Gurit Reports Strong Net Sales Growth

Gurit Reports Strong Net Sales…
Gurit (SIX Swiss Exchange: GUR) reports net sales of CHF 195.3 million for the first six months of 2018. This represents a growth of +11.5% in reported Swiss francs and a currency-adjusted increase of +6.1% over the previous year. Operating profit amounted to CHF 16.0 million and the operating profit margin came in at 8.2% of net sales for the first half-year 2018.

The market environment was very favorable for Gurit Tooling in the first six months of 2018, while wind material demand was still weak in India, stagnating in China, and fair in other global regions. The new Aero Business Unit suffered from a temporary lower customer build rate. The Automotive Business Unit had a bad start into the year as it got hurt by a sharp demand decline in the biggest volume contract which affect the first eight months of 2018. It also was impacted by start-up efforts for three new programs ramping-up in the plants in Hungary and the UK.

Chemical raw material cost were on the rise across all Gurit businesses compared to 2017, while corresponding client price increases in majority will only materialize in the second half year 2018.

Gurit now reports net sales in four segments: "Composite Materials", "Aerospace", "Composite Components" and "Tooling". Aerospace was detached from the Business Unit Composite Materials and established as an independent Business Unit as of April 1, 2018. Prior year net sales figures have been restated accordingly in order to reflect the new structure.

The Composite Materials Business Unit achieved net sales of CHF 102.8 million in the first half-year 2018 (1HY 2017: CHF 104.2 million). This represents a decrease of -1.3% in reported Swiss francs and -5.9% on currency-adjusted basis. Sales to the wind energy industry declined by ‑10.2% (currency-adjusted: -15.1%) to CHF 62.1 million in the first six months of 2018 (1HY 2017: CHF 69.1 million). The decline mainly results from the ongoing weak wind material demand in the wind energy markets in India and China which could not be fully compensated by the demand in Europe and good growth in North America. Material supply to other material markets (excluding aerospace) increased by +16.1% (currency-adjusted: +12.9%) to CHF 40.7 million in the first half-year 2018 (1HY 2017: CHF 35.0 million). Growth resulted from favorable demand in the global marine industry as well as a healthy flow of material orders from industrial customers in North America and Asia-Pacific.

In the Aerospace Business Unit, sales temporarily decreased by -2.2% (currency-adjusted: ‑7.0%) to CHF 25.0 million in the first six months of 2018 compared to net sales of CHF 25.5 million in the first half-year 2017. Lower sales resulted from lower OEM build rates. This OEM is planning to recover the shortfall in the second half-year 2018 and likely also in early 2019. On the favorable side, sales to the US OEM are increasing steadily.

The Composite Components Business Unit reported net sales of CHF 7.3 million for the first half-year 2018. This represents a decrease of ‑25.4% (currency-adjusted: -30.5%) over net sales of CHF 9.8 million generated in the first half-year 2017. The abrupt demand decline in Gurit's biggest car part volume program caused a sales drop and underutilization cost and thus had a major adverse impact on the operating profitability margin of the business unit and the Group. At the same time, the component business unit is in the start-up phase for three new programs which initially have an adverse margin impact as volumes are not yet produced at final tact rate and cost. Full focus will be placed on improving the situation going forward.