-play leader in the broad surface solutions markets with attractive organic and inorganic growth opportunities. We will further leverage our technology leadership to drive growth and profitability by expanding regionally and into new applications and end markets," added Suess. "The board and management will evaluate options for the separation of Polymer Processing Solutions with the aim of optimizing value for all stakeholders."
Taking the Final Step to Become a Pure-Play Surface Solutions Leader
Oerlikon began executing its strategy in 2014 to become a pure-play Surface Solutions leader. From five divisions, the Group has streamlined to its current two divisions. Both divisions occupy "sweet spots" in their respective markets, delivering leading technologies that act as high barriers to entry. The synergies between the divisions though are limited.
Oerlikon announces today its intent to take the final step in becoming a pure-play Surface Solutions leader. Oerlikon will implement this step over the next 12-36 months as Polymer Processing Solutions' filament cycle recovers. The Group will look for the best value creative option for Polymer Processing Solutions, where it can better leverage its distinct brands and leading technologies in its end markets, which are driven by long-term growth trends, such as population expansion and increasing demand for clothing and housing.
With the final step, Oerlikon will become a pure-play leader in the Surface Solutions' attractive end markets. The division serves a broad base of customers in diverse industries - from automotive, aerospace and energy to luxury, medical and semiconductors. Oerlikon will drive profitable growth by delivering innovative technologies that help customers achieve greater efficiency and productivity, while using less energy and producing less waste and fewer emissions. Oerlikon will continue to leverage its core competencies to grow and expand into Surface Solutions' broad end markets. This includes exploiting new applications, markets and geographies.
Oerlikon confirms its mid-term target of 4-6% organic sales growth (at constant FX) for Surface Solutions. Disciplined cost management and the application of the strengthened capital allocation framework will support the division to achieve its mid-term operational EBITDA margin target of 20%+.
The Executive Chair Model is required to smoothly execute this final step in going pure play. With the completion of this step, the Model will be discontinued.
2023 Results Impacted by Challenging Environment in Polymer Processing Solutions
Group order intake decreased by 17.8% to CHF 2 457 million. Adjusted for FX and the Riri acquisition, orders decreased by 16.8%. Group sales decreased by 7.4% to CHF 2 693 million, including an FX headwind of -6.0% and an impact of +4.5% from the Riri acquisition. The FX-adjusted organic decline of 5.9% was driven by the filament downturn in Polymer Processing Solutions, while Surface Solutions saw an FX-adjusted organic sales growth of +7.0%.
EBITDA and EBIT
Group operational EBITDA decreased by 13.4% to CHF 444 million, versus CHF 513 million in 2022. The operational EBITDA margin was at 16.5% versus 17.6% in 2022, due to lower sales, higher input costs, adverse currency impact and unfavorable mix effects. The operational EBIT margin was 8.7% (CHF 235 million) compared with 10.4% (CHF 301 million) in the previous year.
Group unadjusted EBITDA decreased by 8.2% year-over-year to CHF 384 million, or 14.2% of sales (2022: CHF 418 million, or 14.4% of sales). Group unadjusted EBIT was CHF 105 million, or 3.9% of sales (2022: CHF 176 million, or 6.0% of sales).
Oerlikon has strategically realigned its additive manufacturing (AM) business, consolidating production and focusing the business in the U.S. to take advantage of the U.S. as the largest growth market for AM.
To strengthen the division's resilience, Surface Solutions is optimizing its coating centers footprint in Germany and discontinuing its U.S. thermal spray coating services. In Polymer Processing Solutions, the Teknoweb business was discontinued, and its intralogistics offering was divested. These actions led to one-off charges, largely non-cash, which were included in the Q4 results. Operational EBIT and EBITDA for 2023 and 2022 were adjusted to exclude these activities.
The reconciliation of the operational and unadjusted figures can be seen in the tables below.
Table I: Reconciliation of Q4 2023 and FY 2023 Operational EBITDA and EBITDA1
===
In CHF million Q4 2023 Q4 2022 FY 2023 FY 2022
Operational EBITDA 100 127 444 513 Expenses/income from restructuring2 1 -53 1 -54 Expenses related to discontinued activities3 -36 -15 -58 -32 Expenses related to acquisition and integration costs -1 -3 -3 -9 EBITDA 64 55 384 418 ===
Table II: Reconciliation of Q4 2023 and FY 2023 Operational EBIT and EBIT1
===
In CHF million Q4 2023 Q4 2022 FY 2023 FY 2022
Operational EBIT 47 72 235 301 Expenses/income from restructuring2 1 -53 1 -54 Impairment charges -14 0 -14 0
Expenses related to discontinued activities3 -83 -37 -114 -63 Expenses related to acquisition and integration costs -1 -3 -3 -9 EBIT -49 -22 105 176 ===
1 All amounts (including totals and subtotals) have been rounded according to normal commercial practice. Thus, an addition of the figures presented can result in rounding differences. 2 Includes provisions for personnel expenses, primarily aimed at reducing costs in the divisions. 3 Includes costs from discontinued businesses, thus 2023 and 2022 numbers have been restated accordingly.
The Group's net result was impacted by the downturn in Polymer Processing Solutions and the previously mentioned cost actions. It amounted to CHF 23 million in 2023, compared with CHF 93 million in 2022. Earnings per share in 2023 stood at CHF 0.10 (CHF 0.27 in 2022).
As of December 31, 2023, Oerlikon had net debt of CHF 1 151 million, corresponding to a net debt/operational EBITDA ratio of 2.6. This represents an increase compared to the ratio of 0.9 as of year-end of 2022 and was mainly driven by the acquisition of Riri and the downturn in Polymer Processing Solutions impacting EBITDA and net working capital. Oerlikon's total equity ratio was 25% as at the end of 2023.
Continued Commitment to Sustainable R&D
In 2023, Oerlikon filed 78 patents and continued to invest in innovation, spending 3.8% (CHF 103 million) of 2023 Group sales on R&D to develop new, improved and sustainable technologies designed to meet customer needs and demands.
Q4 2023 Performance
MORE TO FOLLOW) Dow Jones Newswires
February 20, 2024 00:30 ET (05:30 GMT)
