sia Abrasives delivers strong growth in sales and profits (21/07/2006)
Product innovations and partnerships boost performance
The sia Group, a global player in the flexible abrasives market, built on the success of the 2005 financial year during the first six months of 2006. sia Abrasives increased sales by 10% to CHF 143.2 million and profit for the period by 20% to CHF 10.9 million. The first half results are in line with management’s targets. In light of the positive business trend, sia Abrasives expects 2006 sales growth to roughly match that of the first six months.
The sia Group is focusing on sales growth in the current financial year. During the first six months of 2006, the Group increased sales revenue by 10.0% (CHF 13.0 million) to CHF 143.2 million. Movements in foreign exchange rates had an impact of CHF 2.0 million, contributing 1.6% to growth. Operating profit before interest, tax, depreciation and amortisation (EBITDA) advanced by 8.5% to CHF 22.0 million while operating profit before interest and tax (EBIT) grew by CHF 1.4 million to CHF 15.5 million, up 9.9%. Profit for the period (EAT) rose by CHF 1.8 million or 19.9% to CHF 10.9 million, representing a margin of 7.8% (2005: 6.9%).
With these results, the Group met management’s targets for the first six months. sia Abrasives does not expect any significant change in the rate of sales growth in the latter half of the year provided that the political and economic climate does not have any adverse effects. Second half results will benefit from cost saving measures taken during the first six months. In addition, properties not required for operations are scheduled for disposal before the end of 2006. All in all, sia Abrasives anticipates an EBITDA margin of 15% to 17% for 2006.
Market launches and partnerships boost sales performance
With product innovations, coupled with selective acquisitions that perfectly complement the range of systems offered by sia Abrasives, the company is progressively expanding its abrasive surface finishing expertise. The numerous products launched on the market last year and the rewards of fruitful partnerships showed in the first half of 2006 and boosted sales and profit performance.
An extremely successful innovation has been sia-slide, the sanding pad launched on the market in mid-2005 that increases the precision and cost-effectiveness of panel sanding. Many existing and new customers swear by the ingenious technology used in this system. sia Abrasives also won a great number of new customers with TopTec, the cutting-edge wide belt technology that ensures a dust-free sanding process and produces an even more homogeneous surface finish. Building on this success, the company is now changing other product series over to this new technology. sia Abrasives has developed a revolutionary antistatic abrasive for a new Bona parquet sanding machine featuring a special vacuum system. This innovative system solution – coming complete with a machine, finishing product and abrasive – is setting new standards in dust-free sanding and will help to accelerate distribution of the products. More market launches are planned for the second half of the year, including a unique, extremely promising diamond-coated abrasive for finishing ultra-hard, scratch-resistant coatings (nanotechnology) in automotive paint and bodywork applications.
sia Abrasives expanded into the market for foam abrasives in November 2005 following the acquisition of sia Abrafoam Ltd. The company’s integration into the sia Group has gone according to plan, without restructuring costs. The Group will already be able to expand sales this year by marketing foam abrasives worldwide through the distribution channels of sia Abrasives.
The acquisition of sia Abrafoam added a third manufacturing company to the sia Group. The decisive market advantage of being able to offer a one-stop source for three complementary groups of flexible abrasive products – coated, nonwoven and foam abrasives – was also one of the logistical considerations addressed by sia Abrasives: since spring 2006 the three manufacturing companies’ sales have been combined in a central distribution hub in Frauenfeld. This has enabled sia Abrasives to increase its delivery rate and cut logistics and shipping costs.
The collaboration with Sika AG in Baar has been stepped up further. Already established in Italy, the UK and Greece, the distribution model adopted by sia Abrasives and Sika to market a range of automotive repair products through both their sales channels will also be launched in another country this year. This model enables the partners to offer the best products and services from a single source through a more closely knit sales network.
Management successor appointed
Peter A. Schifferle will be stepping down as CEO and Executive Director of sia Abrasives Holding AG on 31 December 2006. He will be succeeded as CEO by Roland Eberle who joined the company on 1 July 2006 and will assume operational responsibility on 1 January 2007. Until 31 May 2006, Eberle served as President of the cantonal government of Thurgau where he headed the Department of Finance and Social Services. Schifferle will take over as Chairman of sia Abrasives Holding AG after the 2007 Annual General Meeting. Hans-Ulrich Spiess, the current Chairman, will remain on the Board as Deputy Chairman.
sia Group financial highlights (CHF’000)
Six months ended 30 June 2006
Six months ended 30 June 2005
% Change
Net sales
143,168
130,139
+10.0%
Operating revenue
140,323
132,284
+6.1%
Operating profit before interest, tax, depreciation and amortisation (EBITDA)
22,016
20,284
+8.5%
EBITDA as % of operating revenue
15.7%
15.3%
Operating profit before interest and tax (EBIT)
15,534
14,134
+9.9%
EBIT as % of operating revenue
11.1%
10.7%
Profit for the period (EAT)
10,882
9,077
+19.9%
EAT as % of operating revenue
7.8%
6.9%
Net cash inflow from operating activities
10,930
9,862
+10.8%
Capital expenditure (gross)
3,052
3,407
–10.4%
Detailed figures are available in the Interim Report which can be downloaded from http://www.sia-abrasives.com/ (Investor Relations; Financial Summary and Reports; Interim Report). The official, printed version will be published on 15 August 2006 and can be ordered by calling +41 52 724 45 75 or emailing ir@sia-abrasives.com.
The sia Group based in Frauenfeld ranks among the world’s top three suppliers of coated abrasives. It develops, manufactures and markets complete abrasive systems tailored to specific requirements and applications for surface preparation and finishing of all kinds. This commitment has made sanding and grinding into true surface technologies. Employing some 1,100 people worldwide, sia Abrasives posted net sales of CHF 261.4 million and operating profit (EBITDA) of CHF 40.5 million for 2005. sia Abrasives Holding AG is listed on SWX Swiss Exchange and generates more than 90% of its sales outside Switzerland.
Financial calendar
23 March 2007, 9 a.m. Annual press conference at SWX Swiss Exchange in Zurich 23 March 2007, 11 a.m. Analyst conference at SWX Swiss Exchange in Zurich 24 April 2007, 4 p.m. Annual General Meeting of Shareholders at Frauenfeld Stadtcasino 30 April 2007 Dividend payment
For further information
Peter A. Schifferle, CEO and Executive Director Gerhard Mahrle, CFO and Investor Relations Phone: +41 52 724 45 75 Fax: +41 52 724 45 70 E-mail: ir@sia-abrasives.com Internet: http://www.sia-abrasives.com/
® 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).
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