sia Abrasives unscathed by the economic climate (05/03/2002)
Now ranking No. 3 in the world coated abrasives market
Despite the difficult business environment, sia Abrasives succeeded in consolidating sales at a high level in 2001: while sales declined slightly in Swiss francs, falling 1.5% to CHF 222.3 million, they increased by approximately 1% in local currencies. Operating income dropped 15.3% to CHF 20.6 million, and net income decreased 10% to CHF 15.1 million. This year the No. 3 in the world coated abrasives market is targeting at 6% to 10% growth in sales and an operating profit margin of over 10%. By implementing a capital expenditure program to invest altogether CHF 53 million in its Frauenfeld production facilities over a period of several years, sia Abrasives is clearly demonstrating its faith in Switzerland as a production and technology center. The Annual Meeting of Stockholders is being recommended to declare an unchanged dividend of CHF 6.75 per registered share.
Having grown continuously at a distinctly higher rate than the industry as a whole for nine consecutive years, sia Abrasives saw the first break in this trend and had to post a slight downturn in 2001 sales after translation into Swiss francs: the Thurgau-based group of companies, which is listed on the stock exchange, turned over CHF 222.3 million or 1.5% less than in the strong year before (2000: CHF 225.7 million). Thanks to the successful acquisition in the UK and to new products launched and new markets opened up, the sia Group operating internationally still increased its sales by approximately 1% in local currency despite the difficult environment.
Capital expenditure program enhances efficiency
Compared with the extremely successful previous year, operating income before interest and taxes (EBIT) slipped 15.3% to CHF 20.6 million in 2001 (2000: 24.3 million). By taking cost-cutting measures, sia Abrasives consolidated operating income for 2001 at the 1999 level. The operating profit margin, at 9.3% (2000: 10.8%), was slightly below the targeted 10% it had distinctly topped a year earlier. Capital expenditures on processes and facilities for ground production, amounting to CHF 15.4 million, resulted in efficiency enhancements that already had a positive impact on last year’s results. The acquisition of sia Fibral came up to expectations as regards operating income despite substantial capital spending on the sia Group’s marketing concepts and distribution channels. Given the very small proportion of extraordinary income, at CHF 0.7 million, net income displayed a disproportionately low decline of 10% to CHF 15.1 million (2000: CHF 16.8 million). As a result, the return on sales only decreased to 6.8% in 2001 from 7.4% in 2000. With this performance in operating and net income during a difficult year, sia Abrasives demonstrated the resistance to cyclical fluctuations that it has built up through its global presence in a variety of segments.
sia Fibral Ltd. integrated according to plan
By acquiring the Freudenberg Group’s nonwoven abrasives division on July 30, 2001, sia Abrasives reached an important strategic milestone: establishing itself as No. 3 in the world coated abrasives market. The integration of the unit, now operating as sia Fibral Ltd., into sia’s corporate culture went well.
Outlook for 2002: growing sales and profits
The sia Group is centralizing its UK operations at the site of sia Fibral Ltd. in Greetland (West Yorkshire) with a view to tapping further synergy potential and stepping up productivity.
To create an ideal platform for future internal growth, sia Abrasives announced a substantial capital expenditure program at the end of 2001: having already adopted a program for CHF 20 million, the company is going to invest another CHF 33 million in ground production and conversion by 2004.
Even though sia Abrasives believes the environment will still be difficult in 2002, the Group is optimistic that sales will grow by altogether 6% to 10% and is confident it will return to an operating profit margin of over 10%. The Board of Directors is recommending the Annual Meeting of Stockholders to declare an unchanged dividend of CHF 6.75 per registered share. This represents a total payout of CHF 4.9 million or 32% of consolidated net income.
® Correct nomenclature for sia Abrasives Holding AG
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).
News 