In the first half of 2009, the globally active Interroll Group started to feel the impact of the world-wide recession and plummeting levels of demand across various user markets.
In terms of local currency, sales fell by 32.3 %, from CHF 187.5 million in the extremely buoyant first half of 2008 to CHF 127.0 million in the period under review; on the basis
of Group currency, the decline was 37.9 %. Expressed in reporting currency, consolidated revenue similarly contains currency losses of 5.6 %, with a further 6% fall linked to
dramatic collapses in the price of raw materials such as steel and plastics.
In comparison with the same period last year, and despite the extremely challenging market environment, the gross margin (total output less cost of materials as a percentage of
total output) was maintained at 58.8 % (first half 2008: 58.7 %). Moreover, we succeeded in capturing additional market share and attracting new customers. With the economic
downturn looming, Interroll began adjusting its operating costs in the final quarter of 2008 in preparation for the recession. This represented the continuation of an already
stringent cost management policy, which together with the clear market positioning and strategy of recent years has enabled Interroll to establish an extremely sound financial
foundation. This basis is allowing Interroll to pursue critical strategic areas in spite of the recession - areas that include R & D aimed at the development and
launching of new and innovative products, geographical expansion and even the introduction of a new ERP system for the entire Group. This investment in the future will enable the
company to achieve above-average increases in its margins, market share and profitability as the economic picture brightens. In September 2009, Interroll will host an
international customer symposium - a forum for ideas - in the Swiss city of Locarno. The objective will be to unveil the company's innovations and future-focused
concepts for the materials handling industry and discuss these with clients from around the world.
EBITDA/EBITIn the first half of 2009, earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at CHF 8.5 million compared to CHF 30.5 million in the
outstanding first six months of 2008. The margin was 7.2 %. Earnings before interest and taxes (EBIT) amounted to CHF 0.8 million, i.e. a margin of 0.7 %, in the reporting period
(June 2008: CHF 23.3 million, with a margin of 12.9 %).
Net profit
At the end of June 2009, net profit stood at CHF 0.1 million, compared to CHF 17.9 million at the end of June 2008.
Financial position
During the reporting period, capital expenditure (e.g. in new products, geographical expansion and a new ERP system) amounted to CHF 12.5 million. The balance sheet total at the
end of June 2009 stood at CHF 220.4 million; the equity ratio rose from 55.2 % at the end of 2008 to 59.8 %. As at the end of June 2009, net debt remained at a very low level of
CHF 0.2 million.
Components segment: Interroll Drives & RollersIn terms of local currency, the Components segment recorded sales of CHF 87.7 million at the end of June 2009, down 24.9 %
on the same period last year. In Group currency, revenue fell from CHF 116.8 million year on year to CHF 81.5 million. The pressure caused by collapsing demand reduced earnings
before interest, taxes, depreciation and amortisation (EBITDA) from CHF 22.9 million last year to CHF 10.4 million, equivalent to a margin of 12.9 %. In response, fixed operating
costs were scaled back dramatically with a view to easing the pressure on EBITDA. Nonetheless, investment in strategic projects aimed at long-term growth (such as expanding the
Wermelskirchen site in Germany and developing new products) was maintained in the first half of 2009. Earnings before interest and taxes (EBIT) stood at CHF 4.4 million compared
to CHF 17.2 million in the first half of 2008.
In contrast to the disproportionate drop in sales in Scandinavia and Spain during the first six months of 2009, revenue in Central Europe and France performed well given the
current crisis. In the United States, Interroll succeeded in gaining market share and clearly improving its market position. In contrast to the very strong first half of 2008,
sales fell by 36 % in China, whilst Interroll's other key Asian markets developed as expected. In the period under review, Interroll Drives & Rollers reported rapid
progress on new drive concepts for materials handling in the product groups of drum motors and RollerDrives (motorized rollers). Rollers were technically enhanced to meet new
materials handling requirements, and will also be redesigned. Expansion and modification of the Centre of Excellence for roller conveyors and RollerDrives in the German town of
Wermelskirchen proceeded according to plan in the first half of 2009; the project will be completed in 2010. Industrial drum motors with smaller diameters will relocate this year
from Denmark to the Centre of Excellence for drum motors in Baal, Germany, which opened in the first half of 2008. Meanwhile, Interroll established a rubber lagging centre for
hygienic drum motors designed for the food processing industry in the German town of Wassenberg during the reporting period. In February 2009, in collaboration with a licensing
partner, Interroll opened a manufacturing site in Bangalore to supply the Indian market with drive/conveying solutions for material flow systems.
