Oerlikon’s sales lag of 12% leads to restructuring plans and company realignment

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Owing to an “unprecedented historic decline” in demand in the global textile machinery market, among other factors, Oerlikon Group has provided a commentary on its 2008 sales, revenue and overall outlook for 2009. While the company reported a 12.1% decline in sales year-on-year to CHF 4.8 billion, it expects that its planned restructuring will regain profitability in 2010, with 2009 presenting further losses.

Oerlikon Group received CHF 4.3 billion in orders for 2008, a decrease of 25.7% y-on-y. One-off costs for restructuring charges and goodwill write-offs amounted to an overall spend of CHF 422 million.

However, the company’s core businesses performed well, compensating slightly for the slow demand for textiles and semiconductor services and products. Oerlikon is currently implementing three defined work streams, which will involve an expansion in restructuring, strengthening of the financial stability and further focusing of the company’s portfolio.

The solar segment in particular performed well, with sales increasing to CHF 628 million. Third-party sales increased by 124.8% to CHF 598 million, but the postponement of some solar projects in the second half of the year led to delays and a slowdown in orders, resulting in an orders decrease of 12.9% y-on-y to CHF 566 million.

Continuing with the solar segment, Earnings Before Interest and Tax (EBIT) reached CHF 107 million, an increase of 69.8% and representing an EBIT margin of 18%. These figures show that Oerlikon’s Solar Group was the best performer in 2008, and with an anticipated parity between 2008 and 2009 sales figures for the segment, the company expects a return to double-digit market growth by early 2010.

Dr. Uwe Krueger (pictured right), Oerlikon CEO, commented, “We remain convinced that Oerlikon has considerable medium and long-term growth and earnings potential. The business environment remains very difficult and, therefore, we have embarked on all necessary measures – timely and consequently – in order to first rebuild and then sustain shareholder value. We are in the process of implementing strict restructuring and contingency programs and we will reduce our risk exposure by strengthening our financial base and streamlining our portfolio.”

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