Press Releases
Double-digit organic growth in net sales but weaker market dynamics
Net sales fell by 1% due to exchange rate and portfolio effects +++ Fiber Optics division on the upswing +++ EBIT margin (excluding one-off income) of around 8% anticipated for 2011
HUBER+SUHNER has recorded double-digit organic growth in net sales (+11%) after nine months compared with the very good equivalent period of the previous year. However, the strong Swiss franc and a realignment of the product portfolio have caused net sales to shrink by 1% to CHF 594 million. Order intake is still slightly above net sales at CHF 599 million with an organic growth of only 2% compared to the previous year due to a slow-down in the third quarter.
Main markets and regions characterised by very varied dynamics
In the Communication market demand maintained a pleasing level in the third quarter. This is due in particular to the introduction of the next generation of LTE (Long-Term Evolution) mobile telephony in North America. Over the next few months this will create interesting business opportunities for HUBER+SUHNER as a leading supplier of system solutions in the field of ‘Fiber to the Antenna’ (FTTA). Net sales in Swiss francs shrunk overall by 5% in the Communication market during the first nine months. However, order intake clearly exceeded net sales and the Communication market has a promising project pipeline.
In the Transportation market the railway segment is in good shape worldwide, with the exception of China, where the government had stopped various large-scale projects, even resulting in some order cancellations in the third quarter. However, recent news from the Chinese Ministry of Railway indicates that the halted projects will be reinstated. In the Automotive segment the continued activities are expanding after nine months. Overall, the net sales in the Transportation market have grown in Swiss francs by 2%. Order intake was very low in the third quarter due to the situation in China but is on the same level as net sales in cumulative terms.
The Industrial market is characterised by general weakness in the solar segment. Demand has dropped considerably both with solar panel manufacturers and with installers. HUBER+SUHNER anticipates that the current situation will not change noticeably in the short term and that the solar segment will only recover in the medium term. The remaining high-tech Industrial segments are holding their ground at approximately the same level as in the previous year, although order intake did not quite reach the level of net sales in Swiss francs.
The regions developed as variedly as the markets: in Swiss francs net sales in Europe are up 3% compared with the equivalent period of the previous year, while Asia sustained a loss of 3% as the result of the above-mentioned factors. During the first three quarters business in the Americas geographic region was very slow-moving with a minus of 15%. However, an upward trend has been noticeable towards the end of the year.
Radio Frequency Division: Continues on an organic growth path
Although the Radio Frequency division’s net sales have increased in local currency compared with the equivalent period of the previous year, net sales in Swiss francs dropped by 7%. Order intake fell by 10%, but was still slightly above net sales. The portfolio adjustment in the Transportation market (sale of the automotive connector business) was also responsible for the decline in net sales. Business in the Communication and Industrial markets developed in a similar way to the previous year, with a slight net sales decrease in Swiss francs.
Fiber Optics Division: Anticipated upward trend has begun
After restrained business development during the first two quarters the third quarter brought a turnaround: during the first nine months order intake grew by 5% – even in Swiss francs – compared with the equivalent period of the previous year. In contrast, net sales are still limping behind with a minus of 7%. HUBER+SUHNER expects the upward trend to continue. The positive development is driven by the segments ‘Fiber to the Antenna’, ‘Fiber to the Home’, data centers and wind power.
Low Frequency Division: Significantly weaker order situation in the third quarter
After the strong growth in net sales of the Low Frequency Division in recent years, a decline in demand is now to be observed. The already mentioned reasons are the current weakness of the solar market as well as the cancelled projects in the Chinese railway market. The smallest of the three most important market segments, Automotive, continues to grow. Projects from the application hybrid and electric vehicles are making initial contributions to net sales. Overall, net sales after nine months – even in Swiss francs – are still 4% above the equivalent period of the previous year. In contrast, order intake has dropped by 14% and was lower than net sales.
Outlook
Against the backdrop of the continuing strong Swiss franc and diminishing market dynamics in some applications, HUBER+SUHNER anticipates a lower volume of business in the fourth quarter compared with the previous year. Annual net sales will increase in organic terms in the year under review as well, but will be around 5% lower than in 2010 in Swiss francs. From today’s perspective, the company predicts an operative EBIT margin of approximately 8% for the business year 2011 and an EBIT margin including one-off income of approximately 10%.
Contact
Axel Rienitz
Leiter Corporate Communication
HUBER+SUHNER AG
+41 44 952 2560
email:axel.rienitz@hubersuhner.com
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HUBER+SUHNER
Public Relations
HUBER+SUHNER accelerates strategy implementation in response to the strong Swiss franc
Following expansion of know-how-intensive workplaces, some less complex assembly jobs are now to be relocated. HUBER+SUHNER, the global manufacturer of components and systems for electrical and optical connectivity, intends to relocate approximately 80 assembly jobs from the Swiss location of Herisau to its production plants in Poland and Tunisia. The executive management thereby intends to mitigate the negative effects of the currency crisis and boost competitiveness, especially in relation to market participants from the Euro zone.
As an export-oriented company with important production locations in Switzerland, HUBER+SUHNER is particularly badly affected by upheavals on the international currency markets. Although the company continues to invest in know-how- and capital-intensive workplaces at both the Pfäffikon ZH and Herisau locations, it is no longer able to maintain less complex assembly activities in Switzerland in view of the above situation. Following a recruitment freeze already implemented in the summer, HUBER+SUHNER will now relocate around 80 assembly jobs from Herisau to its locations in Poland and Tunisia.
This step takes place as part of the company’s long-term, global production strategy of ‘the right activity in the right location’. While HUBER+SUHNER has created around 130 high-quality jobs in Switzerland since the beginning of 2010, the company is now relocating some 80 jobs involving a high degree of manual work sooner than originally planned. The Pfäffikon location is not affected by these measures. HUBER+SUHNER currently employs almost 1,600 people in Switzerland, approximately 900 of whom are located in Herisau and around 700 in Pfäffikon. Approximately 4,000 permanent employees work for the company worldwide.
HUBER+SUHNER will manage as many as possible of the approximately 80 job losses in Herisau through natural fluctuation, early retirement and internal transfers. However, a number of redundancies will be inevitable. The consultation process with the representatives of the employees has already begun. The company supplements the existing social compensation plan with generous voluntary benefits. These include length-of-service-based compensation for loss of pension for employees taking early retirement, workshops on career reorientation and professional support as well as active job search assistance. In addition, the company will extend the period of notice to up to six months for employees who do not find a job.
Axel Rienitz
Leiter Corporate Communication
HUBER+SUHNER AG
+41 44 952 2560
email:axel.rienitz@hubersuhner.com
