Posting net sales of CHF 298.0 million, sia Abrasives can look back on its best year ever in terms of sales revenue. This 5.7% increase is at the upper end of the targeted growth range of 4% to 6% and ahead of the overall market growth.

The operating results for 2007 are also satisfactory. Operating profit before interest and tax (EBIT) came in at CHF 30.3 million, versus CHF 31.5 million in 2006. This represents an EBIT margin of 10.2%, which is within the target range of 10% to 12%. Here it must be remembered that the prior year’s EBIT included an exceptional net gain of CHF 2.8 million on the sale of a property in Frauenfeld. Excluding the impact of this one-off item in 2006, EBIT for the reporting year was up 5.6% year on year. sia Abrasives is reporting a profit of CHF 22.4 million for the year, compared to CHF 22.6 million for 2006. This represents a profit margin of 7.6% against 8.1% a year earlier. Excluding the effect of the previous year’s one-off item, the sia Group’s profit after tax increased by CHF 2.1 million or 10.3%, and its profit margin improved. Given the solid operating results, the Board of Directors will recommend a dividend of CHF 12 per share for approval at the Annual General Meeting.
 

Europe and metal lead growth

Supported by customer responsiveness, product innovations and successful alliances, the sia Group improved its sales figures in all markets. The best performing region was Europe with 7.1% sales growth. In Europe, where sia Abrasives generates two-thirds of total sales, the company benefited from the good economic conditions and saw business flourish in traditional core markets like Switzerland and Germany and continue to boom in Eastern Europe. Growth in America was 2.9%. Rebounding after a decline in 2006, the sia Group grew 4% in Asia. The efforts to expand in this market are starting to bear fruit. The region encompassing Australia/Africa showed a moderate gain of 2.4%.

A highlight of last year was the 12.6% leap in sales for metal applications. The company significantly strengthened its market position through organic growth alone. Today, sia Abrasives has a leading edge in quality with metalworking products and is the partner of choice for customers with demanding applications. These include component suppliers to the automotive industry and manufacturers of engine components for the new Airbus A-380. The good performance was also driven by siastar metal, a product launched in 2007. This is an innovation that fills a large market need and offers great potential for expansion.

Successful alliance with Sika

Coupled with product innovation and customer focus, alliances are another pillar of the company’s strategy that proved to be particularly effective last year. Alliances are a way for sia Abrasives to expand its surface preparation and finishing expertise and speed market penetration with new offerings. In this context, the collaboration with Sika AG in Baar is worth special mention: part GmbH, the sales company jointly formed in Germany at the end of 2006, achieved a marked upturn in sales during 2007. Having seen the success of this distribution model, sia Abrasives and Sika are set to replicate the concept in other European countries. The strategic alliance with Herisau-based AG Cilander has also been most successful, giving sia Abrasives greater independence in the procurement of high-quality cloth backings.

Outlook for 2008

Provided that the good economic conditions continue during 2008 and the Swiss franc does not keep strengthening, sia Abrasives anticipates another bright financial year. With its high quality products and continuous innovations, the company has the platform for further profitable growth. Based on these assumptions, management expects sales growth of 4% to 6% and an EBIT margin of 10% to 12% for the current year.

Substantial capital expenditure programme

To enable sia Abrasives to handle future growth and remain well positioned in the market with its quality products, the Frauenfeld-based company invests continuously in upgrading its production capacities. In February 2008, the Board of Directors decided to plan a substantial capital expenditure programme: a new production facility for manufacturing so-called jumbo rolls is being evaluated at the Frauenfeld site. With this facility, the company would be able to develop additional market segments in future, expanding in areas such as wide belts or microgrits. By taking this decision, the Board of Directors is underscoring its confidence in market performance worldwide. The new manufacturing facility would be completed by the end of 2010.

sia Group financial highlights (CHF’000)

Financial calendar

About the sia Group

For further information

sia Abrasives Holding AG, Frauenfeld
Roland Eberle, CEO
Gerhard Mahrle, CFO
Phone: +41 52 724 45 75
Fax: +41 52 724 45 70
E-mail: ir@sia-abrasives.com
Internet: http://www.sia-abrasives.com/

As there are other companies and organizations that use the same abbreviation as our company, we would be grateful if you could help to avoid any misunderstandings by always writing our name as follows: sia Abrasives (never just sia by itself).