Subsystems segment: Interroll Dynamic Storage and Automation
Sales for the Subsystems segment, which is reliant on project business to a great extent, amounted to CHF 39.3 million in local currency in the first half of 2009, a 44.4 % fall
compared to the figure for the same period last year. In terms of reporting currency, revenue stood at CHF 35.0 million (first half 2008: CHF 70.7 million). The figures reflect an
unexpectedly high number of projects postponed or shelved until further notice on account of unsecured financing. EBITDA fell from CHF 7.5 million to CHF -1.9 million. The loss
before interest and taxes was CHF 3.6 million (first half 2008: EBIT of CHF 6.1 million). In the area of Dynamic Storage, pressure was particularly evident in Europe and North
America. By contrast, a number of encouraging contracts were signed in Asia and opportunities for new dynamic storage applications opened up in the Middle East. The situation
started to show slight signs of improvement in Europe and North America in June 2009 as project-related enquiries rose sharply. Interroll stands to benefit from attractive new
business if these projects get the green light.
In January 2009, Interroll Dynamic Storage held a trade press conference to unveil new solutions for order picking flow racks (Carton Flow) with significantly higher customer
benefit; the company also opened a new testing centre for dynamic storage solutions within its Centre of Excellence in the French town of La Roche sur Yon. Interroll also
installed a Carton Flow machine at its site in Canada in order to improve both production capacity and supply readiness for Carton Flow products in North America. With the
acquisition of BMW Metal Fabrication Inc. of Atlanta, Georgia, in February 2009, Interroll has strategically expanded its dynamic storage solutions business in the USA. Moreover,
to enhance customer service in Asia, the company moved its dynamic storage production operations from the plant in Bangkok to a new site nearby.
In Europe and the USA, Interroll Automation was faced with postponed or cancelled projects during the reporting period. On the plus side, a number of attractive projects linked to
postal authorities and other fields were secured in China and Singapore. In February 2009, Interroll transferred its production operations for belt curves and conveyor modules in
China to a new office and manufacturing complex inside the modern industrial park at Suzhou, west of Shanghai. In addition, high-potential projects relating to airports and
postal/distribution centres in the USA, Germany and South Africa were secured in the second quarter of 2009. The Interroll Crossbelt Sorter also consolidated its position in the
USA, having been specified by a leading American courier company. The prospects for our sorter business in the United States are encouraging given the upturn in demand late in the
first half of 2009. Interroll Automation also expects to benefit from state-funded infrastructure projects around the end of the year. Thanks to its space-saving design and the
considerable advantages it offers key customers, the new Interroll Belt Curve, which is being introduced onto the market in stages, met with a positive response in the first six
months of 2009.
Outlook
Interroll expects the economic environment to remain difficult and challenging throughout the second six months of 2009. However, with its healthy financial foundation and
stringent cost management, the company will continue to implement strategic projects linked to innovation, geographical expansion of its global network and the introduction of a
new ERP system. Interroll is thus prepared to take maximum advantage of any fresh opportunities that may present themselves within a business climate which, at best, could start
to stabilise. The positioning of the Interroll brand on markets across the world is another strategic priority. To this end, as we mentioned, a customer symposium will take place
in the Swiss city of Locarno in September 2009. This forum of ideas will enable us to consolidate our partnerships with clients around the globe.
For more information please contact Interroll on Tuesday, 12th August 2009, between 08:30 and 10:30 a.m.:
Paul Zumbühl, CEO
Tel. +41 91 850 25 24
Lorenz Köhler, Head of Corporate Communications
Tel. +41 91 850 25 21
www.interroll.com/ir (Investor Relations)
investor.relations@interroll.com
Download Half-Yearly Report 2009
Download Half-Yearly Report 2009 Key Figures
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