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The Schaffner Group in the first half of fiscal 2004/2005 - Economic slowdown affects business trend
Luterbach (ots) - The Schaffner Group (SWX Swiss Exchange: SAHN) posted net sales of CHF 79.3 million in the first six months of fiscal 2004/2005 (first half 2003/2004: CHF 86.2 million). EBITA and EBIT both amounted to CHF 0.4 million (down from CHF 3.6 million and CHF 2.6 million, respectively). After deducting the negative financial result of CHF -1.2 million (CHF -1.6 million) and tax expense of CHF -0.4 million (CHF -0.4 million), the Schaffner Group's net loss for the first half of fiscal 2004/2005 amounted to CHF -1.2 million (net profit of CHF 0.5 million). Rigorous cost management meant that administrative expense was reduced by 23.5% to CHF 9.0 million (CHF 11.7 million), while the overhead cost block decreased by about 11% to CHF 29.3 million (CHF 32.9 million). Order intake totaled CHF 88.4 million, down from CHF 93.6 million, but the Schaffner Group's book-to-bill ratio after six months was promising at 1.11.
Economic developments in recent months have served to heighten the pressure on prices for electrical and electronic components. While net sales were down by roughly 8%, the cost of goods sold was unchanged year-on-year at CHF 49.6 million. At the same time, rising raw materials prices and more stringent safety requirements such as the 'Restriction of the use of certain hazardous substances' (RoHS) have driven up production costs, whereas there is only limited scope for the market to accept price increases at present. The interim results also reflect the cooling off on the technology markets that started in mid-2004, which was further amplified by the seasonal weakness in orders during the first calendar quarter of 2005. Furthermore, exchange rates relative to the key trading currencies - in particular the US dollar - had a negative impact. Although efforts to streamline the product range in Test Systems business and focus on products with greater profit and growth potential additionally weighed on sales, these efforts have already enhanced results in Test Systems business.
The automotive sector performed in line with the Group's strategy in the first half of 2004/2005, with two new customers won for Schaffner's immobilizer system components (one in Korea, the other in China). Following preliminary investments in the current fiscal year, the first sales are expected in fiscal 2005/2006. Mass production of Schaffner components for use in tire pressure monitoring systems (TPMS) will also begin in the first quarter of the next fiscal year for a large US manufacturer. Another positive development was the signing of a three-year agreement worth approximately CHF 14 million between the Components business and a long-standing customer in the industrial electronics sector.
In terms of sectors, 37% of Group sales were generated in industrial electronics (first half 2003/2004: 36%), 17% (19%) in telecommunications, and 13% (11%) in automotive. Remaining sales were spread across several minor sectors, including IT, medical technology, armaments, and power supply. Broken down geographically, 72% (73%) of sales were generated in Europe, 18% (17%) in the Asia-Pacific market, and 10% (10%) in the US.
The analysis of the Test Systems business that was announced in January and involved external specialists was completed as planned. The various scenarios are currently being reviewed in detail. In view of the renewed deterioration in market visibility, attempting to forecast the business trend going forward is extremely difficult at present and makes little sense. However, the Schaffner Group management team is confident that the traditionally stronger second half of the fiscal year will bring improvements in both sales and orders.
The Interim Report 2004/2005 is available at www.schaffner.com
ots Originaltext: Schaffner Holding AG
President & Chief Executive Officer
Executive Vice President & Chief Financial Officer
Schaffner Holding AG