The Schlatter Group posted declines in both net sales and profit in the 2019 financial year. Economic sentiment in the markets was marked by uncertainties, making customers extremely reluctant to place orders. The Welding segment benefited from a good order backlog in the first half of the year, but the decline in orders made it impossible to maintain its good capacity utilisation in the second half. Even so, the Welding segment posted a substantial operating profit. In contrast, the Weaving segment suffered a significant loss due to low capacity utilisation. At the end of the year, the outlook in both segments' individual markets brightened somewhat. Given the order backlog as of 31.12.2019 and uncertainty about order intake, the Board of Directors and management expect lower revenues for the current financial year. However, they are striving to achieve at least a break-even result, excluding the corona effect. Should the measures taken worldwide to combat the corona virus last longer, this could have a negative impact on the 2020 financial statements.
Net sales in the Welding segment in the 2019 financial year totalled CHF 77.3 million (2018: CHF 91.8 million). At CHF 61.3 million, order intake was significantly down on the previous year's figure of CHF 94.8 million. The order backlog at the year-end stood at CHF 21.5 million (31.12.2018: CHF 37.5 million).
Given the decline in new orders in the period under review and the resulting poorer net revenue prospects for the 2020 financial year, Schlatter initiated a comprehensive cost-cutting programme in the Welding segment that will bear fruit in the 2020 financial year.
In spite of the current market weakness, the action taken in past years to increase productivity, along with heavy investment in new product development and measures taken to strengthen the presence in the market, give grounds for confidence.
Wire product area (systems for the manufacture of reinforcing and industrial mesh) The wire product area, Schlatter's most lucrative, was hit hardest by the decline in orders. Schlatter expects a moderate recovery, but revenues are still likely to be lower than they were in the past.
The continuing development of the MG950 industrial mesh product family and the range of products for the manufacture of reinforcing mesh, which has been modernised in past years, constitute a stable foundation for Schlatter's business.
Schlatter continues to make substantial investments in product development in the wire area: in the development of a new machine platform designed to reduce production costs and complexity, for example, in extended applications for the manufacture of new products on Schlatter systems, in automated solutions – especially in the area of industrial mesh – and in the development of digital products helping customers with system operation and manufacturing.
Rail welding product area
Sales of rail welding systems were unsatisfactory in the year under review. One reason for this is that the expansion of capacities for welding high-speed track in China has led to saturation. But new opportunities are presenting themselves in other regions, where governments have already given the go-ahead for numerous major new railway line construction projects.
At CHF 13.5 million, order intake in the Weaving segment was down on the previous year (2018: CHF 19.4 million). Net sales in the year under review stood at CHF 16.4 million (2018: CHF 19.6 million). The order backlog as at 31.12.2019 stood at CHF 4.9 million (31.12.2018: CHF 7.7 million).
The Münster site suffered a substantial loss in the Weaving segment, due partly to lower net revenues and partly to cost and productivity problems, which must be addressed as a top priority. Comprehensive measures have been initiated to increase productivity.
The Münster site has also reduced its capacities and initiated cost-cutting measures in the Weaving segment. The objective is to substantially reduce the site's profit threshold. In addition, a service initiative has been launched to increase both customer satisfaction and net revenues.
Development of new business fields in the technical textiles area
The volatile market for weaving machines for the production of paper machine clothing is leading to sharp fluctuations in capacity utilisation at the Münster site. A product development project launched in 2019 will enable us to enter growth markets for the production of other technical weaves, reducing Schlatter's dependence on the volatile market for weaving machines for the production of paper machine clothing and generating growth.
The Schlatter Group benefited from the positive sentiment in the markets in the three years before 2019. During that period, Schlatter successfully launched product innovations, intensified marketing activities in regions where the Group had previously been under-represented, and significantly expanded its service business.
The decline in net sales and in the overall result in the 2019 financial year presents Schlatter with challenges that are now being actively addressed – with comprehensive cost-cutting measures affecting both segments, for example, by reducing capacities at the largest sites, and with measures to increase productivity that are already in the course of implementation.
The medium-term measures are being consistently pursued – among them higher-than-average investment in product development and intensive marketing, both of which will help to strengthen the market position.
Given the order backlog as of 31.12.2019 and uncertainty about order intake, the Board of Directors and management expect lower revenues for the current financial year. However, they are striving to achieve at least a break-even result, excluding the corona effect. Should the measures taken worldwide to combat the corona virus last longer, this could have a negative impact on the 2020 financial statements.
2020 Annual General Meeting
At the General Meeting on 4 May 2020 the Board of Directors will propose that no dividend be paid for the 2019 financial year.
The full 2019 Annual Report can be downloaded from the Schlatter Group website: http://www.schlattergroup.com/de/investor-relations/geschaefts-_und_semesterberichte/
Schlatter Industries AG
Chief Executive Officer
Telephone +41 44 732 71 70
Mobile +41 79 343 62 62
Publication of detailed annual results 2019 (press release and publication of annual report on the website of the company)
Annual General Meeting
Publication of half-year results 2020
Key figures of the Schlatter Group
Change compared to previous year
Operating result (EBIT)
in % of net sales
in % of net sales
Headcount at period end
Net financial position (debt)1
Free cash flow3
Return on equity (ROE)4
Key share figures
Share capital as of December 31
Total registered shares
Registered shares entitled to dividend payments
Net result per registered share5
Equity per registered share5
Dividend per registered share
Share price development
Net financial position (debt): cash and cash equivalents less interest-bearing liabilities
Gearing: net financial position divided by equity
Cash flow from operating activities less purchase of tangible fixed assets and intangible assets, plus sale of tangible fixed assets and intangible assets
Net result divided by average equity
Determined on the basis of dividend-entitled shares
In accordance to the proposal to the Annual General Meeting of May 4, 2020
Schlatter Gruppe (www.schlattergroup.com)
The Schlatter Group is one of the leading specialists in plant engineering for resistance welding systems as well as weaving and finishing equipment for the production of paper machine clothing, wire fabrics and wire mesh. Thanks to its many years of experience in the field of plant technology, its innovative strength and its reliable service, the Schlatter Group – which is listed on the Swiss Reporting Standard of SIX Swiss Exchange – guarantees its customers a range of powerful and high quality production equipment.
This media information contains certain forward-looking statements, e.g. statements using the words "believes," "assumes," "anticipates," or formulations of a similar nature. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which could lead to substantial differences between the actual future results, the financial situation, the development or performance of the Company and those either expressed or implied by such statements. Such factors include, among other things: competition from other companies, the effects and risks of new technologies, the Company's continuing capital requirements, financing costs, delays in the integration of acquisitions, changes in the operating expenses, the Company's ability to recruit and retain qualified employees, unfavorable changes in the applicable tax laws, and other factors identified in this communication. In view of these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company accepts no obligation to continue to report or update such forward-looking statements or adjust them to future events or developments.