In fiscal 2005, sia Abrasives increased sales by 3.7% to CHF 261.4 million. This result is mainly due to adjustments in customer orders in response to the sia Group’s high service level. The marked improvement in service level allowed customers to adjust their own inventory levels, temporarily dampening sales growth. At the same time, the high supply capability further strengthened customer retention and loyalty. Although the sales growth is slightly below the guidance range of 4% to 6%, operating results are set to be in line with forecasts. The Thurgau-based company expects a 2005 operating margin of 15% to 17% at EBITDA level (operating income before interest, taxes, depreciation and amortization) and 10% to 12% at EBIT level (operating income before interest and taxes). This year, the sia Group will focus primarily on sales growth, to be fueled by geographic expansion and innovative product launches. sia Group management expects productivity and profitability to continue to improve during 2006.
Last year, the sia Group increased sales by CHF 9.2 million or 3.7% to a total of CHF 261.4 million, clearly advancing in all application areas and geographic markets. This sales growth is slightly below the 4% to 6% guidance issued by the company. This is due in part to the focus that the company had set itself for last year. In 2005, sia Abrasives concentrated primarily on further increasing product quality, developing new and innovative products, and sustainably improving supply capability. Part of the sales growth has been contributed by sia Abrafoam Ltd., based in Alfreton/UK, which was acquired in October.
For 2005, operating income before interest, taxes, depreciation and amortization (EBITDA) will be in the expected range of 15% to 17% of operating revenues and operating income before interest and taxes (EBIT) will be in the range of 10% to 12% of operating revenues.
High service level strengthens customer retention and loyalty
Customers responded to the improvement in service level by adjusting their own inventories to match the sia Group’s high delivery service. While allowing customers to maintain a high inventory turnover, this significantly improves customer/supplier relations with the Thurgau-based abrasives manufacturer. Peter A. Schifferle, CEO and Executive Director of sia Abrasives, explains convincingly: “Our customers appreciate the flexibility this gives them and the reliable just-in-time deliveries. That is why they adjusted their order and purchasing cycle times in the 4th quarter of 2005.” Schifferle sees this trend clearly reflected in the level of orders received in 2006. Now that customers have adjusted their inventories to appropriate levels, new orders are rising again significantly. Orders received by the sia Group’s plants in January 2006 are more than 30% up on last year’s levels.
Concentration on sales growth and profitability
During 2006, the sia Group is focusing primarily on sales growth. This growth is to be driven by sales in new geographic areas (e.g. India) and new products launches (e.g. for dust-free abrasive processes). The Group is seeking to consistently expand market share, bolstered by the added surface expertise from the acquisition of sia Abrafoam Ltd. And last but not least, partnerships (e.g. with Sika) should help to boost market penetration. sia Abrasives also intends to extend its strategic cooperation with key suppliers of raw materials (like Cilander) with a view to securing its profitability and competitiveness.
Having completed its capital spending on manufacturing and conversion facilities, the company expects productivity and profitability to continue to improve during the current year. The increased production capacities resulting from these programs should allow sales to grow at a higher rate than costs.
The sia Group based in Frauenfeld ranks among the world’s top three suppliers of coated and nonwoven 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 252.1 million and operating income (EBIT) of CHF 24.7 million for 2004. sia Abrasives Holding AG is listed on SWX Swiss Exchange and generates more than 90% of its sales outside Switzerland.
Calendar of events (sia Abrasives)
March 24, 2005: Annual press conference at SWX Swiss Exchange in Zurich March 24, 2005: Financial analysts’ conference at SWX Swiss Exchange in Zurich April 19, 2005: Annual Meeting of Stockholders at Frauenfeld Stadtcasino April 25, 2005: 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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