A challenging first half

The automotive industry’s current weakness had a substantial impact on the Komax Group’s result for the first half of the year. Various uncertainties such as the trade conflict between the USA and China, the Worldwide Harmonized Light Vehicles Test Procedure (WLTP), and Brexit have made customers generally cautious, causing them to postpone investments and numerous projects. Since Komax generates over 80% of its revenues in the automotive industry, the other market segments have been unable to compensate for this weakness despite being less significantly affected. Consequently, the first half of 2019 saw a 19.2% decrease in order intake to CHF 206.7 million (previous year: CHF 256.0 million) and a 14.2% decline in revenues to CHF 203.3 million (previous year: CHF 236.9 million). Acquisition-related growth (+1.3%) and the negative currency effect (–1.9%) also impacted revenue development. Already aware in March 2019 that the previous year’s record result cannot be reached, Komax projected a 10% to 20% fall in order intake and revenues for the first half of 2019.

The largest decrease in revenues was reported by Europe (–19.9%), but Asia (–18.3%) and Africa (–18.6%) also recorded significant declines. Developments were positive in both North and South America, where revenues were up by 7.5% overall. This was also due in part to the acquisition of US-based Artos Engineering, which has been contributing to the Komax Group’s result since the second quarter of 2019. The takeover has helped Komax to improve its position in North America in particular. “The Komax Group will continue to pursue this strategy in the second half of the year and work towards strengthening its proximity to customers in individual regions. This is precisely what we are doing in Thailand, for example, where Komax will now be present with its own company,” says Matijas Meyer, CEO of the Komax Group.

To play its role in shaping the sector’s future, market and technology leader Komax once again invested heavily in R&D in the first half of 2019: CHF 19.7 million (previous year: CHF 20.6 million) or 9.7% (previous year: 8.7%) of revenues. Although Komax managed to reduce costs in other areas in the first six months of 2019, the significantly lower revenue figure led to a 54.2% fall in operating profit (EBIT) to CHF 16.4 million (previous year: CHF 35.7 million). This gives an EBIT margin of 8.0% (previous year: 15.1%). Operating profit was additionally hit by expenses for projects in new application areas such as data connectivity and aerospace. The foreign-currency impact on the EBIT margin amounted to minus 1.1 percentage points. Group profit after taxes (EAT) decreased by 62.2% to CHF 10.7 million (previous year: CHF 28.3 million). Due to the high tax rate of 24.1% (previous year: 16.2%), EAT declined even more sharply than EBIT. Basic earnings per share amount to CHF 2.79 (previous year: CHF 7.41).

To be able to remain on a growth path in the coming years, Komax is investing heavily in capacity expansion at four sites,” explains Komax Group CFO Andreas Wolfisberg. The newly built Kabatec facility in Burghaun, Germany, became operational in April 2019. The other three new production and development facilities – in Switzerland, Germany, and Hungary – are all scheduled for completion in the second half of 2019. Despite these large investments, the Komax Group’s financial base remains robust: As at 30 June 2019, shareholders’ equity totaled CHF 257.2 million (31 December 2018: CHF 281.6 million), while the equity ratio stood at 55.9% (31 December 2018: 60.8%). Free cash flow amounted to CHF –2.9 million (previous year: CHF 4.1 million), while net debt stood at CHF 71.2 million (31 December 2018: CHF 39.4 million).

The Komax Group is confident it can achieve higher order intake, revenues, and EBIT in the second half of 2019 than in the first six months. After the very weak first months of 2019, business has stabilized. If the trend of the second quarter continues and this level can be maintained in the second half of the year, Komax expects to see full-year revenues of CHF 415 to 430 million for 2019, together with an EBIT margin of between 8% and 9%, in the knowledge that – in the current environment – a forecast of over two to three months is even more difficult than in previous years. Despite the current phase of weakness, Matijas Meyer remains positive with regard to Komax’s medium-term outlook: “Thanks to our very strong global positioning and the ongoing trend toward automation, we are convinced that Komax will enjoy considerable growth potential over the next few years – and that we will be able to exploit this potential.”