Acquisition with high sales potential (03/11/2005)
sia Abrasives expands its surface finishing expertise
The sia Group, a global player in the coated and nonwoven abrasives markets, is acquiring Abrasive Foam Limited, a UK company based in Alfreton (Derbyshire), retroactively as of October 1, 2005. With this acquisition, sia Abrasives is expanding into the market for abrasive coated foam products. Abrasive Foam’s products ideally complement the range of specialized surface finishing systems offered by sia Abrasives. Abrasive Foam has enjoyed steady sales growth over the past years. For the current fiscal year, it will generate sales of CHF 15 million. With its products additionally marketed through sia Abrasives’ distribution network, sales will continue to increase.
UK-based Abrasive Foam Ltd. in Alfreton (near Birmingham) manufactures abrasive foam blocks and pads from foam blocks and rolls (backing material). These abrasive sponges ideally complement the coated and nonwoven abrasives made by the sia Group, further enlarging its range of specialized surface finishing systems. Abrasive Foam exports 90% of its products (mainly to Europe and the USA). Serving a wide customer base, the company supplies products to some 250 base dealers across the globe. Marketing the products through sia Abrasives’ distribution channels worldwide will significantly boost sales of abrasive sponges. Growth is going to be bolstered on a sustainable basis by new products and geographic expansion. Abrasive Foam’s broad customer base, combined with the traditional range of high-end products for high precision surface preparation and finishing, key products for metal and wood applications and new system solutions, will make sia Abrasives even less sensitive to economic fluctuations.
Trend toward flexible abrasives
Abrasive sponges are ideal for gentle hand sanding applications requiring the very high surface finish quality that abrasive foam can produce due to its varying elasticity. They are used especially in the woodworking industry and automotive paint and bodywork applications. These abrasives for sanding contoured surfaces also respond to the marked trend toward fine and flexible abrasives, which are setting new standards in surface finishing technology. Abrasive Foam is extremely committed to quality and process technology, making it a perfect fit with the philosophy of sia Abrasives. With its abrasive foam manufacturing process, the UK company also produces the foam manicure blocks used worldwide for shaping and blending acrylic nails. sia Abrasives wants to enlarge this area of applications by adding new products to build up a complete (pedicure and manicure) range.
Sales potential and healthy financial base
Today, the world abrasive foam market is estimated to be worth about CHF 60 million, but the potential should be considerably higher with appropriate market development. The comparable competition is limited to three other manufacturers, with fewer than ten companies producing abrasive sponges worldwide. Abrasive Foam, the market leader, stands out from its competitors through its environmentally friendly manufacturing process. The family-owned business established in 1988 and employing 110 people is set to generate approximately CHF 15 million in sales for 2005. Abrasive Foam has a healthy financial base, coupled with sales growth averaging more than 8% in the past three years. Its operating ratios are similar to the sia Group’s. Abrasive Foam enjoys an excellent market reputation, earned not least through the good price/performance ratio of its products and short delivery times. Abrasive Foam can be integrated into the sia Group without any notable restructuring because the sales organizations and products are complementary, and the company has a lean organization.
Acquisition with high synergy potential
Abrasive Foam uses a new, state-of-the-art coating technology that can be partially adapted for manufacturing coated and nonwoven abrasives as well. The acquisition should allow part of the physical distribution system to be optimized for the now three Group companies located in Great Britain. In addition, Abrasive Foam and sia Fibral, the company based in Greetland (Halifax), will benefit from economies of scale resulting from joint raw material purchasing and inventory management.
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 1,000 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.
Financial calendar
March 24, 2006, 9 a.m.
Annual press conference at SWX Swiss Exchange in Zurich
March 24, 2006, 11 a.m.
Financial analysts’ conference at SWX Swiss Exchange in Zurich
April 19, 2006, 4 p.m.
Annual Meeting of Stockholders at Frauenfeld Stadtcasino
April 25, 2006
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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